Mark Lollback’s big regret as McDonald’s CMO: Flushing ‘$3m down the toilet’ on Salesforce
In his four years as chief marketing officer at McDonald’s, Mark Lollback regrets spending too little time on media – “probably less than 5% of my time” – and too much money – $3m – on CRM service Salesforce.
“I think we’re all guilty, and I say this as a marketing guy, I think we’re all guilty [of] chasing down the next Holy Grail that’s going to solve our business problems,” said the former CMO and current chief executive of WPP’s media investment arm, Group M. “Whether that’s buying a Salesforce CRM system or whether it’s doing whatever, and I personally blew $3m on Salesforce at McDonald’s. I thought it was gonna be the Holy Grail.
“I got the sales pitch, I bought it, we execute it, total waste of time. We wound it back, and said ‘That was a waste of $3m’. I never said that to the board, it was a great investment [according to what I told them]. But, in reality, we blew $3m down the toilet.”
Lollback and Wilson spoke at the conference in a session moderated by Mi3’s Paul McIntyre
Lollback led the fast food company to double-digit growth for three years in a row, in a category that was only growing “2 or 3%”.
“Why? Because we went back to the real fundamentals of understanding the business, understanding the consumer, innovating, and spending a lot of money. None of that 12% came from a CRM system,” he said.
When asked at yesterday’s Future of TV Advertising conference whether it was ‘negligent’ to have spent such a chunk of money on Salesforce given it didn’t yield results, the Group M leader was forthright.
“Yeah, in hindsight, yes,” he admitted.
“And again, we bought the Holy Grail. The business was struggling, we were doing whatever the Holy Grail was, and we’ve all heard it. Wouldn’t it be amazing if we fully control a one-to-one consumer experience and engagement and messaging. That’s what we need. Don’t need an agency, don’t need television networks, I’m just going to go to every single one of our customers every day one-on-one. It’s just bullshit. You just can’t do that.
“Are there tools out there that are useful? Yes. Are there tools that will help marketing people have more insight, whether that’s Adobe, whether in the right environment, a CRM system can work? For us, it just wasn’t right.
“Most of the marketing people I meet, when they hear about all this different tech, what they don’t have is an independent person who doesn’t care what they buy to talk to, to say, if I bought this, what does it really do? How does it plug into your systems? And how will it make you generate better returns for me? That’s what we’re [at Group M] trying to do very extensively. We’ve set up centres of excellence, we’ve trained lots of people, we’re hiring new talent and upskilling our agencies so that we can be that partner for our clients and make sure the money isn’t being diverted and that it contributes back to media.”
Lollback and fellow panellist Mike Wilson, chair of Havas Media, also turned their attention to a conversation that has ripped through the industry over the past 12 months: pitching, and paying agencies, fairly. When asked what he would focus on if he returned to a client-side marketing position, Lollback was decisive.
“I would certainly pay my media agencies fairly.”
The CEO tore into – and suggested tearing up – malus clauses in client contracts. Clients who don’t want to engage in a good faith relationship with you aren’t those you want a relationship with, he argued.
Lollback was at McDonald’s from 2012 to 2015 (Photo by Joiarib Morales Uc on Unsplash)
“The world has gone crazy, particularly for global pitches, where price’s just become everything,” Lollback said.
“And everybody in the industry who’s on our side just looks at it and go ‘It’s just the rest of the world’. But everybody ends up getting hurt and there’s malus clauses and whatever else. I would say they’re more to do with certain categories, big global clients, and as much as some of them stand up on stage and talk about how they want to keep their agencies, in reality, they don’t. It’s all price, price, price.
“I had a client saying to me, we did amazing, amazing work for them. The strategy was taken global, they were the fastest growing company in the organisation worldwide here in Australia on the back of the strategy, and you get the phone call to say, ‘You need to reduce my media cost by 20%. And the team by 20%’.
“You just go ‘You know what, I don’t need you as a client, I can’t do it. Go pitch, do whatever you like, we’re not going to take you as a client’.”
Was he talking about Procter & Gamble, which famously switched from Group M’s Mediacom to Publicis’ Starcom in one of the biggest account moves of 2018? Lollback couldn’t say, but Wilson sat beside him, nodding.
There’s a global account review at the moment, Wilson added, “where the client spends over $500m around the world” but “the Australian team’s contribution to that review was nine cells on one Excel spreadsheet of some unit costs”.
“And we’re probably the third or fourth most important market for that client in the world. That’s an extreme example, but it’s a correct example,” Havas Media’s founding CEO said.
“You’d be very aware that there’s the start of a movement now of agencies walking away from untenable conditions in pitches. That happened quite publicly, famously last year in this market. I’ve walked away from three in the last six months. Just won’t do it.”
That pitch was for Kellogg’s’ account, which also went to Publicis after being called out at Mumbrella360 by Initiative’s global CEO Mat Baxter for unreasonable pitch conditions, including 120-day payment terms.
At the time P&G pulled its account from Mediacom, it was understood one of the pitch’s sticking points was also 120-day payment terms.
Lollback concluded that changing the client-agency relationship is possible. At McDonald’s, it started with the contractual relationship.
“Personally, I’d tear up malus clauses and throw them out. I think they’re an absolute waste of time,” he said.
“You should have a trusted relationship with your agency, joined at the hip. When I was running McDonald’s, we put all our agencies onto a bonus system that was the same as mine. So I got my bonus, you got your bonus.
“I didn’t have agency KPIs or media KPIs or CPM KPIs. It was ‘Guys, here’s what my bonus looks like. Here’s what we have to achieve to hit my bonus. If I get it, you get it’.
“We changed the whole bloody relationship. I’d rather have those relationships with clients.”
McDonald’s is currently on the hunt for a new CMO following the departure of Jenni Dill.
Brittney Rigby was Mumbrella's deputy managing editor - news and analysis. She left Mumbrella in April 2021.
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Think that’s supposed to be “malus”, not “malice”?
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Hi Alex,
Indeed. What an unfortunate, if not amusing, typo.
Thank you for flagging. It has been amended (but I think I preferred it before!)
Vivienne – Mumbrella
Good to hear a senior executive talk about their transformation disasters, particularly outing a vendor like Salesforce too.
Does anyone remember which listed realestate group dumped SF after a botched transformation, and booked a significant write down as a result.
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Always refreshing to hear some honesty about past mistakes – and how they influence future learnings. There was a lot of integrity on the stage for this panel.
It’s pretty clear that the issue with maccas move to use Salesforce and CRM was misguided because there wasn’t a clear strategy or the right objective. It doesn’t mean Salesforce is a shit product suite – quite the opposite. Clients just need to know what they need it for, and how to implement it properly to achieve that – and have an agency partner that is clued up to help them navigate it.
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I was today years old when I found out it wasn’t actually called a Malice Clause
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“Understanding the business, understanding the consumer” – put that first, and only then the systems and the platforms. It’s all about the order of operations.
Makes a lot of sense for platforms and agencies to be helping answer those fundamental questions first, so they don’t end up being the (sometimes inadvertent) cause of the next marketing dumpster fire.
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Interestingly while Salesforce obviously didn’t work for them (in Oz, or globally I wonder?) McDonald’s bought a company called Dynamic Yield last year – which is entirely around 1:1 personalisation. It’s behind things such as the in-store electronic screen ordering, and things like car licence plate recognition in drive-through in the States. Broad sweeping statement like “I’m not going to all of my customers one-to-one” simply aren’t true…..because they are. It’s just not powered by Salesforce anymore.
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If you did the ROI projections, then you would have found the answer prior to implementing a Salesforce CRM solution. Payback potentially could have taken up to 34 years.
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The power of Salesforce seems to lie more when you have a customer base who purchase and engage online – I struggle to see its use it as a tool for a vague attribution model tracking online to in-store behaviour.
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Perhaps that’s because Mark Lollback left McDonalds 4 years ago so can only talk to his experience before leaving?
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