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Changing the Game in Agribusiness CRM Part 3 E-mail

Nick Poulos        Volume 1, Issue 3
Managing Director, Chrysalis Marketing
Customer Relationship Management

CRM Compass™ Creating Loyalty in Agribusiness

I’ve been struck by the similarity of the challenges, which we faced as an industry a decade ago.
Let me recount one brief tale.

I talked with 2 friends today.

One has been in animal health distribution for “all his life”; the second teaches at “The B-School”. The subject with both was the role of distribution and the inevitable tension that exists across the channel, sometimes “exploding” into what is best termed “channel conflict.”

Our conversations were peppered with words such as “trust”, “consolidation”, “role”, “going direct”, “distrust”, etc. All signs of various levels of nervousness or fear; mistrust and apprehension: the realization that the world is much different today than when I was a kid 50 years ago. I was a B2B distributor early in my career. I “get it.” Emotions are roiling; it’s time for a change: it’s time to establish a new covenant among and across agribusiness partners – a customer-based, value-focused covenant. The battle is over familiar topics: who “owns” the customer? Who is “our customer”? What role will our channel partners play going forward? And so on. Sounds all too familiar, doesn’t it?

“The Channel” has played a pivotal role in agribusiness over the last century. Sadly and with the excitement of great potential, the role of the channel is changing dramatically.

Changes not withstanding, distribution has played, and has the opportunity to continue to play, a unique role in the United States. The channels’ processes and the roles of the players, off-shore, don’t “look” the same nor provide the same services nor do they offer the-potential-to-add-significant value, which our channel partners can play in North American agribusiness. Distributors, retailers, dealers, vets, agents and advisors all play critical roles.

Roles bring with them responsibilities and the concomitant obligation to give back and add value moving down the channel to the end-user. Each of the players in this distribution game understands their position and the reality of the changing world of agribusiness. Hence the growing distrust and channel conflict – all over customer knowledge and who owns the customer, it would seem.

A good Dealer or Distributor partner is invaluable: in the past, they were guaranteed the financial success they sought [1]. North American “Distribution Systems”, my academic friend reminded me, traditionally “owned” certain responsibilities:

a.  Sales,

b. “Demand fulfillment,”

c.  Physical distribution,

d. “Product modification and after-sale service, “ and,

e. “Risk assumption.”

In everyday language, the agribusiness “OEM”’s rely on their channel partners to be just that: “partners”.

Distribution is asked to generate demand, to sell their manufacturers’ products and to negotiate pricing; we ask them to run a business, stocking their shelves with inventory from our “plants” and at the same time to train their people to support us (and, we want them to support only us, knowing full-well they are, in most cases, multi-line outlets); we ask them to move product around the system and to customize it in the fields or barns; we ask them take on some major risks: inventory carrying, customer credit, investments in their own place to support the specific distribution and support of our products. We ask a lot. Good distribution partners give a lot – in some cases even more than we might have dared to imagine.

Those comfortable halcyon days of agribusiness have been disappearing ever since the mid-90’s. Information, transgenics, the power of the internet and the flattening of the world seem to be among “the root-causes.” There has been a blurring of roles, a continuing shrinkage in number of outlets there is also the threat – real or perceived - of manufacturers cutting out the middle guys, and a growing need to transform producer and grower data into actionable knowledge used sensitively to create a competitive advantage and noticeable point of differentiation.

“Power” continues to consolidate across the industry, while the most important element of the equation for success – whether we are in the seed or crop chemical or cattle or equipment business – still remains the relationship with, and knowledge of, our customers: the producers and growers of North America.

Agribusiness feeds and clothes the world: our social contract, if you will. As an industry we stand better able to serve our customers, the producers and growers, than virtually any other industry of which I can think. Our practices, chemistry, biology, seeds traits are gifts to the world. Much of our potential as an industry is founded upon data. Founded really upon data we now finally are learning to translate into “actionable knowledge.” Data at the farm-gate level. Data, the ownership of which triggers much of the channel conflict today - our mutual distrust and apprehension and/or need for control. We are not willing to freely share with every member freely along our value chain. Truly a “pain-point” for agribusiness.

Tension is healthy in any relationship. There is a healthy tension that needs to exist in well-functioning distribution systems. Sadly, the healthy level of channel tension has escalated to an unhealthier state of channel conflict. This channel conflict is transparent, however, to our mutual customer: the producers and farmers of North America. Our customers, the growers and producers want value – value as they define it: value that changes over time with each new interaction and each new transaction. Every party to agribusiness wants to receive value. Each party also wants to be paid for the value they deliver. They each also want to (or at least of a needs must) deliver value and be relevant, if they are to play a role moving forward.

At each position along the agribusiness distribution value chain barriers exist to achieving the best for all members of “the value delivery chain”.

Recognizing our interdependence and our mutual responsibility to the producers and growers of the world, perhaps it is time to “change the game” and build a new covenant with our channel partners and customers. A covenant based upon mutual respect and new principles of behavior.

Founding Principles of the New Covenant

In building our new covenant, let me suggest a few critical founding principles:

1. Our true customer is the producer or the grower, whichever place in the
    distribution channel we hold.

2. We are committed to building customer communities
    whose foundation is a civil way of doing business.

3. Value is what drives purchase decisions both at the dealer
    and farm-gate levels.

4. Value-based, relevant communications serve as our passport
     into this agribusiness community.

5. Conflicts and rivalries over who owns the grower and
    grower information are destructive to serving the grower,
    and are unacceptable.

6. We define value according to what our mutual end-user
    customer wants.

7. Each member of the channel is committed to understanding
    what the grower—our mutual customer—wants.

8. Some degree of tension within the channel and between
    channel partners—when focused on meeting customer
   needs—provides a healthy strengthening of the channel.

9. Manufacturers identify the areas in which they can best
    deliver value and the areas in which their retail partners
    can best deliver value to their mutual customers. These
    partners then help one another to deliver this outstanding
    value proposition focused on meeting the unique needs of
    each individual customer.

10. Agribusiness is committed to raising the performance of the
     entire channel by re - creating its infrastructure to deliver relevant
     value, information, education, and support whenever
     and wherever necessary.

I think these principle “touch ground.” If they don’t, I’d like to hear back from you where you think these principles fail to meet the needs of business today, of “reality.” With these founding principles in mind, let us now work together to identify what this new covenant is, and, over the next few months, paint a real-world picture of what doing business within this new paradigm looks like.

CRM Compass ™ is published by: Chrysalis Marketing

Nick Poulos
Managing Director
Chrysalis Marketing

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

[1] I recognize that there are different naming conventions by industry: if we’re talking about the distribution value chain for seeds, crop chemicals, pharmaceuticals, etc. For ease, I’ve opted to use neutral words that work across multiple scenarios.


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