Today’s CXstory is about McDonald’s-
The iconic global brand operates over 38,000 locations in more than 100 countries and serves approximately 69 million customers daily. A few years back, in the 2010’s, it found itself losing consumer interest. Against the onset of increased competition, changing consumer preferences, and the use of technology, they found themselves challenged for growth.
This was reflecting in decreasing customer stickiness, lower repeat ratios, operational inefficiencies, lower employee engagement and overall decline in revenue.
They chose to address this, not by changing their marketing tactics but by focusing their attention on customer experience.
Phase 1 - all about menu and CX
In 2017, Mc Donalds’s CEO at the time, Steve Easterbrook laid out its long-term vision for digital transformation. Dubbed the “Velocity Growth Plan,” the strategy was built around 3 pillars:
Customer retention or “retain”
“Regain,” recruiting lost customers
“convert,” attracting new customers
They started by making an effort to listen to their customers and providing them with a more streamlined experience — like the one customers had been requesting. Based on customer feedback, McDonalds created a simpler menu, improved order accuracy and use of higher-quality ingredients.
Phase 2 - Digital Transformation
Though Esterbrook exited McDonald’s in 2020, its new CEO, Chris Kempczinski, reiterated their commitment to customers enabled through digital transformation. “There’s no question that digital is transforming global retail. Across the system, there is great excitement about the role it will play in transforming McDonald’s by strengthening and deepening relationships with our customers”
They embarked on a huge innovation and digital transformation drive - invested in upgrading store interiors for a better look and installed digital, self-order kiosks and table service, resulting in lower wait times for customers. Plus Menu diversification that enabled more trials. As these changes were implemented, they saw sales start to grow.
In late 2020, McDonald’s launched its “Accelerating the Arches” growth strategy which builds on the company’s historic strengths, while also addressing opportunities to meet rapidly evolving consumer preferences. Importantly, the cultivation of a curiosity culture underpins that growth strategy — bettering the odds of digital transformation success.
“Our three growth pillars known as our ‘MCDs’ – marketing, core menu and the 3Ds (digital, delivery and drive-thru) guide our business. This includes amplifying contactless channels like delivery and drive-thru and creating digital experiences that are seamless, personalized and easy to use.
In the words of the CEO – “Our aspirations are even higher, and to reach these goals, it’s clear to me that we need to create a more frictionless customer experience across all of our service channels. Our customers should be able to move seamlessly between the in-store, takeaway and delivery service channels so that we offer even more convenience and better personalization”
Mcdonald’s invested upwards of $300 million in Dynamic Yield, an AI company that, essentially, uses predictive analytics to deliver personalized customer experiences on factors such as purchase history, weather, time of day ad more to create customized offerings.
Phase 3 - Structure and Culture Change
A large internal culture transformation drive with structural re-alignment with the customer (CX) function at the core and employee engagement that ensured their buy-in in the changes. In the CEO’s words - As I thought about this future, I concluded that we needed to remove some internal barriers and silos that ultimately lead to a fragmented customer experience. If we put our customers first, then our organization structure needs to reflect the customer experience we want to provide – not the other way around.
In 2021, the CEO announced the creation of a new Customer Experience team, bringing together the Corporate teams central to our “M-C-D” growth pillars - Global Marketing, Global Restaurant Development and Restaurant Solutions, Data Analytics, and Digital Customer Engagement.
McDonald's has existed on the bleeding edge of its industry for decades. While for much of the 20th century that meant formulating new food products and pursuing operational excellence, now it means embracing artificial intelligence (AI), advanced analytics and digital transformation.
CX led Transformation led to Growth -
McDonald’s is now able to set themselves above competitors by elevating their overall customer service experience. Not only did they see improvement in financial performance but also increased retention of existing customers and attracting new customers too. The brand perception improved a few notches too.
According to Accenture, McDonald's is one of 8% of companies who have boldly and successfully pursued innovation. As a result these “leading companies” have grown revenue at more than 2x the rate of those in the bottom 25% of the peer group in the study
McDonald's annual revenue for 2023 was $25.494B, a 9.97% increase from 2022.
Quoted from another CEO comment - Our very first value is, “We put our customers and people first.” At the heart of McDonald’s is the experience we offer, and for 65 years we’ve created indelible experiences for billions of people around the world. Along the way, we’ve always focused on following our customers’ needs, finding the most convenient and engaging ways for them to enjoy McDonald’s.
McDonald's is planning to open 10,000 new stores globally by 2027, in what the world's largest fast food chain says would be the “fastest period of growth” in the brand's history.
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