Q: When is your customer not your own?
A: When that customer also is your dealer’s customer.
Manufacturers have been struggling for years to find ways to build relationships with customers who purchase their products. The challenge is always that those customers do not purchase products directly from the manufacturers; rather, they by directly from dealers who then have the relationship with the customer.
Ultimately what lies behind manufacturers attempts to build relationships with customers is channel conflict.
The dealer is afraid that the manufacturer will build a relationship with the customer thus making the dealer’s customer relationship less important or irrelevant. In addition, the dealer is also afraid that the manufacturer may steer customers to other dealers, or entice them to purchase less profitable products.
The other party in this relationship — the manufacturer — is concerned that the dealer may not represent their products well, may steer those customers to competitive products, or sell a mix of products that do not maximize the manufacturer’s profit margin. Does that sound familiar?
In addition, the dealer knows that the manufacturer obtains and controls leads. The dealer is concerned that the leads may go to their competition, and that the leads they receive may not be high quality, requiring extensive effort from the dealer sales team without any achieving sales results.
So given this maze of concerns and conflicts, should the manufacturer simply give up and rely on product development and mass advertising to generate overall business growth?
Many manufacturers have taken this point of view. However, those companies acknowledge the inherent conflict and deal with it directly will be the ones that win.
Ultimately, both the problem and solution lie with data.
Leading manufacturers who are building close relationships with their dealers are obtaining, using, and sharing customer data in transparent, new ways. The best manufacturers are characterized by 3 common approaches to reducing or eliminating channel conflict with their dealers:
1. Agreements are made between companies and their dealers to share data transparently. The dealer agrees to share transaction data on the company’s products and how those products compare to the competition. The manufacturer agrees to share leads, lead conversion and dealer performance with the dealers, compared to competition.
2. The manufacturer provides their dealers with technology that an individual dealer would never be able to afford on their own, enabling those dealers to engage with their customers across multiple channels. Dealers are equipped to build their own brands within a consistent structure provided by the company.
3. Marketing initiatives from the manufacturer are measured consistently and the results are shared with the dealers–both the good results and the failures.
Trust is not something that is built overnight; rather, it is cultivated consistently over months and years. The development and sharing of customer data between manufacturers and dealers provides the framework for that trust, accountability and transparency.
If you are not working aggressively to build that trust with your dealers, your competition probably is.
