Seed Money

In my September column, I discussed data from AgKnowlogy’s Customer Ex­perience Monitor showing full-service retailers often have a lower Net Promoter Score (NPS) for seed vs. farmer-dealer seed specialists. While a full-service retailer might have a NPS in the 25% to 35% range, a Pioneer or DeKalb seed specialist could often have an NPS in the range 55% to 70%.

Retailers ask us what is a good NPS. Each industry is different based on customer expectations and the performance of companies in the sector. For companies in the banking and cell phone businesses, low scores are common. To date, we are not seeing the high scores in ag retailing that retailers assume. There is much work to be done. This column discusses some of the financial impact of Passives and Detractors on your seed business.

Setting The Table

In our work with retailers to uncover their local drivers of loyalty, the concept of “consideration set” is useful. Imagine its time to replace your family car. What manufacturer is your first choice and who else would you consider? Is there a maker you would not consider based on your past experience or comments you have heard from friends? Growers also have a first and second choice of retailer for their crop inputs. Whether you are in the Primary or Secondary position in their Consideration Set has serious consequences related to loyalty and profitability.

The graph compares the total share of business a retailer has received from customers with his Net Promoter Score by category. The highest share of business is in fertilizer (86%) from customers who consider the retailer to be their Primary supplier for this category. Notice the total share of business drops to 49% in fertilizer for customers who consider the retailer to be their Secondary supplier.

In every category, the retailer receives less share of business from growers who don’t consider him to be their Primary retailer. Some readers believe the sales split in a category between Primary customers and Secondary customers is driven by distance from the plant or other easily understandable factors. While these play a part, we believe share of business (for example, the split between Primary and Secondary) is mostly driven by the experiences customers have with you and conversations with other growers.

The retailer’s Net Promoter Score is highest for fertilizer at 29%. The share of business in each category clearly follows the Net Promoter Score. Looking at seed, we see the retailer’s share of business is only 41% among customers who consider him to be their Primary seed supplier, and only 23% among customers who consider him to be their Secondary supplier. This low share of business is a result of the retailer’s low NPS of 15% for seed. A Net Promoter Score is calculated by taking the percent of Promoters for a business minus the percent of De­trac­tors. Customers and prospects in the Passive segment are not included in the calculation of an NPS. In our example, an NPS of 15% means there are not that many more Promoters vs. Detractors. To demonstrate how large the financial impact is from Passives and Detractors, I will use our findings in seed from the same retailer.

I have shown how the spending lag caused by reduced share of business in the seed category is leaving significant revenue on the table for the retailer in question. The retailer’s Net Promoter Score in seed is 15% (percent of Promoters minus Detractors). The average acres for each customer segment is shown, which allows us to estimate the total acres for each customer segment. Passives on average spend $16 less per acre on seed with the retailer as a consequence of their reduced share of business.

Detractors on average spend $21 less per acre on seed with the retailer. The estimated impact for Passives and Detractors is calculated by multiplying the spending lag times the acres from these customers. The total estimated impact in seed alone from Passives and Detractors is approximately $1.5 million from the 177 customers we studied.

A Big Impact

Across all the retailer’s customers, this financial impact would be much larger. Clearly, this potential upside won’t be captured in one year. Perhaps a reasonable target would be 50% of the upside over two years. Remember — this will drop directly to your bottom line because this increase in share of business is with current customers.

I am attempting to give you a sense of real-life impact and urgency for measuring customer experiences and quantifying their impact. Full-service retailers are struggling to grow their business against local farmer-dealer seed specialists. Based on our work using the Customer Experience Monitor, it appears the local seed specialist offers his customers a superior experience vs. the full-service retailer. Compared to a farmer-seed specialist, a full-service retailer appears to have more Passives and Detractors among his customers.

I say this because so far, full-service retailers have lower Net Promoter Scores for seed than their seed specialist competitors. To break through this glass ceiling, full-service retailers will have to pay more attention to what seed experiences drive loyalty and share of business. They then must put this learning into their strategic planning and assign a manager to be accountable for it. Finally, the resulting refinements to service delivery must be monitored on an ongoing basis if there is to be any hope for the improvement required to catch competitors.

Leave a Reply

Management Stories

ManagementWashington Update, Dow-DuPont Earnings, and the Passing of an AGCO Legend
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
Donald Trump
Crop InputsTrump Targets Agriculture with Latest Executive Order
April 26, 2017
(Via UPI.com) President Donald Trump on Tuesday took executive action in an effort to help grow the domestic agriculture industry Read More
Sonny Perdue
LegislationSonny Perdue Confirmed by Senate as Next Agriculture Secretary; Praised by ARA
April 25, 2017
After months without a secretary of agriculture, the Senate voted Monday evening to confirm former Georgia Gov. Sonny Perdue to Read More
Stewardship video screenshot
ManagementNew Video Raises Awareness of 2,4-D Stewardship
April 24, 2017
A new public service video developed and produced by the 2,4-D Research Task Force, in conjunction with the American Soybean Read More
Trending Articles
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
AdjuvantsA New Weed-Control Era Begins: But First, One Last Obstacle
March 4, 2017
There is trepidation, there is reluctance, and there is excitement. Ag retailers feel it all about the new dicamba and Read More
LIFT Academy video screenshot
Crop InputsLIFT Agriculture Academy: A Q&A With West Central Distribution’s Dean Hendrickson
March 1, 2017
West Central Distribution recently launched its LIFT Agriculture Academy, a new, premiere training and professional development resource for West Central’s ag Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
Latest News
ManagementWashington Update, Dow-DuPont Earnings, and the Passing…
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
BRANDT
CropLife 100Former PotashCorp COO Joins BRANDT Board
April 27, 2017
BRANDT has announced the appointment of another industry veteran to its board of directors. David Delaney, most recently EVP and Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsFortune: Inside China’s $43 Billion Bid for Food …
April 26, 2017
(Via Fortune.com) The worst famine in human history occurred in China from 1959 to 1961. An estimated 34 million people Read More
Syngenta Sign
Crop InputsSyngenta Announces Changes in Board of Directors
April 26, 2017
ChemChina and Syngenta announced changes relating to the new Board of Directors of Syngenta following the closing of the ChemChina Read More
Crop InputsBioSafe Systems Introduces PerCarb Broad-Spectrum Bacte…
April 26, 2017
BioSafe Systems announces PerCarb (Sodium Carbonate Peroxyhydrate), a new alternative to potassium bicarbonate and lime sulfur products for use in Read More
Deere Twitter
EquipmentTop 10 Twitter Pics for #Plant17
April 26, 2017
Despite some wet weather in parts of the Midwest, growers and ag retailers are working feverishly to plant this year’s Read More
Donald Trump
Crop InputsTrump Targets Agriculture with Latest Executive Order
April 26, 2017
(Via UPI.com) President Donald Trump on Tuesday took executive action in an effort to help grow the domestic agriculture industry Read More
AGCO Ratliff featured
EquipmentAGCO Mourns Passing of Company Founder, Industry Vision…
April 25, 2017
AGCO Corp., a worldwide manufacturer and distributor of agricultural equipment and solutions, mourns the passing of founder and former President, Read More
Engenia soybeans
Crop InputsINNVICTIS CROP CARE Introduces VANDAL MOC Soybean Herbi…
April 25, 2017
INNVICTIS CROP CARE, LLC has announced the U.S. EPA registration for VANDAL MOC, a combination of sulfentrazone plus metolachlor. VANDAL Read More
Kochia
HerbicidesINNVICTIS CROP CARE Launches STAVE Post-Emerge Broadlea…
April 25, 2017
INNVICTIS CROP CARE, LLC has introduced STAVE as the newest addition to­ its expanding portfolio. STAVE will be a great Read More
Sonny Perdue
LegislationSonny Perdue Confirmed by Senate as Next Agriculture Se…
April 25, 2017
After months without a secretary of agriculture, the Senate voted Monday evening to confirm former Georgia Gov. Sonny Perdue to Read More
BPIA logo
Seed/BiotechBPIA Files Comments with USDA
April 24, 2017
The Biological Products Industry Alliance (BPIA) has filed comments with the USDA’s Animal and Plant Health Inspection Service (APHIS) Plant Read More
Eric SfiligojHope for Application Equipment Sales
April 24, 2017
The old saying goes that a “rising tide lifts all boats.” If this is indeed the case, then things may Read More
Stewardship video screenshot
ManagementNew Video Raises Awareness of 2,4-D Stewardship
April 24, 2017
A new public service video developed and produced by the 2,4-D Research Task Force, in conjunction with the American Soybean Read More
ManagementAn Inside Look at Award Winning Ag Retailer Gar Tooteli…
April 20, 2017
CropLife Editor Eric Sfiligoj discusses An Inside Look at Award Winning Ag Retailer Gar Tootelian Read More
Students Soybean Field
Industry NewsMACA Announces 2017 Young Leader Scholarship Recipients
April 19, 2017
The Mid America CropLife Association (MACA) Board of Directors selected 11 college students to receive the MACA Young Leader Scholarship Read More
Growmark FS Outlet
SoftwareKnoa Software Solution Helps GROWMARK Boost System Perf…
April 19, 2017
Knoa Software, a leading provider of user experience management (UEM) software, has announced that GROWMARK, Inc., a regional agricultural cooperative Read More
Crop InputsFBN Publishes ‘Voice of the Farmer’ Agricul…
April 17, 2017
Farmer’s Business Network (FBN) released today its “The Voice of the Farmer”, which the company is describing as “a special Read More