Whitepaper. The Farmer as a Businessman.

Transcription

1 Whitepaper The Farmer as a Businessman.

2 The Farmer as a Businessman. In modern business, a farmer is an entrepreneur. He is demanding and for a good reason. The market as well as our society asks for In a nutshell high-quality meat, diary and vegetables for a accurately calculated price. Optimal entrepreneurship is necessary for the farmer to survive and thrive. Given these circumstances, the role of the whole agri chain is getting more and more important. After all, what is a farmer worth without the best suppliers who provide the right tools and advice to keep his business going? Farmers prefer a more clientfocused approach. Sharing data is crucial in the agri chain. Without a single client view no insight into the chain as a whole. Cooperation, establishing and maintaining valuable relations is becoming more and more important. With current economic developments in the background, the importance of customer relationship management (CRM) increases as a result. This is not only in the business sector, but also in the agricultural sector. But how does the agri chain deal with its special relationship with the farmer? And what does the chain itself do to serve its unique customer in the best possible way? Visit our website for more information about CRM for agri businesses Personal relationships seem to be the key to success here. In this whitepaper we show why that is, based on current market trends, and we explain how a single customer view and collaborative CRM can help achieve success. And we also show what results it yields for the chain as a whole, as well as for its individual players. The Farmer as a Businessman 2

3 Content. Introduction 2 Content 3 Whitepaper The Farmer as a Businessman. 1. From business at the kitchen table to operational excellence 4 Operational Excellence 4 2. Best of both worlds 5 Chain inversion 5 3. A single customer view 6 Customer Data 6 4. The role of the chain with a single customer view 7 Help with operations 7 From data sharing to win-win 8 From Practice 8 5. Collaborative CRM 9 6. Optimal results for the entire agri chain 10 Individual result for chain parties Personal relations enforce the chain 12 About CRM Partners 13 Sources 14 The Farmer as a Businessman 3

4 From business at the kitchen table to operational excellence. The agricultural sector is still dominated by family farms. In these farms, the family is the owner and manager at the same time. The family bears the risks and doesn t only supply the most labour activities, but often also the main part of the capital. Investment choices are mainly based on the room for expenditures by the family. Decisions about the purchase of land or the renovation of a bathroom are taken at the kitchen table. This traditional approach, however, does not include that agricultural operations are not moving along. Family farms have continuously adjusted to changing circumstances. They are constantly searching for a balance between the demands of the market and society on the one hand, and the underlying economic principles that count for entrepreneurs in general on the other. Therefore, Family Farms have increasingly concentrated on their core business in recent years, and specialisations are more frequent than before. Also, cooperation on subareas is increasing. Researchers of the Agricultural Economics Research Institute of Wageningen University predict that, except for glasshouse horticulture, the output in the agricultural sector in 2020 will still mainly take place on family farms. But, the researchers say, they will combine with other business forms such as the use of franchising and labels, hiring freelancers, and participation in joint ventures. Operational excellence As operations became increasingly automated and largescale, farmers are turning into managers who continuously strive to improve. The need to continuously improve has joined the pursuit for operational excellence (Treacy & Wiersema, 1995) in the agri chain as a whole. Operational modernisation of the farming business has caused suppliers and producers in the chain to hardly sit at the kitchen table anymore. Moreover, the use of technology makes the agricultural sector less dependent on Mother Nature and the impact of the seasons; managing on costs is more accurate and effective than listening to a gut feeling. The need for manageability and controllability of the output increases every year, which implies that decisions taken at the kitchen table are no longer sufficient. The agri chain has focused completely on producing reliable products at competitive prices. The result of this operational excellence is that the chain is working more and more efficiently, not only in the factory, but also in contact with the customers. The monthly or even weekly visits of an account manager are reduced to short and effective communication through or social media maybe once or twice a year. As a result, the chain parties have largely lost sight of the personal relations with the farmer, being the end-customer. The Farmer as a Businessman 4

5 Best of both worlds. Alongside their popular company strategy of operational excellence, Treacy and Wiersema defined two other value strategies; product leadership and customer intimacy. With customer intimacy, companies continuously focus on the alignment of supply and demand. The focus is on optimisation of the lifetime value of the customer, and not so much on the turnover of a single transaction. With product leadership, companies centralise the continuous development of their products and services. Innovation and reducing the time to develop are important. Treacy and Wiersema advise companies to choose one of the three discussed strategies. It s only then that they will be truly successful. Nowadays however, other companies plead for a combination of two of the three strategies. The reason for this is that many organisations occupied with operational excellence are accused of spending too little time on understanding their customer, which is crucial in their operations. This caused a visible shift from operational excellence towards a combination of operational excellence and customer intimacy. This combination results in customized solutions for individual customers, based on a far-reaching insight into their real needs. Chain inversion In the past organisations and their products and services were the central point of focus in different branches. Nowadays, it s all about the customer and their individual needs. For the agricultural sector to be able to follow the changing consumer, the chain needs to move from product-focused to more customer- or farmer-oriented operations. Within the agricultural chain, it s the farmer who feels the need for a more customer-focused approach. This so-called process of chain inversion is based on the initiative of the customer, with the aim to provide them with such customisation. This doesn t mean that the strategy of operational excellence should be exchanged again, as seen already above, but businesses in the agricultural sector next to their focus on efficient operations need to pay more attention to building valuable relationships. In short: they need to keep working efficiently, but back at the kitchen table. As a supplier or producer, how do you make sure that you don t compromise on efficieny, but you do build on valuable customer relations? On the one hand, it means that suppliers and producers need to cooperate more within their own organisations, and colleagues and departments need to exchange more information with each other. The trick is to build the relation with a farmer together with several employees and make use of each other s customer experience and know-how. On the other hand, it also means that chain partners must use their external relations in the chain more and share more information about the end customer with the purpose of meeting all the business needs of the farmer. In order to make this possible, a single customer view is a prerequisite. The Farmer as a Businessman 5

6 A single customer view. The need for a single customer view has been noticed before in other branches. The research project Kanalen in Balans studied the government and discovered four universally applicable goals of a single or uniform customer view. 1. Service improvement 2. Increase in satisfaction and loyalty 3. Increase in turnover / sales / cross-selling and up-selling 4. Customer identification a single customer view is optimally used. Marketers of different financial institutions strongly focus on the enlargement of customer loyalty and strive to bind the customer to their business for several products and services (share-of-wallet). An example of a good use of a single customer view is the telecommunications industry, where a huge need for an integrated view of the customer is originated from merging services for Internet access, analogue telephone and television signals. For the customer, integrating these services of telecom providers is a logical combination that can be arranged with just one call. But in the back office of telecom providers, it s not that simple. Contracts are terminated, new ones made, service orders created, modems sent, letters automatically generated, etc. (source: Telecommerce. nl). In order to communicate this to the customer in a good and simple manner, a single customer view is ideal. Without it, everything intertwines, the customer receives mail and telephone calls from various parties and the coherence between the different services is completely lost. Also, within the financial services sector big steps are taken in the process of the transition from a productfocused to a customer-focused business model where Customer data These examples show that a focus on building valuable customer relations can make a big difference for organizations, also in the agricultural sector. After all, this focus doesn t only contribute to more solidarity with the farmers, it can also ensure that farmers continue to commit themselves to the chain and spend more as a whole. Focusing on customer demands in an view based on customer data from all layers in the organisation, regardless of size, source system, structure or volume. The trick is to recognise the customer through all the layers and departments. Systems for CRM have helped all kinds of organisations for years to improve their contact with relations and target groups. CRM is the heart of the customer-oriented architecture and spider in the web of customer data. Therefore, an optimally used CRM system is an ideal basis for the creation of a single customer view and building a strong relationship with the farmer. The Farmer as a Businessman 6

7 The role of the chain in a single customer view. Unique to the agri chain is that all parties depend on a single entrepreneur: the farmer. Farmers have to deal with market circumstances that have a direct effect on the chain as a whole. Thus the effects of an increase in scale are clearly noticeable for suppliers and producers. The number of farmers is decreasing at a rate of five per day, the Centraal Bureau voor de Statistiek, CBS (the Dutch central agency for statistics) reported last year. A decrease in the number of farmers means a smaller market with big players, allowing for an increased competition. There is also a lot going on in terms of modernisation. For example cattle farms have become efficient, partly through automated manufacturers asking for balanced food and whether or not that is dictated by today s society have high demands when it comes to animal welfare. Compound feed companies and stall builders that fail to anticipate on this, run the risk of losing market share. Help with the business The farmer as a shared target group specifically asks for information sharing in the chain. Sharing information makes it possible to add extra value, resulting in the entrepreneur being optimally served. In the context of optimal operations, managers have a great need for (management) information to be able to make ad hoc adjustments in their company. Think for example of the possibilities around heat stress with cows. When the thermometer indicates high temperatures a few days in a row, there is a risk of heat stress and low milk production. At temperatures above 25 degrees, the cows must keep eating and a special diet with extra vitamins and minerals is recommended. The chain can play an important role in the prevention of such issues by providing targeted information that allows a proactive approach. With a simple text message, farmers can be informed about extreme weather circumstances and associated hazards. Based on a shared knowledge of the livestock, specific advice for grazing, feed management and housing can be given, linked to concrete deliveries of extra minerals, for example. The next example is also simple but effective. It shows that sharing information can add value. A farmer needs a new part for his recently purchased spraying machine. He buys this part from a dealer who bought it from a wholesale, delivered by the manufacturer. When replacement of this part is covered by warranty, the request for warranty often proceeds through the entire chain, after which the manufacturer determines whether the warranty is valid. This is a labour-intensive and often an transparent process that can be shortened considerably by sharing information: warranty requests can be shared directly with the manufacturers and assessed more quickly, helping the farmer in a much faster way. Moreover, by sharing information, everybody in the chain gets more knowledge about common problems (such as the weak points of a sprayer) and how these can be easily prevented or solved. The Farmer as a Businessman 7

8 From information sharing to win-win For a successful approach around such customised information, cooperation and sharing data with the target group is crucial. But the effect of these efforts is also very positive. It enforces the bond with the target group that feels understood and supported. This doesn t only have a positive effect on the operations of the farmer, it also provides extra revenue opportunities for the chain. Next to the heat stress, there are many possibilities for the chain to serve its target group optimally by sharing information and add value to the relationship. Also in the field of equipment and crops, a joint approach based on sharing information serves extra opportunities and chances that strengthen the chain as a whole. Without a single customer view, building a strong relationship with a farmer using resourceful service is close to impossible. Traders, suppliers and producers all have a wealth of (digital) information about the farmer, obtained from contact with that farmer about one specific part of his operations. All combined, data offer many new insights that can contribute directly to the improvement of the overall Farm operations. The agri chain only really has a single customer view when it brings together all data available in the chain. That s also the role of the chain. By sharing all data about the shared target group, the chain as a whole can learn so much more about that target group. This ensures the well-known win-win situation. From practice Nutreco is an international organisation in the animal nutrition and fish feed industry. With approximately employees in 30 countries and the sales of its products in 80 countries, Nutreco his a market leader. Within the organisation, there was already much information about the customer, but this was spread throughout the company and different business units. We delivered a Microsoft Dynamics CRM solution that provided insight into all the information in just one system, including all data about and the communication with their relations. More than 500 employees from the different business units and in the various countries use this CRM solution. By using one CRM system in the entire organisation and its subsidiaries, Nutreco now has a better understanding of its customers. The Farmer as a Businessman 8

9 Collaborative CRM. The importance and the possibilities of a single customer view are clear. But how do we achieve this in this case single farmer view? How does an individual party in the chain make sure that all business information is secured? The solution lies in collaborative CRM in the chain or cooperation in the field of CRM by access to parts of the customer information of other chain partners. As said, CRM helps companies to enforce their relations hips and build a single customer view. CRM systems are the core of the business relationship management. This is often an internal matter, and the customer database is often seen as the most valuable asset in the organisation. However, when companies reveal parts of that information to each other, this value can be further expanded. Cooperation in the area of CRM is increasingly common outside of the organisation. The only requirement for good cooperation in the field of CRM is that the different systems of the chain parties make it possible to get access to parts of information from each other s CRM systems in various places and at different times. When this is realised, the application possibilities are unlimited; suppliers and farmers can adjust data in addresses or business information, follow the status of orders and deliveries, monitor complaints and make changes in a catalogue. A CRM system can be used for collaborative CRM in two ways. First, to set up a solid support infrastructure with which companies can directly and carefully communicate with all their relations about questions, complaints or other communication needs. The second way relates to the intensive maintenance of relations with all stakeholders and goes beyond a service desk only. It concerns the exchange of data between suppliers, producers and end customers with the purpose of sharing knowledge and strengthening the chain as a whole. The Farmer as a Businessman 9

10 Optimal results for the entire agri chain. In summary, the agricultural sector should combine the pursuit for operational excellence with personal relationship management at the kitchen table. In this way, the sector can actually continue to meet the changing needs of the farmer. Sharing information and working on a single customer view across the different layers of the chain, increase the opportunities in that area for the whole industry. In a quickly changing market it s important to be able to make adjustments fast and simple. The right technology choice is therefore critical for the success of this chaintranscending approach. Bringing together these five factors optimal operations, personal relationship management, sharing information, single customer view and technology delivers results. Better relations with the farmer Better cooperation and shared knowledge and information by the different partners in the chain increase the farmer s confidence in the chain. The application possibilities are countless and give the farmer the idea that the parties really know what he is doing and that they really support him. This added value ensures better relations. Insight into the whole chain To take the right decisions, one needs to understand one s own operations. A chain-transcending approach where information between the different chain parties is shared also provides insight into the whole chain and the relations between the separate parts. This doesn t only benefit the chain parties, but also the entire sector. Identify the impact of epidemics and respond instantly The combination of information from different layers in the agri chain may even lead to entirely new insights. Data stored disperately before may now uncover new connections. This can easily identify the impact of epidemics, and the different chain parties can individually or jointly respond on behalf of the farmer and his crops or livestock. Support the farmer with the optimization of operations by full information Sharing information does not only give access to a single customer view to suppliers and producers, also the farmer receives full management information that can help him optimize his business. Better segmentation possibilities The more registered customer data, the more possibilities for customized segmentation and supply. This doesn t only contribute to the optimization of the supply of products and services, it also adds to a better customer relationship and customer loyalty. In short, sharing information optimizes the entire agri chain. But there are also many advantages for the individual players. Centralised and ordered processes The decision to take the customer as a starting point for products and services offers possibilities for a centralised approach. All processes can be managed based on the customer, which meets a customer-focused approach. The Farmer as a Businessman 10

11 Efficiency advantage and savings through better understanding A centralised and ordered process approach ensures extra efficiency and saves costs. The new insights resulting from this optimized approach can also contribute to cost savings and efficiency. Grip on the sales organisation These centralised and ordered processes also optimize the sales. Sales professionals can be managed better, scheduled more efficiently and sent off with more precise information. Understanding the customer potential Understanding of the chain also ensures insight into the total client potential per farming business. By combining all operational data, the extent of the potential sales per company becomes clear; for example the total need for compound feed or the market share of the individual supplier or producer. In this way the link in the chain gets a clear understanding of its chances and opportunities. Management reporting The use of the right technology is the basis of good management reports. This provides additional support for future decisions and strategies. Secure reliability Capturing and organising processes also secures agreements. It makes the organization more compliant and it increases its reliability considerably. This contributes to a pleasant cooperation and it reinforces the relations in the chain. The Farmer as a Businessman 11

12 Personal relations enforce the chain. The conclusion? Without a single view, no insight into the separate parts of the chain and the chain as a whole is available. And without collaborative CRM, no single customer view for the chain can be created. With a single customer view, all parties in the chain establish a solid basis for the future. It s the starting point for more customised service and products, and for personal communication with the farmers. Automating the single view in a CRM system ensures additional optimisation of the processes and makes them future-proof. Sharing is caring Has this whitepaper inspired you? Let us know! We would love to hear your opinion. At CRM Partners, we believe that organisations are more successful when the relationship with their target group is personal. It truly involves a supplier or producer in the needs and wishes of the customers, whether they are farmers or occupied by other things. Entering personal relations will determine the future of the agri chain. Personal relations ensure connection and commitment, and are a breeding ground for loyalty. Such an approach responds to the various market trends and enforces the chain as a whole every day. The Farmer as a Businessman 12

13 About CRM Partners. Serving true customer needs, that is what CRM Partners makes possible. In addition, personal contact with the target group is a guideline for success. CRM Partners is the Dutch market leader when it comes to customer relationship management, and implementations of the Microsoft Dynamics CRM Platform. Through consultancy, technical support and training, organisations are guided into a full integration of CRM into their business processes. The focus of CRM Partners is on three markets: Agri, Finance and Members. Through unique labs, organisations in these branches get access to a wide range of services, solutions and knowledge. Customers such as ABZ Diervoeders, Kuerneland, Kramp Groep and Nutreco have already chosen CRM Partners. CRM Partners is a Microsoft Certified Gold CRM Partner and member of the President s Club and the Inner Circle of Microsoft Dynamics. In 2013 CRM Partners received the title of CRM partner of the year finalist and Country partner of the year finalist, receiving the Partner of Western Europe Award. Visit our website for more information about CRM for agri businisses More information about CRM Partners? Visit the website or follow CRM Partners on Facebook LinkedIn Twitter. Copyright CRM Partners, All rights reserved. The information in this whitepaper is carefully composed. However, CRM Partners can take no responsibility for any of the consequences of incompleteness or inaccuracy that may follow from the material in this document. CRM Partners is a trademark of CRM Partners Group BV. Other company names, product names and company logos used here are trademarks or registered trademarks of their respective owners. The Farmer as a Businessman 13

14 References. Sources consulted in order of appearance in this whitepaper. Beyond the family business? Organising the agricultural business. Now and in the future. G. Backus, W. Baltussen, M. van Galen, H. van der Meulen en K. Poppe. LEI, Wageningen Universiteit, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market. New York: Basic Books. M. Treacy & F. Wiersema, Chain inversion: The producing consumer. G. van Atteveld, Operating channels. Marije Teerling and Piet Boekhoudt, August Creating a more simple customer view. Vincent van Hunnik, Telecommerce, Fewer farms due to increasing farm growth. Nu.nl, 25 September The Farmer as a Businessman 14

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