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

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
LegislationTFI Praises White House For Signing WRRDA Into Law
June 11, 2014
The bill streamlines U.S. Army Corps of Engineers projects, prioritizes authorized waterway improvements and provides needed adjustments to the Inland Waterways Trust Fund. Read More
Allied Cooperative Grain Plant
ManagementAllied Cooperative, Arcadia Co-op Plan Merger
June 10, 2014
The Board of Directors of Allied Cooperative and Arcadia Co-op recently signed a letter of intent for a merger between the two cooperatives. Read More
EmployeesSyngenta: ‘Take Charge’ Of Farm Safety
June 4, 2014
Syngenta and health officials warn of four health-related challenges in agriculture and how they can be managed. Read More

Trending Articles

EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More
EquipmentGPS: 25 Years And Still Growing
June 2, 2014
The evolution of global positioning systems applications in agriculture remains ongoing as the technology hits a notable milestone. Read More
CropLife 10013 Key Acquisitions Pinnacle Has Made In The First Half Of 2014
May 29, 2014
The only thing that has reached a more frenzied pace than #plant14 might be the multiple acquisitions that Pinnacle Agriculture Holdings has made in the first half of the year. Read More

Latest News

Soybean Field
InsecticidesTranform WG, Closer SC Insecticides Receive R&D 100…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More
EquipmentKinze, Raven Team Up On 4900 Planter Monitor
July 23, 2014
Kinze Manufacturing announces a partnership with Raven Industries to develop a standalone monitor solution for the Kinze 4900 series planter. With this new Read More
LegislationNew Farm Bill Continues To Confuse As Growers Await USD…
July 23, 2014
The new five-year Farm Bill eliminates many of the direct payments previously payed to growers and could benefit from USDA clarification, reports a Toledo Blade columnist. Read More
EquipmentPrecisionAg.com Relaunches With Responsive Design For M…
July 22, 2014
PrecisionAg, the worldwide leader in precision agriculture information and analysis, announces the launch of its completely redesigned website, PrecisionAg.com. Read More
FungicidesEPA OKs Two Willowood Fungicides
July 21, 2014
The EPA has approved Willowood Azoxy 2SC and Willowood AzoxyProp Xtra. two widely used broad spectrum, preventative fungicides with systemic and curative properties. Read More
Precision AgFarmers Learning Fast As UAVs Take Off
July 17, 2014
Farmers and others interested in how UAVs can be used in agricultural applications were able to learn more about the technology during the recent Precision Aerial Ag Show. Read More
CropLife 100Bobby Knight, Richard Petty To Highlight Ag PhD Field D…
July 17, 2014
Attendees at the July 24 Ag PhD Field Day at Hefty Farms will learn about the latest agricultural technologies, and get a chance to meet legendary sports figures Bobby Knight and Richard Petty. Read More
WebinarsUpcoming Webinars
July 17, 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
A finished Willmar 16-ton side-shooting tender.
TendersNew Production Facility Helps Willmar
July 17, 2014
In 1963, a group of businessmen started Willmar. Today, a half-century later, the company is one of the ag industry’s longest-running brands. Read More
FertilizerCF Industries Sells Carbon Credits To Chevrolet, Donate…
July 17, 2014
CF Industries has completed the sale of a large block of carbon reduction credits to Chevrolet, and will donate the net proceeds of $600,000 to the National FFA Foundation. Read More
CropLife 100Grainland Cooperative, Minier Cooperative Grain To Merg…
July 17, 2014
The shareholders of Grainland Cooperative and Minier Cooperative Grain Co. approved a merger of company operations effective August 1, 2014. Read More
ManagementStudy: Drought Costing California Billions
July 17, 2014
A new study has found the drought has cost the state $2.2 billion, primarily in lost farm revenue and wages. Read More
FertilizerCF Industries Resumes Production At Oklahoma Nitrogen C…
July 17, 2014
The company had shut down production at the Woodward, OK, facility in April to address an issue in one of the site’s boilers. Read More
CropLife 100Wilbur-Ellis To Relocate Agribusiness Division To Denve…
July 16, 2014
The move Eastward will allow Wilbur-Ellis’ Agribusiness Division to be more accessible to relevant geographies and is expected to enhance communication and collaboration among the division’s nearly 3,000 employees. Read More
Soybean field
FungicidesValent Launches New Seed Protection Fungicide For Soybe…
July 16, 2014
The INTEGO SUITE System contains the first new, novel seed protection fungicide chemistry registered in 30 years by the EPA for protection against Pythium and Phytophthora. Read More
Crop InputsSyngenta Drive To Thrive 10 Finalists Announced
July 15, 2014
Finalists are chosen based on the quality of their essays and photos depicting what makes them thrive. Read More
FertilizerHow To Minimize Phosphorus Losses In Runoff
July 15, 2014
Phosphorus losses from agricultural fields can be divided into three categories: flash losses of soluble phosphorus, slow leak losses and erosion events. Here's how to minimize losses in each instance. Read More
ManagementCalifornia Drought Threatens To Dry Up Farm Wells
July 15, 2014
Farmers hit hardest by California's drought could begin to see wells run dry next year, according to a new study by The Center for Watershed Sciences at the University of California, Davis. Read More