How You Can Steer Customers to Think Value … Not Just Price

First, a little background: According to the USDA’s February 2017 Farm Income Forecast, net farm income will decline by 8.7% this year. That’s the fourth consecutive year of the downward slide. And last year’s record crops did little to soften the blow for farmers.

So what are farmers doing to “keep the lights on” during this downturn? For starters, they’re looking for ways to spend less and produce more—not an easy formula to master. And they’re likely pushing for lower prices on input costs.

As an ag marketer, that puts you in an awkward position. Do you cut your margins (which are already razor thin) so you can give price-sensitive customers the breaks they want? Or do you hold steady on prices, and search for ways to add more value for customers?

According to Will Secor, A Purdue University ag economist, you might see some short-term gains by dropping prices. But it’s a different story in the long run.

Effect of cutting prices to gain sales during a tough ag economy:

• Erodes value perceptions of your brand.
• Reveals just how much margin is built into your prices.
• Makes it difficult to raise prices in the future.

As an alternative, Secor suggests getting a better understanding of what your customers and prospects find most valuable in the products and services they use. Then adjust your offerings to communicate value during this economic downturn.

The difference between price and value

A cheap price focuses on what your customer pays, not what they get. Whereas value focuses on getting more for the money they spend.

In terms of marketing in agriculture, value means more than the seed, chemicals or feed you’re selling. It means everything that goes with it—expertise, delivery, application, grain marketing and more. And it goes even further than that.

• There’s value in working with an ag business your farm customers trust.
• There’s value in doing business with an ag cooperative where farmer members share in profits.
• There’s value in supporting a local business, which in turn supports local employees and the communities in which they all live.

How to zero in on what your customers value most

According to an Insights from Purdue University article, you should find out what your customers value most about your products or services by asking questions like these:

1. How do farmers compare product performance versus price? How do volume or quantity discounts figure in?
2. What is important to farm customers in terms of delivery time, financing, technical support and warranties?
3. What does service mean to them?
   • Do they see it as traditional services, such as fertilizer applications?
   • Do they want data support and analysis?
4. Are they loyal to a brand? Which brand? How loyal?
5. How important are the relationships with their salesperson?

To get an even better understanding of the purchase decision process for agricultural inputs, faculty from Purdue’s Center for Commercial Agriculture have developed a buyer decision specification tool.

Consider using this tool with a cross section of customers. Tabulate the results in order of importance. Then communicate to your customers how your ag business or farm cooperative delivers on these points of value. Get your salespeople on board. Make sure they communicate value face-to-face with customers.

As you face the challenges of yet another annual decline in farm income, it makes sense to rethink how you position your products and services. From a marketing standpoint, this impacts what you say … and how you say it.

VistaComm has helped farm cooperatives and ag businesses for the last 20 years retain … and grow … sales numbers—even during down cycles like the current one. Find out what we offer to support your efforts.

 

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