Speaking of tires, no one knows “Michelin”. When it comes to traveling and recommending gourmet restaurants, the most famous one is still “Michelin”. In recent years, Michelin has successively launched Shanghai, Beijing and other mainland Chinese city guides, which continue to cause a sensation. And its in-depth cooperation with local e-commerce companies such as JD.com has also accelerated its coordinated development with the Chinese market from its old business of tire manufacturing.

Ms. Xu Lan, Chief Information Officer of Michelin Asia Pacific, Chief Administrative Officer of China, and Chief Data Officer of China

An international brand with a century-old history has gradually come out of its own methodology in the process of further embracing the Chinese market. In a series of recent moves by Michelin, what is particularly striking is that Michelin, as a consumer-resistant product, resolutely entered the direct-to-consumer (DTC, Direct to Consumer) battle. And this is an eye-catching strategic innovation in the global development of Michelin.

“There are many innovative ways of playing in the Chinese market. To a large extent, the practice of the Chinese market is an important sample for Michelin worldwide.” Michelin Asia Pacific Chief Information Officer, China Chief Administrative Officer, China Ms. Xu Lan, chief data officer of the district, concluded in this way.

And this 19-year Michelin veteran is also a new function “slash manager” of the “trinity” of business, technology and management tailored by Michelin for the Chinese market. It is this organizational role that allows Xu Lan to successfully lead Michelin’s DTC strategy. So, as one of the leaders of Michelin China’s digitalization and a business leader with a technical background, what is Xu Lan’s insights today, and what transformation skills can he learn from? Below, through her dialogue with our reporter, find out.

“For cross-border brand Michelin, DTC is the only way to go”

As a well-known durable goods brand, what is the specific consideration of Michelin’s DTC (direct-to-consumer) strategy?

Xu Lan: In the Chinese market, Michelin’s business focuses on consumer-oriented car tires and services. It can be said that we are recognized as the “Leading Brand” in the tire industry. Compared with its peers, Michelin’s brand equity itself is very “cross-border”. The most famous ones are known as “Michelin Star Restaurant” ratings, food guides, etc., which have been passed down for more than a century.

Therefore, we believe that the biggest advantage of Michelin is the advantage of the brand. The richness of the brand allows Michelin to provide consumers with a more complete experience. Based on this advantage, we need to further strengthen the pulling effect of consumers, not just rely on channels. Of course, Michelin’s channel layout is relatively complete, but if we don’t add access to consumers, we may become a pure supplier. That’s something we don’t want to see, and that’s why we’re starting to think about direct-to-consumer strategies.

But the problem is that there is no ready-made platform that can be used “on the fly”. Looking at the world, there are very few market ecosystems that have so many different ways of playing and are so active and rich in China.

In the absence of reference samples, can you share with us the trajectory and unique experience of Michelin DTC and even digitalization?

Xu Lan: Globally, the Chinese market is at the forefront. The domestic consumer ecology is very rich. This is not a situation encountered by a Michelin company. This is precisely a special opportunity encountered by multinational companies today. The Chinese market has become a hotbed for cultivating innovation, and the innovative achievements emerging from China start to nourish the world.

In January 2021, Michelin China formalized the DTC strategy, which was the first thing I did as a CDO digital leader. At that time, the project team decided to start from the consumer side and officially start a new round of digital transformation.

We decided to open up channels and content through WeChat applet, a lightweight middle layer. First, within 3-4 months, complete the establishment of internal division of labor, carry out pre-adjustment and other work. Next, build new data capabilities. This is a key step, because Mini Programs are inconsistent with the requirements for traditional enterprise-level e-commerce platforms, and it involves the selection and construction of CDPs. Therefore, we have chosen our current partner. Everyone worked together to complete at least 80% of the data integration within 3 months, unifying the consumer information scattered in different business systems. In fact, the starting data volume when we went online reached 11 million.

From the official launch on November 25 last year to May this year, it took only 6 months for the membership platform based on the applet to hand over a beautiful answer sheet – 1 million new members and stable operation of 10% MAU (monthly active users ). Compared with the more mature brand WeChat applet that has been operating for about two years, this data is also very good, which makes us satisfied.

Its attempts in content are also quite innovative. For example, the experience of Michelin star restaurant under the category of “Life +” has better stimulated the interactive needs of consumers. In addition, other convenient and practical content such as event information and quick repair services are also very eye-catching. Because our purpose is never simply to attract fans, but to see the linkage effect of “data-business”, that is, how the growth of data in the front office leads to the business in the back office.

From the point of view of the marketing AIPL model, it is to open up the whole link “from A to L”. The good thing is that all the links are opened up through the unified platform of the applet, which also achieves a preliminary purpose of our initial DTC strategy. Now, compared to the development of small programs, we pay more attention to the “consumer operation” at the macro level, including multi-channel content operation capabilities, consumer mentality and analytical insight and other in-depth data operation capabilities.

“Transformation is a journey, spend more time choosing good fellow travelers”

We have seen that the short-term achievements of the Michelin Mini Program have been relatively bright. As the helm of this project and the “IT head” of Michelin China, can you show some effective and relatively mature methodologies for our reference?

Xu Lan: From a general perspective, Michelin’s positioning of DTC has always been clear, that is, to achieve brand integration and create a complete and optimal consumer experience. But how exactly? What is the most direct effect? This is mostly something CDOs need to consider. We are always looking for the ability of a partner that matches our big goals.

Based on this situation, as a CDO, I will also reasonably arrange the focus of my work, and put about 50% of my energy directly into digital business transformation. From a management perspective, we need to think more about how to build and empower teams, how to ensure the coordination of complex projects between various business departments, and how to ensure that the progress of projects is in line with the development goals of the company. The consumer-oriented DTC transformation project is a new topic for us, and there are not many best practices for reference in the industry, so better integration of partners’ capabilities is crucial.

According to the cooperation needs, Michelin’s digital partners are mainly divided into three categories: technical products, manpower supplementation and consulting services. For technical products, we pay more attention to productization capabilities when selecting models. It is also for this reason that we choose to join hands with the CDP platform based on Microsoft’s powerful technology and its ecological partners. In the overall transformation path, Michelin leads the direction, architecture design and methodology of the cooperation with Zhongda, but at the same time it also emphasizes the co-building of trust, and the teamwork on this basis is very energetic in solving problems. So far, the overall cooperation has been relatively pleasant and smooth.

We see that you have requirements for partners who work side by side on the digital transformation road, and the target pattern is also very clear. So how do you assess this journey with key partner Microsoft?

Xu Lan: Microsoft data services such as Databricks and other innovative technology services have provided great help. Microsoft continues to develop and progress in China, and its product standardization and technology updates are obvious to all. We have always been optimistic about its product iteration roadmap.

Each company has its own positioning and its own transformation path. For us, with the Michelin business as the core, we pay more attention to the functional value of technology in solving business pain points. Therefore, the choice of technical partners should be prudent. Michelin’s business reengineering and model innovation need to be supported by a stable technology platform enabler like Microsoft and a diversified and strengthened ecosystem.

“Transformation does not stop, looking at new opportunities in the supply chain”

Thank you for the wonderful angle. So based on the current achievements, what is the future trend and confidence of Michelin? What advice do you have for colleagues in the industry?

Xu Lan: With the deepening of the transformation, our work focus has expanded from the channel side and the consumer side to all levels of the enterprise, including digital supply chain, digital manufacturing, digital employee empowerment, etc.

In addition, I would like to share with other business leaders who are facing similar transformation challenges the “Measure Everything” method, that is, quantify and then analyze the results, and continue to use, learn and optimize. In fact, whether it is a technical flow type or a methodological type, the learning ability is particularly important, including the speed of personal learning, the specific practice situation, and the rise from the level of personal ability to the team, department and organization.

The essence of the transformation is to “advance with the times”, so Michelin does not particularly value the candidate’s experience. The original experience is likely to be forced to become “past tense” within two years, one year or even six months. Therefore, the talent we are talking about does not mean rich experience, but emphasizes outstanding learning ability. In the future, we also look forward to working with our technical partners, starting from DTC, and using diversified technological innovations such as AI, VR, and big data to feed back business innovation.