Channel Management: The Channel Isn’t the Challenge, Change Is

David Lazarenko

IIn many of my recent posts, I have mentioned that agrimarketers have a bad habit of considering our challenges so unique that solutions that have worked for other industries facing similar obstacles won’t work for us.

In my 20+ years as an agrimarketer, one of the most common “unique challenges” is the farmer sales channel. More specifically, when working with all manner of manufacturers (whether it be seed, chem, equipment, etc.), there is a prevailing concern regarding the challenge of selling to a farmer customer through a third-party retailer (independent, chain or co-op) who may or may not have the best interests of the manufacturer in mind.

This challenge is seemingly so large that within it, there are many sub-challenges, including:

  • An inability to form and nurture a direct relationship with the farmer customer for fear of offending the retailer (for the farmer customer is really their customer, after all)
  • An inability to effectively leverage a farmer pull strategy” (given the belief that retailers will push the products they want to push regardless)
  • An inability to collect and analyze comprehensive customer data for timely insights (given that the retailer captures and owns much of the transactional data, and may not share it as fully or as quickly as desired)

While the points above are indeed challenging, I’d like to suggest that they aren’t as overwhelming as we make them out to be. Moreover, based on the progress made in industries that have faced similar channel dynamics, I would even say that they aren’t as immutable as we may think.

First, I think it is crucial that we as agrimarketers reframe our mindset of the situation at hand (and this applies to agrimarketers working for manufacturers and retailers alike). It’s imperative to understand that no one owns the farmer customer. Not the retailer, nor the manufacturer. The farmer customer, like any customer, has the right to do business with whomever they please, and ultimately, they should be able to choose the retailer(s) and manufacturer(s) that provide them with the greatest benefit. Period.

So, if you find yourself in a debate on whether the farmer is your customer or their customer (manufacturer vs retailer), or whether you as a manufacturer serve the retailer or the farmer, the truth is that the farmer isn’t yours or theirs. We will all be much better off if we focus on serving and providing value to the farmer and the farmer alone.

Second, it is just as important that we as agrimarketers seek out new solutions that aren’t simply a variation of the same thing we’ve tried time and time again. As I’ve stated before, significant times of change, like the one ag is currently facing, require new and novel solutions, especially when all indicators suggest that what got us here (to our current state of struggles) won’t get us there (to a new and better future).

That’s why it’s so important to accept the fact that these solutions can come from other industries — ones that may seem to be quite different but have ultimately faced and overcome similar challenges. As it pertains to our channel challenge, we need not look any further than some of the following industries for possible insights:

  • Hospitality – If you have booked a hotel room in the last 10 years, there is a much better chance that you did so through a third-party than the hotel itself. Whether it be Expedia, Hotels.com or Trivago selling Marriott, Hilton or Best Western properties, the benefit to the customer has been an increase in pricing transparency, choice and overall service.
  • Food Retail – From supermarkets to convenience chains, major food manufacturers and the retailers who sell their products have consistently focused on providing the customer with greater benefit through improved selection, quality, value and overall buying experience.
  • Automotive – Similar to ag, even large-price-tag products do not always sell direct to customers, as has long been the case with car and truck manufacturers. Whether it be through brand exclusive dealerships (like many luxury brands) or brand agnostic dealership networks (like John Doe Ford, John Doe Chevrolet, John Doe Honda, etc.), the end customer is again the primary focus of any and all value creation.

In each of the above, there are some very interesting take-aways for agrimarketers to observe. First, in most cases, the person buying the product or service in question would consider themselves a customer of both the manufacturer AND the retailer (not one or the other). As I noted above, this is important in ag, as in many cases; we tend to believe that the farmer is only a customer to the retailer, when that simply isn’t the case.

Second, while disintermediation (the elimination of the middleman) has indeed found its way into each of the above industries through the likes of AirBnb, Amazon and Tesla, it has not become the norm as of yet. Instead, it has put additional pressure on manufacturers and retailers alike to continue to improve the customer offering and overall experience through innovation.

Finally (and most importantly to ag), in each of the cases above, the manufacturer and retailer parties involved share data so they can both benefit from a more holistic view of the customer (which, in turn, allows them both to become more effective and efficient in serving said customer). In ag, this is something that I believe could be improved significantly, as, to date, there tends to be protectionism in place over the data that each party holds.

More specifically, there tends to be a belief that, because the purchase transaction takes place at the retailer, they ultimately hold the most critical and valuable data, when that simply isn’t the case. Instead, I would advise that manufacturers already have critical and valuable customer data in the form of “analytical data,” and they should instead focus their efforts on capturing and leveraging it as effectively as possible.

Most of the online time that a farmer spends researching and reviewing products, performance and best practice information is done on the manufacturer’s digital properties - not the retailer’s. This means that the manufacturer can capture much more data on the customer’s overall journey and experience (including pre-, during and post-purchase behaviors and actions). Therefore, if retailer and manufacturer agrimarketers could work together to share their transactional and analytical information, imagine the additional clarity it would shed on every customer they jointly serve!

Thankfully, as ag isn’t the first or only industry to contend with this challenge, there are already software and solutions available that can make this joint data capturing, sharing and analysis possible. All it takes is a willingness to overcome our fears and work together for the betterment of the farmer, who, as everyone’s customer, deserves this most of all.

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