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Why Are We Losing Customers?

Why Are We Losing Customers?

A few months back Fortune magazine published an article about how over the past few years McDonald’s has been losing market share, losing sales, and losing its identity. (http://fortune.com/2014/11/12/can-mcdonalds-get-its-mojo-back/).

Of course, many factors are at play. However, a prime culprit seems to be that McDonalds has lost sight of its competitive value equation – what customers experience compared to what they pay, at McDonald’s versus its competitors.

Some of the value attributes weighted in McDonald’s favor – like fast and convenient – have been losing ground in relative importance to other attributes such as fresh and healthy. Not good news, especially considering Nation’s Restaurant News recently published customer research that placed McDonald’s food quality last among hamburger chains.

In a recent debacle, McDonald’s released ‘Mighty Wings’. Market taste testing suggested these Hong Kong-style, spicy wings would be a hit. Yet the release crashed, leaving McDonald’s with 10 million pounds of unsold chicken! What happened? Customers apparently balked at the high price point … because McDonald’s failed to make clear that what customers were getting was giant wings. McDonald’s assumed customers would understand the value. Customers assumed they would pay more for less.

And with a menu that has increased fourfold over the past 10 years to over 120 items, what is it exactly that McDonald’s stands for?

What does this mean for you? 1) Identify your distinct customer segments. 2) Determine the attributes that drive value for each segment, and the relative weighting of those attributes. 3) Establish your competitive position based on the value attributes you can best deliver on. 4) Repeat the process regularly to stay relevant in an ever-changing market.

Your thoughts?

Michael