Retailers Who Deliver Agronomic Services Have More Influence: US Channel Power
Key findings from 2017 US Channel Power study for retailers now available.
In order to strengthen their position, ag retail organizations need to keep up with the changing needs of their farmer customers. In April 2017, we surveyed 1604 farmers across the United States to determine their perceptions of ag retailers, and the key findings are now available.
The Value of a Loyal Customer
The study allowed us to identify what strategies are being implemented by the leading ag retail organizations to gain share of customer, and what keeps their customers coming back.
Our findings validated the notion that loyal customers are an ag retailer’s most valuable asset. For all retailers in the Midwest, crop input share of customer was the highest among farmers who indicated a high level of loyalty to their retailer, and 92% of those loyal customers were willing to recommend their ag retailer to another farmer.
In terms of retailer perceptions, findings of the study revealed commonalities across all three regions surveyed: farmers value retailers who offer good prices, who are trustworthy and are reliable when it comes to product availability. However, we found that farmers are different—even within each geography—in the way that they rank the importance of price, service and agronomic advice.
Interestingly, we found that ag retailers who offer agronomic services have more loyal customers: out of the farmers surveyed in the Midwest, 63% were committed to their retailer when they received agronomic services from them. That number is substantially lower at 17% when their retailer does not provide them with agronomic services.
When we looked at that from a crop inputs decision-making standpoint, we also saw the increased influence that an ag retailer has in those decisions when they provide agronomic services:
- 64% of farmers surveyed indicated their retailer had a strong influence on their fertility decisions when their retailer delivered soil sampling services, as opposed to 25% when soil sampling services are not delivered.
- When asked about crop chemical decisions, 73% of farmers said their ag retailers had a strong influence when they delivered crop scouting services. 36% of farmers say the same when no crop scouting is done by their retailer.
The highest number of farmers surveyed in the Midwest indicated their retailers most often lead with a focus on pricing and programs, but we found this approach is the least effective in getting share of customers’ crop input business. Instead, delivering the best possible service is the sales approach that delivers the highest share of customer for retailers.
Opportunities and Threats to Retail
That being said, the future of retail organizations is evolving. 16% of farmers in the Midwest are currently seeking an independent agronomist’s help to scout their fields for weeds, insects and disease; and that number increases as the farm size grows. When that happens, retailers lose their ability to influence the crop chemical decisions.
We also found that as farm size increases, farmers take a more transactional approach to business; that is, less emphasis on the relationship they have with their ag retailer and the services offered by them, and more of a focus on price as a leading decision-making factor.
Transactional farmers are the least loyal customer segment in the Midwest. Ag retailers may want to carefully consider this as they think about opportunities and threats their organization will be faced with and their plans for future success.
Strategies for Ag Retail Growth
What are the top-performing retail organizations doing to meet the needs of their customers and retain them? In our report, we provide a more thorough competitive analysis that lends insight to US ag retail organizations looking to strengthen their position and design the right initiatives to build customer loyalty and long term commitment. The report includes findings from the South, West and Midwest US.
Contact me at (204) 745-5853 or KristaMacLean@StratusResearch.com to obtain more information.