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Tuesday, November 14, 2006

Should a manufacturer profit from selling leads to their sales channel?

There is a war raging in the automotive industry over sales leads.  The question automotive executives must ask themselves is should we profit from sales leads we pass on to our sales channel?  In the past the question has been answered easily.  Manufacturers would conduct advertising, direct mail campaigns, and other marketing techniques to drive customers to the point of sale where the transaction takes place.  If sales leads were generated from these activities they were passed on for free or a nominal charge to the sales channel.  Then along came the Web.  As consumers and businesses flocked to the Web to conduct research on their next vehicle purchase, auto manufacturers have cooked up schemes to change the business model and organize entire companies, divisions and groups within their corporate structure to profit from passing sales leads onto their channel.  While I can understand the need to provide these services at cost, I don’t understand the profit motive in this.  Aren’t manufacturers and their sales channels in the selling game together?  Shouldn’t manufacturers concentrate their funding and energies on making their products more desirable and marketable vs. building up departments and groups to profit from lead generation?  Should profits coming from the Web be used in more effective ways to drive more sales vs. going into the corporate chauffeurs?  It’s high time for the auto industry to wake up and stop trying to profit from marketing services they provide to dealers and start helping them do everything they can to sell more products -- more effectively.

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