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

Fall Creek Seth Harden The Nature Conservancy
StewardshipLocal Farmers’ Watershed Initiative: Continuous Improvement Is Possible In 5 Key Areas
January 13, 2017
The goal in the Big Pine Watershed Project is to more intentionally do what local farmers and responsible ag retailers Read More
ManagementDeere-Precision Planting Update and the Ag Secretary Wait Continues
January 12, 2017
Editors Paul Schrimpf and Eric Sfiligoj provide the latest on the court date for John Deere/Precision Planting and the quest Read More
ManagementAg Land Values In Limbo In 2017
January 10, 2017
Several factors will come into play in 2017 that will determine the direction of land values. Randy Dickhut, senior vice Read More
ManagementThe Frontrunner for Ag Secretary and What to Watch in 2017
January 6, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the possible new Secretary of Ag and what trends they will be looking Read More
Trending Articles
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
Latest News
Andersons Retail Store
UncategorizedThe Andersons To Close All Retail Stores; Shutdown Does…
January 16, 2017
In a stunning announcement to the Toledo area, The Andersons Inc. said on Sunday that it would close its two Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojPrecision To Lead Agriculture In 2017?
January 16, 2017
Another new year is upon us! And I’m certain I speak for many in the agricultural world when I say Read More
Corn
Eric SfiligojThe Mood From Madison? In A Holding Pattern
January 16, 2017
Last week, I had the chance to attend the annual Wisconsin AgriBusiness Classic show in Madison, WI. It’s been a Read More
Syngenta Sign
Crop InputsAccenture Helps Syngenta Transform Its Global Logistics
January 13, 2017
Syngenta, a leading agriculture company, has collaborated with Accenture to design and implement a new digital logistics operating model across Read More
Fall Creek Seth Harden The Nature Conservancy
StewardshipLocal Farmers’ Watershed Initiative: Continuous Improve…
January 13, 2017
The goal in the Big Pine Watershed Project is to more intentionally do what local farmers and responsible ag retailers Read More
HerbicidesEPA Expands Enlist Duo Herbicide Registration To 34 Sta…
January 13, 2017
The U.S. EPA has expanded the geography for application of Enlist Duo herbicide from 15 to 34 states. This means Read More
Olson Ag Enterprise
CropLife 100Wilbur-Ellis Acquires Nebraska Seed Retailer
January 13, 2017
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
ManagementDeere-Precision Planting Update and the Ag Secretary Wa…
January 12, 2017
Editors Paul Schrimpf and Eric Sfiligoj provide the latest on the court date for John Deere/Precision Planting and the quest Read More
Monsanto sign
Seed/BiotechMonsanto, NRGene Form Agreement For Big Data Genomic An…
January 12, 2017
Monsanto Co. and NRGene have announced that the companies have reached a non-exclusive, multi-year global licensing agreement on NRGene’s genome-analysis Read More
AGCO Custom applicator
SprayersAGCO, Asmark Institute To Offer Training For Beginning …
January 11, 2017
AGCO Corp. and the Asmark Institute are collaborating to offer a new training program dedicated to educating and developing custom Read More
ManagementAg Land Values In Limbo In 2017
January 10, 2017
Several factors will come into play in 2017 that will determine the direction of land values. Randy Dickhut, senior vice Read More
Industry NewsPattison Agriculture Positioned To Be Leading Canadian …
January 10, 2017
Pattison Agriculture Limited (Pattison Agriculture), a division of The Jim Pattison Group (the Pattison Group), has announced the merger of Read More
Fertilizer Tender close-up
MicronutrientsHow Micronutrients Fit Into 2017 Fertility Plans
January 10, 2017
Where do micronutrients stand going forward in fertility plans? For one thing, Tim Mundorf, Field Representative with Midwest Laboratories, says Read More
Fertilizer application
State of the IndustryCautious Optimism On Fertilizer In 2017
January 10, 2017
What kind of fertilizer rates are growers and retailers looking at in 2017 and beyond? According to stakeholders CropLife magazine Read More
Asmus Farm Supply crop protection products in storage
State of the IndustryCrop Protection Products Market: Complexity Begets Oppo…
January 10, 2017
While other key market segments in agriculture continue to see tumultuous shifts in sales volumes going forward (large equipment sales are Read More
RoGator RG1300B AGCO
Sprayers10 Sprayers That Will Showcase The Latest Application T…
January 10, 2017
Sprayer manufacturers continue to step up their games with the latest in application technology. From direct injection systems and four-wheel Read More
Soybean Field
FungicidesGrowers Report Yield Boost, Extended Residual Disease C…
January 9, 2017
With the new growing season around the corner, it’s time to start thinking about inputs for 2017. As growers weigh Read More
Donald Trump
Eric SfiligojTrump’s New Ag Secretary Coming Soon?
January 9, 2017
As agricultural experts are quick to point out, incoming President Donald Trump largely has the nation’s growers to thank for Read More