In today’s highly competitive market, it is difficult to achieve a sustainable competitive advantage without achieving superiority in service delivery. As part of AgKnowlogy’s Customer Experience Monitor, we measure the willingness of growers to recommend their Primary and Secondary retailers to another grower. When this willingness to recommend is analyzed from many growers, a Net Promoter Score can be calculated, which is a comparison of the percent of Promoters vs. Detractors within a retailer’s customer base and trading area. Promoters are highly willing to recommend you, while Detractors won’t recommend you, and actually look for opportunities to tell other people about their concerns. Passives are vulnerable customers who are receptive to competitive offers.
Here is why you want to care about your Net Promoter Score, particularly if you want to grow your seed business: The “willingness to recommend” is highly correlated to loyalty and the current share of business customers give their Primary and Secondary retailers. AgKnowlogy recently completed Customer Experience Monitor projects that measured how willing growers were to recommend a full service retailer to another grower vs. their willingness to recommend a farmer dealer seed specialist. We expected farmer-dealer seed specialists would have higher Net Promoter Scores vs. full service retailers, but were surprised at how big the advantage was. The Net Promoter Score for several leading full service retailers was quite low at about 20%, while the Net Promoter Score for a Pioneer or DEKALB farmer seed specialist was typically about 60%.
Having More Promoters
In other words, the farmer seed specialists had considerably more Promoters within their customer base and prospects in their trading area than the full service retailers we compared them to. Conversely, the full service retailers had more Detractors than the farmer seed specialists they compete with. Remember — a retailer’s Net Promoter Score is calculated by subtracting the percent of Detractors from the percent of Promoters. These segments behave very differently, and this has significant impact on your business.
The graph shows full service retailers receive approximately 60% of the available business from Promoters, and only 19% of the available business from Detractors. If full service retailers have more Detractors than farmer seed specialists, and Detractors give less of their available business to a retailer; then this has serious implications for growth in the seed category for many full service retailers.
I suggest calculating a potential seed opportunity for corn and soybeans per acre based on receiving 100% share of business. Then estimate the financial impact per acre on your seed business from Detractors using the approximate numbers in the Share of Business graph. If we are correct and there is roughly a 40% “hit” from Detractors, this represents a formidable challenge to full service retailers as they attempt to organically grow their seed business.
More Emphasis On Seed
As we all know, there have been extensive mergers among ag retailers over the past decade. At the same time, the value of corn and soybean seed has increased due to the trait package in current hybrids and varieties. Consequently, retailers have seen the value of their seed business expand significantly. I suggest, however, the two trends of mergers and trait value can mask the important question of whether you are growing your share of your customer’s seed business.
At the same time, our focus always needs to be on customers first. Unless we truly understand the needs of customers in our local market and how we perform relative to those needs, it is difficult to focus improvement efforts precisely enough to achieve sustainable results.
The information AgKnowlogy is uncovering with the Customer Experience Monitor represents real strategic insight for full service retailers. We believe there is a bigger opportunity trying to grow at the expense of farmer seed specialists rather than attempting to take share from other full service retailers. By identifying the customer priorities and experiences that drive customers into Promoter, Passive, and Detractor segments, full service retailers can make improvements that will increase the percent of Promoters within their business. If you would like more information on the performance evaluations we have made between full service retailers and their farmer seed specialist competitors, please contact me.