Is the Price-Shopper an Illusion?
How did David Copperfield make the Statue of Liberty disappear in 1983? How did Criss Angel levitate? How did Harry Houdini walk through a brick wall? I am not about to debunk the mysteries of these illusionists...but there is one illusion in the business of agriculture that deserves an investigation. That is the illusion of a price-shopper; the customer who is only interested in getting the lowest price.
November 27, 2014
The magic of an illusionist is to redirect your attention and take your eye off what is really going on. How often do those we deal with in business get redirected or lose focus on what they should be doing? Yes, price is important, especially with lower commodity prices. But farmers tell us that ag retailers who add value through their product knowledge, services and agronomic expertise are more successful. Those ag retailers who get lost in focusing on price negotiations quickly lose their trust.
We recently surveyed 1,894 farmers from across the US; from wheat growers in North Dakota to cotton growers in Texas and grape growers in California. We asked them what were the most important attributes when choosing an ag retailer to support? Farmers are not all alike and they want different things; there were three distinct differences in attributes that were important. The 1st group placed a greater importance on knowledgeable agronomists; the 2nd group placed a greater importance on obtaining good prices and the 3rd group placed a greater importance on reliable custom application. The segments were equally represented in the population.
Conventional wisdom would say listen to what your customers are telling you; and we discovered that some retailers are in fact doing just that. Farmers reported that the sales approach of the retailers somewhat paralleled what was important to them. But farmers say that a disproportionate number of ag retailers focus mostly on pricing and programs.
Here is where price becomes the distraction and conventional thought defies reality. In all cases the retailer whose approach was focused on providing agronomic advice or providing the best possible service was more trusted than those retailers where price was the focus. This was also true for the farmer who deems getting a good price to be the most important thing. Leading with price is not what builds trust.
At the end of the day, an ag retailer is selling crop inputs, and the farmer trusts those retailers who are competent, know their product and provide great service. Why is trust important? When trust is established in a business relationship a greater percentage of business is done with that retailer. Those retailers who are highly trusted get more of their customer’s crop input business than those who are not trusted.
The illusion of the price-shopper has been debunked. A competitive price is an expectation, but to earn the right to do business with a farmer an ag retailer needs to go deeper in their approach and bring added value in terms of expertise and service.