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Published on February 14, 2000

Listening to customers pays off

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Michelin Americas Small Tires executives have discovered that no company can expect to be everything to everybody and that listening to customers pays off. By choosing to supply fewer direct customers and striving to serve them better, MAST has all but solved its fill-rate problem and significantly improved its relations with dealers in North America.

In the process, MAST increased 1999 sales by 11 percent and raised its market share by an estimated two points.

These results were achieved with half the number of direct dealers the company had two years earlier.

That's a remarkable turnaround for a company that once offered its products to as many retail outlets as possible and had a reputation among dealers for being aloof and unsupportive.

Today, MAST rightly is focusing on being the best possible supplier to a select group of quality customers. It's also striving to work more closely with this group for mutual benefit.

In effect, the company has decided to become more customer-driven rather than focused primarily on product. In today's competitive environment, it will take that type of approach to sustain growth.

MAST's decision to alter its market approach was inspired, in part, three years ago when it initiated its Customer Value Analysis. This on-going survey of MAST tire dealers and distributors confirmed that the company had the highest quality products but scored poorly in service.

Using the findings of the CVA survey, MAST executives determined what they needed to do to improve delivery and better serve customers. The moves they made were gutsy.

Besides slicing the company's direct dealer base, they eliminated several sizable private brand accounts in an effort to improve manufacturing and distribution efficiency.

The moves have been effective. By the end of 1999, MAST's fill rate had improved to 90 percent and the company now has its sights set on reaching the 95-percent level.

What worked for MAST may not be right for every tire maker. But listening to dealers' needs and working together with them for mutual benefit is a lesson every manufacturer should take seriously.

MAST executives realized that for their company to grow they had to undertake some dramatic changes. To their credit, they made the tough decisions.

Most importantly, they are viewing their dealers as partners. This is an over-used term in the tire industry, as every manufacturer professes to be a partner with its dealers. But those manufacturers that truly listen and work with their customers are rewarded with increased sales and profitability.

MAST's recent financial results are testimony to that.

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