McDonald’s has been trying to turn around its sales by drastically expanding its menu with new offerings. This led to new problems including customer confusion, longer ordering and wait times, more work and pressure on staff, and higher prices from premium offerings. They recently announced plans to cut the number of items on its U.S. menus and use fewer ingredients in its food as it moves to speed up service, bolster sales - eliminating eight food items and five Extra Value Meals.
Chef/restaurateur/Food Network star Geoffrey Zakarian recently agreed with this move: "McDonald's should do what it does well. You get the feeling they're throwing things against the wall to see what sticks. You can't be all things to all people."
Geoffrey Zakarian must have read Michael Porter since he aptly stated the essence of Strategy: “You can't be all things to all people." Too many people confuse strategy with making moves and processes. Strategy means having a clear understanding of what makes you special and then having the discipline to focus only on those things that help you grow profitably based on your uniqueness. Find and be excellent in a niche whenever you can. Otherwise, competitors with broader resources can simply undercut you in price or offerings. You also risk being mediocre (neither special nor unique) in everything and excellent (with a unique and targeted value proposition) at nothing.
Michael Porter's definition of strategy:
The recent marketing moves (I daresay "fiasco") by Intuit with their TurboTax products will be a business school case study for years.
Intuit’s TurboTax products dominate the tax preparation software business with over 60% market share in 2013. For 2014, Intuit removed some functionality (e-file forms for some schedules) from their “TurboTax Deluxe” desktop product. This move would force many “Deluxe” users to upgrade to the more expensive “Premier” or “Home & Small Business” products. The problem was that the changes were noted in small print on their packaging and many long time Deluxe users falsely assumed that they could still get the latest Deluxe product for their 2014 taxes. Unfortunately, they ended up with a big surprise when the software program informed them that they needed to upgrade when they dealt with the missing forms. This also represented a rather steep 50% price hike for a former "Deluxe" product user to "get back" past functionality. Thus, a past “Deluxe” user might feel that their product got downgraded to make them pay more.
The uproar was huge with long time users calling Intuit out and urging others to switch to alternative products. Over 1,200 negative comments were posted on Amazon.com with users complaining of “rip off”, “bait-and-switch” and “price gouging.” Things only got worse when an Intuit Vice President replied online stating that the Deluxe product still had the forms – albeit that one had to manually complete them, which further infuriated users since that negates electronic filing and defeats the main purpose of software. Intuit’s competitors also saw this as an opportunity to grab market share with H&R Block offering their tax preparation software for free to consumers who felt cheated. News of the controversy was carried by national media, including the Wall Street Journal and NY Times.
What happened next?
Intuit customer service offered free upgrades for Deluxe users who called to complain. The list prices were also drastically dropped by 50% on their website during the week of January 19. TurboTax General Manager, Sasan Goodarzi,issued a public apology stating that they "messed up" and the company is offering $25 to customers who used TurboTax Deluxe and had to upgrade to file their 2014 return. Intuit CEO, Brad Smith, recently posted a mea culpa on LinkedIn that "The past two weeks have been a humbling refresher of this lesson for me and for our company.” (Perhaps not coincidentally, Intuit also recently posted the position of "Director of Product Management – TurboTax".)
So What Are the Lessons?
Perhaps it is best to let Brad Smith share his words from his LinkedIn post:
"When changing a product that has served a customer well for many years, whether it is a change to the user interface, a feature, or even pricing:
Proactively engage in dialogue: Reach out and share why you feel the change is necessary, asking for their input on how best to manage the change. Seek feedback in areas you may not have considered.
Ease customers through a transition: Change is difficult for anyone, and having a bridging plan will help guide customers. For years, software companies and social media sites have learned this lesson many times over when changing the layout and design of their home pages and news feeds. They often offer a transition period between “classic” and “new,” helping loyal users transition over time. The same holds true for changing features, or even pricing. Always consider a transition plan that is best for the customer.
Finally, respond when you hear the questions, and don’t wait until you have all of the answers: Where there’s smoke, there’s fire. Once the change is implemented, listen for the feedback and move quickly to acknowledge you’ve heard it. Share what you’re doing to resolve and address any issues with a sense of urgency and commitment.
And above all else, if you mess up, don’t be afraid to say you’re sorry and make it right."
Good words of wisdom and a decent example of public relations recovery from Brad Smith but I'd like to add a few more lessons learnt:
Frank Lio is a Product Manager, Strategist, and Change Agent in the Hi-Tech industry. His growing track record of successes include creating 3 winning software products, leading nationwide seminars, and turning around a failing business unit. He is currently serving a dual role as Product Manager and Business Team Support Manager at Instron ITW.
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