|IN THIS ISSUE APRIL/MAY 2012|
Selling to Multi-Generation Farm Operations
Dealers need to reach out to younger decision makers while nurturing existing relationships with older producers.
Lynn Marcinkowski Woolf, Contributing Writer
Family farms are as much about generations working together as the crops they produce. Understanding those generations — and how they make purchase decisions — is key to keeping customers for the long term.
“Getting to the next decision-maker is the way to secure future business. If you don’t do it well, you just take what you can get,” says Marc Conrady, store manager for PrairieLand Partners. Prairieland has 10 John Deere dealership locations in South Central Kansas.
“You need to get higher, wider and deeper,” Conrady says, crediting Jim Pancero, a sales consultant they recently worked with. “You need to communicate with all facets of the operation. You can’t assume because you have a relationship with the father that means you have a relationship with the son. The more people you can talk to the better.”
Statistics show the time is now to reach younger decision makers while nurturing existing relationships with older producers. Older producers currently own most agricultural land, but it’s estimated that 70% of all farmland will change hands in the next 20 years, according to the Univ. of Vermont.
Paulsen Marketing, an agriculture marketing firm in Sioux Falls, S.D., examined multi-generational decision-making in a recent survey. They researched 14 different farm families in Iowa, Kansas, South Dakota, Minnesota, Missouri, Illinois and Nebraska. They spoke with two different farming demographics: older row-crop producers, ages 46- 70, and younger row crop producers, ages 25-45.
The biggest surprise of the survey results: There was little variance between the viewpoints of older and younger producers.
“We assumed the older generation would be conservative and the younger generation would take more risks,” says Mark Smither, Paulsen’s vice president and strategic director and study co-author. “We believe the reason decision making is so methodical among both groups is because the risks are too high to make a wrong decision. So, younger and older producers don’t move impulsively. Also, younger producers learn about the operation over a long period of time. This apprenticeship can last years or decades.”
The key, then, for dealers is to understand the subtle differences that influence a purchase. Paulsen’s research found these three themes that can help dealers fine-tune their sales message:
1. There is a high degree of brand assimilation in multi-generational farm operations.
2. The generational gap associated with online usage is closing.
3. The consideration cycle leading up to a purchase can last well over a year.
Smither says farmers prefer to buy brands they already know based on familiarity, integration, consistency and relationship.
“Over the generations, certain brands become assimilated and are intricately tied to every facet of the operation. Producers are familiar with how to operate the machine and they don’t want to learn new equipment. Precision ag technology makes it difficult to switch out a brand. And, consistency is important to producers in terms of production efficiency with a known brand,” says Smither.
Brandon Hunnicutt of Gildner, Neb., says his family has been John Deere loyal for generations, mainly due to relationships and the dealer network.
“Some people complain about driving 50 miles to get parts. Within 35 minutes, we can hit six or seven John Deere dealers,” says Hunnicutt, 38, who raises corn, soybeans and popcorn with his dad, Daryl, 61, and brother, Zach, 30.
His dad, Daryl, agrees, but adds the dealer still needs to provide value.
“It’s about the personal relationship and that I’m comfortable with them, but also that they have the expertise I need,” he says.
Technology is now another deciding factor in their loyalty, since they have integrated RTK (real-time kinematic) precision ag in their operation.
“It’s the ease of going from combines to sprayers, and they have a similar set-up and similar monitors,” he says.
Trevor Dale, 35, who farms with his dad, JR, 67, and two brothers in Fertile, Minn., says this about their brand loyalty, “We’re not all one brand, but we are all two brands, John Deere and Case IH.” A specific need played into their recent purchase of a Case IH Quadtrac.
“Our primary reason for acquiring it was for drainage. We’ve had trouble with excess water for several years,” says Dale. The GPS technology will help them achieve the right grade.
Like Hunnicutt, dealer support is critical to Dale’s brand loyalty.
“Deere and Case have a heavy presence where we are. We can drive in any direction in a half-hour and see several stores,” Dale says.
From Relationship to Solution
Conrady says there’s not just one attribute of brand loyalty that works every time. For example, you can’t always lead with the relationship. However, Conrady says brand differentiators and dealer support are always two of the top messages.
“You can find a product where Deere has an exclusive advantage over the competition and you can talk about dealership support. Breakdowns will happen,” he says. “It’s about John Deere branding, dealership branding and location branding,” Conrady says.
Conrady also keeps purchasing styles in mind when he’s working with several generations of decision makers. The younger generation is nearly 100% in line with the older generation regarding the brand, but they differ in how they come to their purchase decision, he says.
“I’ve found that in 80% of farming operations, if the father is one way, the son might lean the other, at least for a period of time. They come together eventually, but it might take decades,” he says. For instance, if the older generation focuses on price, the younger generation might seek out the intangibles, like a dealer relationship.
Todd Kunau of Kunau Implement says the dealer has to turn a good relationship into identifying and meeting the producers’ needs.
“All the manufacturers provide a lot of comprehensive solutions. It takes the dealer to put the package together and make it work. Any dealer can just check a box when ordering equipment or parts. We need to add value to the customer,” says Kunau, who sells Case IH, New Holland and Kubota equipment in DeWitt and Preston, Iowa.
He says it’s about finding the producer’s “hot button,” regardless of the generation.
“If a producer had a bad experience integrating equipment, that’s going to be the #1 concern for them,” says Kunau.
Influencing the Research Stage
How a producer makes a purchase decision, regardless of their generation, is based on what they see and learn about the equipment. Paulsen’s research found that both demographics are turning to online sources to gather purchase data. The survey also showed that the older generation is no longer lagging behind in online activity. However, younger producers are taking a more interactive approach.
According to the survey, younger producers are cultivating their own trusted online networks of peers and turning to online forums, blogs and producer reviews to help them make a decision.
“A review from a stranger carries a lot of weight,” says Smither.
Smither also says dealers should think of online forums as they do focus groups. Monitor them to see what producers are saying about the brand or what they like or don’t like about a model.
“And if the information that is being posted is incorrect, then a dealer should provide a response,” says Smither.
Brandon Hunnicutt says he turns to dealers’ sites, Google searches and forums. He also turns to Twitter.
“My gut instinct is that I think people are more honest on Twitter than on forums. You can be so anonymous on a forum,” he says.
Daryl Hunnicutt says, “I use a computer every day for checking markets and email to reading newspapers and newsletters. It’s a big source of my information gathering.”
Dealers like Conrady are reaching out, but also adjusting traditional methods to reach segments of buyers.
“We’re trying to measure what’s changed. We’re shying away from traditional print media, but still do a sampling and have them go to the website. We still do direct mail, but it’s much more targeted at a specific producer or segment. We used to think that if we’re printing and mailing, we should have something for everyone in that piece,” says Conrady.
Kunau says traditional media is still important, but they have shifted focus a little bit from print ads to more radio and television advertising. However, he says his producers still depend on his used listings in the newspaper.
Kunau says brand consistency is critical in any marketing program. His messages focus on the dealership’s longevity — they recently celebrated their 75th year in business — and the family atmosphere of their dealership.
“We’re always going to be here. We’re always going to take care of you.”
He’s studying social media opportunities now.
Using Social Media
“I want to make sure that I have clean strategy before going into social marketing. Without it, social media can create dissonance with the regular message,” Kunau says.
Smither offers this advice regarding marketing methods: “Be aware that the channels used to reach producers continue to change. Producers are spending more time online and becoming more comfortable with sharing ideas in social media, posting video, participating in forum discussions, following blogs and using mobile apps, regardless of age,” Smither says. “The key is to build a brand presence in these emerging channels long before producers arrive.”
But, don’t abandon traditional marketing in the process.
“Our observations indicate that while online marketing efforts are gaining significance with both older and younger producers, they have not displaced traditional ag media as a trusted source of information,” Smither says.
Seeing equipment in person or talking with a fellow producer ranks high with Hunnicutt and Dale.
“I need to know how it works in real life. I need to talk to people who have used the equipment or see it for myself,” Dale says.
“The farmer word-of-mouth network is very powerful. If you do something well, word about it will spread. If you do something poorly, that gets spread, too — very fast,” Smither says. “Dealers have to provide a sense of transparency and be consistent, especially related to pricing.”
Patient, Ongoing Selling
Producers are generally not impulse buyers when it comes to new equipment, especially with price tags reaching a quarter of million dollars or higher. Paulsen’s interviews show the consideration cycle can last well over a year. A recent media survey showed that 63% of producers gather tractor, machinery or parts information throughout the year.
This means dealers can have lots of opportunities to influence a purchase decision.
“One thing we’ve noticed is that producers are in a constant state of consideration. There is always opportunity. If they purchase land, they might need a larger tractor and then additional implements. One decision affects three or four down the line,” Smither says.
Study co-author Heather Covrig, Paulsen account executive, adds, “Multi-generational operations tend to be larger producers. They don’t have any opportunity to be shut down. They’re always looking for equipment in case there’s a breakdown, for next year and if there’s a big deal they can’t pass up.”
Conrady values the long sales cycle.
“We use the long sales cycle to our advantage. We talk about the product, then the strength of the parts department and the service department,” he says. “The longer the sales cycle, the more likely they are to choose our dealership. A short sales cycle is based on price. A long sales cycle is more about the cost of ownership.”
“Competitors have learned they have to deeply discount to try to shorten the sales cycle,” Conrady says. He adds they can’t deliver his dealership’s value, so they have to compensate with price breaks.
Kunau says the long sales cycle reflects his dealership’s strengths.
“We’re decade-by-decade, not month-by-month,” he says. “We don’t take the pressure off of selling, but it’s short-sighted to crowd the customer before they’re mentally ready.
“Some people do need a compelling reason to buy now. Sometimes there’s a legitimate reason to not let this deal pass. If we’ve never seen a deal as good as this one, we tell them. But you can’t say that every month,” Kunau says.
And Conrady is not worried he’ll lose the farmer’s business if the salesperson leaves the dealership.
“The salesperson believes it’s their relationship that gets them the deal. They think customers are more loyal to them than the data actually shows. The customer actually values other aspects of the brand. It’s a balance for dealers because we do want the salesperson to own the relationship.”
Dealers can benefit most when they understand and merge the viewpoints older and younger generations bring to the purchase decision.
“The older generation learned lessons of their fathers during the Depression and the crises they saw during the 1980s … for every rise there’s a fall. They remember what things used to cost. Younger producers don’t have that history. They see the possibility and the potential,” Smither says.
Technology is one area where the generational perspectives can merge. Today’s precision ag technology appeals to the tech-savvy younger generation and the efficiency concerns of the older generation.
Daryl Hunnicutt, for instance, says he shares his sons’ interests in what precision ag can do, and relies on their expertise in interpreting the data, such as that from yield monitors.
JR Dale also relies on his son, Trevor.
“One thing I’m acutely aware of is the generational differences. Twenty years ago, I was right up to speed on technology and crop production inputs. Now I’m lacking, and Trevor is right up to date.”
Kunau says the technology can extend the productivity of the older producers.
“They’ve never done so much in a day at any age,” Kunau says. “On our field days, we get growers out there in the equipment — two and even three generations. The older generation is becoming more comfortable with the technology because they have done the research and know the younger generation can make it work. The older generation appreciates the return of the investment and the younger generation is driven by how exciting the equipment is,” Kunau says. “Now, there’s such integration between all the equipment. The next frontier is here.”
Safeguarding the Relationship
Conrady says in addition to recognizing the viewpoints, you also have to safeguard confidences.
“Something I was taught in my first couple of months of selling is that you never tell the father’s business to the son and you never tell the son’s business to the father,” he says.
Conrady explains it’s not up to his dealership to be a mediator and play one viewpoint off of the other, but to answer and support all the decision makers. He also advises his salespeople that they can’t compartmentalize their lives. They need to show respect whether they’re interacting as a dealer to customer or as a fellow community member.
“There is one path to building success and that’s through integrity,” Conrady says.