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Changing the Game in Agribusiness CRM Part 2 E-mail

Nick Poulos       Volume 1, Issue 2
Managing Director, Chrysalis Marketing, llc
Customer Relationship Management

CRM Compass - Crafting loyalty at the farm gate

“Trust truly is the one thing that changes everything.” [1]

When I sat down to write this piece, I originally was going to examine Larry Wilson’s acronym T-A-S-T-E [2] , offering a working definition on each component. Instead, I “got stuck” at the word Trust. Trust, ethics, and the need to consciously articulate a social contract in business is high on my personal radar screen. It is also quite high for many of us. During the summer of 2009, the social conversation in the US has found Food, industrial food production, safety, abundance and clean air as much a part of the timbre of our conversation as Health Care Reform.

In Ag, we don’t talk about ethics and enter into what my friend would call “a moral debate” often, if at all, these days. Like many of us, I may personally have realized the importance of “the social contract”, but certainly it wasn’t top of mind daily after graduate school. Lately, Business Schools such as Harvard, Wharton, and Chicago, however, are now debating whether the schools may unwittingly have contributed to the chaos by failing to emphasize value and ethics in business.

I watched and was a part of the collapse of the equity market. Yet, throughout the debacle, many banks advertised how well they focus upon and build “customer relationships”. In truth, however, banks displayed the worst in Customer Relationship Management practices by emphasizing not the relationship, but the sale of the most highly commissioned products. Customers’ needs weren’t understood. Relevance and Value were not provided. The ensuing financial damage and the loss of confidence truly have been global. We cannot allow agribusiness to fail in a similar fashion in our CRM practices.

The Current Situation.

Look at where we are though. Levels of Trust seem low. Apprehension is palpable in Ag. Trust is not our “strong suit.” And so, our work to build customer and channel loyalty and to implement successful customer relationship management business models will be tested daily.

In Ag these days, tensions run high. The press is writing about “another revolution in agriculture”- several in fact, in information and consumer awareness. “The Food System” has reached more of the public’s consciousness, Cap and Trade is a point of conversation among producers and growers, and, uncertainty is increasing. Time Magazine ran a story entitled “Getting Real About the High Price of Cheap Food.” The Beef Industry labeled the report “Yellow Journalism” and The New York Times ran Michael Pollan’s op-ed piece, “Big Food vs. Big Insurance.” At each point along the agribusiness crop, equipment and livestock value chains, there’s concern: real and palpable concern.

“The season” doesn’t look like it will yield “bumper crops”; commodity prices, as always, are in play; livestock breeders face similar worries. The very future of Distribution’s role is being examined and recreated, yet again. The words “direct to the farmer” seem to drop casually into more and more conversations. “Ownership (and profitability) of the acre” is top of mind for every player in agribusiness: a desire to own the relationship at the farm-gate level. The resulting “channel tension” is counterproductive and unhealthy. Can someone help me figure out what’s gone wrong? Is trust missing in agribusiness?


Quantifying the power of Trust

“Mistrust doubles the cost of doing business.” [3]

Trust, these days, has been underplayed, and I would guess that many of us either don’t stop to reflect upon “trust”, or we think of “trust” as a “soft”, and therefore unquantifiable element. Logically we then assume, since it has no quantifiable value, it need not always be factored into our business and personal lives. But when all is said and done, trust not only is the essential element of business, but also it is quantifiable and in need of repair.

Nowhere is this more critically apparent than in the ongoing discussion about: the future role of our distribution partners and the value potential that can result from the creation of actionable knowledge, which can be created when grower/producer transactional and operations information are transformed by the intelligent use of immensely rich, agronomic data. It is the sensitive use of this partnership at both levels that will yield the greatest successes in Customer Relationship Management. It is here where trust will affect our success in CRM.

“Whether it is high or low, trust is the “hidden variable” in the formula for organizational success.” [4]

Quantifying Trust, as explained by Covey, quite logically can be seen through the “the time value of money.” Since there is an economic value that redounds to trust, we can represent it visually and, more importantly, we can quantify its impact!

 An increase in the level of Trust accelerates the speed of execution while reducing the cost; and, the inverse is true as well. Symbolically, we represent this equation:  

Increased Trust   = Increased Speed x Decreased Cost

    And

DecreasedTrust  = Decreased Speed X Increased Cost  [5] 

The real question then emerging is: how is the breakdown of trust affecting our performance by dragging out the time and bloating the cost of our efforts. The question we seem to be asking, however, is: “who owns the farm-gate?” If this assertion is on point, Trust (or the lack of it) may be seen as the root-cause of the current escalation in channel conflict and apprehension concerning grower/producer knowledge.

Early on, Ag clients reminded me continually that farming is a belly-to-belly (or, “hat-to-hat”) business – the parts counterman is our neighbor at church; the seed and chemical salesmen went to grade and high school with us – and that everything in Ag is built upon trust and performance. Is our attitude the same today? Trust is the glue. Trust is essential to the confident, accurate, willing sharing of information across the value chain.

In truth, “the food system”, the business model in agribusiness, requires and collides with trust. The system requires a tremendous amount of ”inputs”: people, time, land, money, outputs and information/data, to feed its engine. The result is that there are tremendous pressures across the entire value chain. The world’s getting bigger, there is less land, the environment is stressed, and the business model – Ag being an archetype of the theory of competitive advantage - is high volume, increasingly lower, thinner margins, continuing consolidation and more globally-able competition, even while change is an increasing constant. The “end-game” is: trust is fragile, while tension is increasing these days.

Agriculture & Agribusiness have always had both an explicit and an implicit social contract. Portions of that contract touch upon issues such as:

a. Feeding and clothing the world,
b. Doing so safely,
c. Using high quality products,
d.  Managing our natural, limited, and dwindling resources wisely,
e. Bringing sustainable stewardship to practices,
f. Employing consistent production standards, etc.

Trust is embedded in points a thru f. Trust, of course, is foundational for any successful social contract. Trust expands the breadth of the promise inherent in agribusiness’ current social contract – the one with consumers and the one with all players across the food value chain. Yet, the current mistrust, apprehension and channel tension belie the promise. Therefore, we need ask –(mustn’t we?) -How must the agribusiness covenant, or social contract, be transformed? If trust is so important, doesn’t it have a quantifiable economic impact on relationships? And, if trust is important but has been lost, or compromised, can it be recovered and restored?

At issue again, it would seem, is a complex confluence of ideas:
a. “Who owns” the grower or producer?
b. What is the evolving role of distribution in agribusiness?
c. How can information be transformed into actionable knowledge?
d. How can all parties in the value chain receive value for what they provide?
e. How can trust be re-established and grow again?

Is everything now a battle for the customer in agribusiness? A battle as to who “owns” the customer? A battle that is weakening the fabric of trust upon which agribusiness was founded?

The counter-measure to falling further into the trap is trust. All parties must engage in a spirit of collaboration and synergy. The simple, yet powerful answer is trust. Trust now has re-emerged into the mainstream and captured the American mind. In fact, the gospel read this Sunday at church was notable for the phrase:


“… fear is useless; what’s needed is trust.”  [6]

Trust is the first word element in our acronym: T-A-S-T-E. It’s first I think for a reason.
 

Successful CRM initiatives integrate people, processes, and data into unique competitive advantages. Using Wilson’s acronym to help guide our management and marketing imaginations will again emphasize trust, while the “A-S-T-E” forms the balance of our suggested social contract, a new covenant for Ag. In doing so, I see the roots of change for agribusiness.
 
 Today’s agribusiness customers, partners, and stakeholders expect more and deserve better. Cultivating trust in agribusiness can guarantee lasting value - for the input companies, for the producers, the growers, for the entire Food System Value Chain, and for the ultimate consumer customer. 

 CRM Compass ™ is published by: Chrysalis Marketing

Nick Poulos
Managing Director
Chrysalis Marketing llc

 Read More about Changing the Game in Agribusiness CRM:  Part 1, Part 2, Part 3 

[1] The Speed of Trust, Stephen M. R. Covey, pg. 26, italics mine.

[2] Introduced by business training expert, Larry Wilson, in his 1987 book, Changing the Game, T-A-S-T-E       requires 100% reciprocity of effort and behavior between both parties:100% trust; b. 100% accountability; c. 100% support; d.100% truthfulness, and e. 100% effort

[3] Professor John Whitney, Columbia Business School, in Covey, ibid, pg. 18
[4] cf., Covey, ibid, pg 20.
[5] Cf., Covey, pgs 13 ff.
 
[6] The Gospel of Matthew

 

 

 

 
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