Do Your Customers Love You?

One of the biggest problems worrying ag retailers is customer loyalty. There is a rural legend that customers are not as loyal, and relationships mean less than they used to. While this may be true on the surface, I think the greater issue is asking why this might be happening. Many ag retailers have convinced themselves the loyalty issue is beyond their control, and there is little they can do to improve profits through greater customer loyalty. This column is the first in a series that will explore customer loyalty. I will review how leading companies in highly competitive markets outside of agriculture are finding innovative ways to improve loyalty and add profits to their bottom line. We will start with some general concepts and move into specifics.

Many studies have shown that satisfaction is a weak predictor of customer loyalty. In the late 1990s, Xerox shattered conventional wisdom by demonstrating that its totally satisfied customers were six times more likely to repurchase Xerox products during the next 18 months than its satisfied customers. The implications were profound: Merely satisfying customers who have alternative sources is not enough to ensure loyalty. Studies by other researchers has confirmed — the more competitive the market, the greater the difference in loyalty between merely satisfied and completely satisfied customers. 

In the ag market, products and services are easily duplicated, and what one retailer innovates, others quickly copy. As we know, the market is very competitive. If achieving complete satisfaction in this type of market is a requirement for loyalty, what is needed to produce complete satisfaction? The only way to understand loyalty is to identify and measure the customer experiences that drive satisfaction and hence, loyalty. In ag, delivering a superior customer experience may be your only sustainable differentiator. Achieving this, however, is more difficult than it seems, and there is typically a significant gap between management’s perceptions of the customer’s experience and the customer’s.

Survey Results

In 2005, Bain & Co. surveyed 362 firms and found that 80% believed they delivered a “superior experience” to their customers. When they asked customers from these companies about their own perceptions, only 8% of companies were rated as delivering a superior experience. This disconnect between customer and company perceptions sets up a perfect storm of potential defections, because management can’t focus on problems they can’t identify and quantify. A key step in our journey is to ask yourself, “why would my business be any different?”  

The objective of this series of articles is to help you manage the key customer experiences that lead to customer loyalty and a sustainable competitive advantage. Positive customer experiences increase your odds of loyalty, category penetration, and revenue growth per customer. Negative customer experiences create dissatisfied clients who look elsewhere to satisfy their needs.

AgKnowlogy‘s customer experience model is shown in the above diagram. To summarize, customers with unique needs give us a share of their business in response to the quality of their experience when they interact with us. Think of these experiences as touch points along a customer corridor. Typically, companies rationalize the results they have with customers (and prospects). Because customers have options in choosing a company to meet their agronomic, grain merchandising, and risk management needs, it is critical to identify which experiences are most important in terms of loyalty, and measure how your company performs on these relative to competitors. 

A problem with customer satisfaction is that measuring it does not tell you how to achieve it. It is essentially the culmination of all the customer’s experiences with your company. Think of it as the net result of the good experiences minus the bad ones. To understand how to achieve total satisfaction, a company must measure customer experiences at the touch points along its customer corridor.

Without measuring key customer experiences and mapping these to loyalty it is difficult to know where you are vulnerable, and where you are aligned with customer needs. If the barriers between yourself, customers, and prospects are not identified and quantified, efforts to achieve improvement are often unfocused and payback is uneven. Finally, without benchmarking your performance to competitors, it is difficult to determine if the improvements that are made are meaningful to customers.

Here are some points to consider in deciding if you should implement customer experience measurements within your business:
   •   Insufficient or no objective measurements on what is important to customers.
   •   No verifiable data on how you are performing on what matters most to customers.
   •   Can you benchmark your performance relative to competitors on the customer experiences that drive loyalty?
   •   Are customer experience measurements being used to redesign service (and potentially product) delivery to customers?
   •   Insufficient collaboration among employees to implement change based on customer experience.

Customer experience management will produce financially rewarding results for companies that implement a disciplined approach to gathering and utilizing “Voice of Customer” input. Ag retailers and grain merchants can increase their share of customer business, improve loyalty, and take their business to a higher level by rethinking their current approaches to customer loyalty. I look forward to presenting my thoughts on this topic, and welcome your questions/observations.

Leave a Reply

Management Stories

StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More
EmployeesAsmark Institute Dedicates New Training Center To Ford West
August 6, 2014
The Asmark Institute plans to recognize the retired industry leader's years of service to the fertilizer industry at the new state-of-the-art facility in Owensboro, KY. Read More
LegislationUSDA: Quick Implementation Of Disaster Assistance Programs A ‘Top Priority’
July 9, 2014
USDA has processed 106,000 payments to farmers in 40 states across the country who suffered livestock and grazing losses between Oct. 2011 and passage of the 2014 Farm Bill. Read More

Trending Articles

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More

Latest News

FertilizerFertilizer Outlook And Technology Conference Set For No…
September 30, 2014
Conference participants can expect to gain perspective on the outlook for agriculture and major fertilizer materials and inputs from industry experts. Read More
MicronutrientsVerdesian Acquires Micronutrient Supplier
September 30, 2014
Verdesian Life Sciences has acquired QC Corp., a producer and supplier of granular and dry micronutrients and ferrous sulfate products. Read More
Eric SfiligojHearing From Young Ag Voices
September 30, 2014
Potential future leaders in ag retail had the chance to shine at the recent Mid America CropLife Association meeting. Read More
WebinarsUpcoming Webinars
September 30, 2014
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
Crop InputsSyngenta Appoints New Chief Operating Officer
September 29, 2014
Jon Parr will succeed retiring COO John Atkin at the end of the year. Read More
CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facili…
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
CropLife 100GROWMARK Announces Vice President Appointments
September 25, 2014
Two individuals have been appointed Vice President positions on the GROWMARK executive team. Read More
FertilizerFertilizer Industry Organizations Join Global Alliance …
September 25, 2014
The Fertilizer Institute, the International Plant Nutrition Institute and the International Fertilizer Industry Association are encouraging the industry to promote the proper use of fertilizer products to minimize their environmental impact. Read More
Precision AgARA Organized Precision Forum Hits Capitol Hill
September 24, 2014
The Coalition for the Advancement of Precision Agriculture (CAPA) hosted its inaugural Precision Ag Forum, Sept. 18, in Washington, D.C. Read More
FertilizerFactors To Consider When Placing Fertilizer With Seed
September 24, 2014
The type of crop, fertilizer source, row spacing and soil environment all affect how much fertilizer can be safely applied with seed. Read More
FertilizerSidedressing Manure Into Corn Has Promising Results
September 24, 2014
Applying manure to growing crops can boost yields, reduce nutrient losses and give livestock producers another window of time to apply manure to farm fields. Read More
FertilizerWhen To Sample Manure For Analysis
September 24, 2014
Because the goal is to collect a sample that represents the manure actually being applied, the best time to sample is during loading or field application. Here's why. Read More
Syngenta
Seed/BiotechSyngenta Faces Second Lawsuit Over Agrisure Viptera Cor…
September 23, 2014
A second company has sued Syngenta AG over sales of genetically modified corn seed not approved by China. Read More
StewardshipCover Crops Field Guide For Farmers Expanded
September 23, 2014
Farmers interested in planting cover crops to improve soil health now have an updated and expanded resource in the second edition of the Midwest Cover Crops Field Guide. Read More
HerbicidesArysta LifeScience Launches Contest For Wheat Growers
September 23, 2014
The Flush after Flush Photo Finish contest encourages farmers across the U.S. to participate through Instagram or Twitter using the hashtag #FlushAfterFlush. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions Wit…
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
StewardshipProgram To Examine Ag-Related Practices, Policies To Pr…
September 22, 2014
A panel discussion on October 14 will include a significant discussion on key issues and solutions related to all aspects of harmful algal blooms. Read More
Eric SfiligojIt’s Product Of The Year Voting Season
September 22, 2014
Readers of CropLife IRON will choose 2014’s best new product over the next month. Read More