Three speakers at the 2016 CAAR Conference discussed finding opportunities in a landscape of changing loyalties.
Moderator: Delaney Ross Burtnack
Emerson Csorba – Co-founder and Director, Gen Y Inc.
Emerson Csorba serves as an advisor for public and private sector organizations and academic institutions across Canada and Britain on topics related to cross-generational engagement and the future of work. As a World Economic Forum Global Shaper, Emerson represented Cambridge, England at the 2015 Annual Curators Meeting in Geneva, Switzerland, and regularly participates in global meetings on the future of work. He is an alumnus of the University of Alberta and University of Cambridge.
Justin Funk – Managing Partner, Agri-Studies Inc.
Justin Funk is the managing partner of Agri Studies, Inc., based out of Guelph, ON. He has developed sales and marketing professional development programs for a multitude of organizations spanning all areas of agriculture. He currently holds faculty positions in the College of Management at the University of Guelph teaching Marketing Strategy in the MBA in Agriculture, and at Purdue University teaching executive programs for the Center for Food and Agricultural Business.
Dr. Allan Gray – Director, Center for Food and Agricultural Business and Agricultural Economics faculty at Purdue University
Dr. Allan Gray serves as director of the Center for Food and Agricultural Business and the MS-MBA in Food and Agribusiness Management. He joined the agricultural economics faculty at Purdue University in August 1998. Allan currently holds the position of Chair in Food and Agribusiness at U.S. agricultural cooperative Land O’Lakes. His research interests are agribusiness management, strategic planning, decision making in uncertain environments and simulation. He also works on the Large Commercial Producer Survey, conducted every five years by the center, which explores the attitudes and buying behaviors of large commercial producers.
Delaney Ross Burtnack: Welcome, and thank you for being part of our panel. In the presentations this morning, one topic discussed is that the basis for customer loyalty is changing. Can you give a bit of context on this, from your individual perspectives?
Emerson Csorba: From what I’ve seen, sales relationships nowadays seem to be much more transactional than they have been in the past; not so much based upon a shake of the hand. They are much more based on factors such as price, social impact, these different things that are much less based on the person selling, and much more based on the values that a company espouses.
DRB: Justin, how have you seen customer loyalty changing through the research you have done?
Justin Funk: One thing we’ve observed over a period of time is that younger farmers are certainly less loyal than older farmers, and we have evidence that would suggest it’s not simply an age-related thing (which would suggest that people become more loyal as they get older).
The evidence is that it’s a generational thing – the decrease in amount of loyalty that exists today is going to move with that group of people, as they get older. It’s definitely a hot topic, and something we need to pay attention to.
Dr. Allan Gray: One of the things that’s always struck me is that this generation – the younger generation – they’ve seen a lot of change in their lifetime. They might be a bit jaded about the idea of loyalty.
Younger generations might be thinking ‘My father, or my grandfather, was loyal to this local retailer who has changed names four times or has now closed in my local community and moved somewhere else.’
So the producer is supposed to be loyal to them, but they’re not showing much loyalty in reverse. I think that’s the mentality that plays into “who is supposed to be loyal to whom?” A lot of that has to do with the influences and changes they’ve seen in their lifetimes.
For example, if you look at a sports perspective, free agency in professional sports came about during this generation’s time, growing up with professional sports as an influence in their lives. And now, players aren’t loyal to teams any more, and teams aren’t loyal to players. Sports can often have a huge influence on society, and now that’s one area where loyalty doesn’t have a big role.
EC: I agree 100 per cent that uncertainty is a characteristic of the world we’re living in now. This is something that’s ingrained for young people, when they open a newspaper, they’ll see articles that are talking about the importance of certain skills in navigating an uncertain world.
That kind of uncertainty or anxiety about what the long-term is going to entail becomes this kind of unconscious thing that guides their behaviour going forward.
JF: When you look at the idea of uncertainty from the farmer/salesperson relationship, the person you’re investing time with very well might not be there – the business will be, but the salesperson might not be – a year from now. So customers are reluctant to develop that relationship, knowing that at the end of the day, that person might not be the person they’re working with next year.
AG: I think the other interesting part of that is that in agriculture, we went through a period where essentially we didn’t hire anybody. So we have a generational shift in the agri-business industries, where we have a set of folks that are in the process of retiring. So as we think about the new generation of farmers or customers coming in, there’s a transition occurring in the leadership and the sales force of the agribusinesses that naturally leads to perhaps skepticism or uncertainty.
If nothing else, it could very well become a trigger for a farmer to say “That relationship that my grandfather or father had with this company through this particular person – they’re retiring and leaving anyway. There’s no personal connection for me to continue that relationship, so why wouldn’t I look around?”
JF: It’s also an opportunity!
DRB: With all of this in mind, we are hoping to tease out some knowledge in terms of how a retailer can take cautions, or take advantage of these trends, to help either shore up the loyalty that exists or build an increased loyalty.
How does a retailer take action in terms of encouraging their customer to continue to do business with them, and grow business with them?
“If we’re going to share values and create loyalty with a farmer, we’ve got to get into their business and figure out how to help them be better decision-makers.” – Dr. Allan Gray
AG: I buy into the idea from Emerson’s presentation about shared values. I think shared values from the retailer to the farm level really has to be focused on the business. If I think about what this means in the business-to-business relationship, it’s ultimately a question of “As a retailer, how much do I share in the values that this farm has, for what it’s trying to accomplish?”
Retailers have to be able to say “This farm is trying to accomplish these things: in business, in their family, in social impact, and environmental impact. And I (as a retailer) understand what they’re trying to accomplish, and I want to be able to deliver that for them.”
Here’s an example of that opportunity: By and large, we still sell products to farmers based on cost per tonne, or cost per acre. And farmers still think that way, I’m not denying that. But it’s a fundamental business flaw to think that way. Farmers need to think about cost per bushel! It’s the only thing that matters to them. And if you think about your own business in the units in which you sell them, it’s on a cost per tonne basis.
Farming is the only industry I know where the general history has been: I buy on a cost per acre basis and sell on a cost per bushel basis. That makes zero sense, if you think about it.
If I’m a retailer who is really invested in this business, I should realize that this is a commodity business. How are these companies going to be successful? Their cost per unit of production needs to be unbelievably efficient because they compete in a global market that requires that. It’s the cost per bushel that matters most.
The point is that the business needs to be about reducing the cost per bushel. So how can they get more productivity out of the cost that they spend, or how can they use less of that input because it may not be environmentally friendly, but still get that opportunity to produce a product at a higher level?
If we’re going to share values and create loyalty with a farmer, we’ve got to get into their business and figure out how to help them be better decision-makers. And I think that’s related to the idea of getting into a relationship that has shared values.
DRB: That’s something that resonates for me, because the two things that stuck out for me in your presentation were the focus for the farmer on managing cost, and that performance is critical for them. Thinking about the cost per bushel really addresses both of those. It’s performance of the product, and the cost management, from a more reasonable sense than the cost per acre. It makes sense.
Emerson, in your presentation you spoke about working through an understanding of corporate goals, corporate values and that support for employees and the customers. Any further thoughts on how a retailer might take that personal approach to engage their people?
“Uncertainty is a characteristic of the world we’re living in now.” – Emerson Csorba
EC: A lot of it comes down to conversation between leaders in a company and some of their younger staff. It sounds very basic, but I’m actually surprised by how seldom it takes place. I’ll go to an organization and speak with the younger staff, and they’ll say “We’d like to have a conversation with executive members, and they say that they have an open door policy, but nothing ever takes place along these lines.”
That’s the disconnection that I see within organizations. Executive teams say they’re open to having these conversations with their staff, but in practice, the younger staff don’t feel like they can engage and have that face-to-face conversation.
So I recommend that members of an executive team actively set time aside – say, half a day – where they engage on a one-on-one basis with the younger staff. So some of the younger staff at a company can be speaking to the CEO or members of the executive team, on issues that they feel are important to them. It’s something that doesn’t take that much time or financial investment, but that leads to a lot more engagement between management and the younger staff, who will now feel a lot more appreciated.
AG: Emerson, does your research show that the environment in which the millennials grow up has an influence over their outlook on life, or is it more about the generation as a whole?
EC: It’s difficult to say, as there are many factors – social, cultural, economic – that shape people’s lives. But anecdotally, the way parents have spoken to their children about being special, and how they have the potential to change the world and do anything they want, these kinds of things do shape how a lot young people think, going forward. There’s not a lot of realism, where they think they should spend 10 or 20 years working hard before they deserve to be in an executive role.
AG: So based on that, here’s my hypothesis: Increasingly farms are consolidating, and there aren’t as many people in agriculture. But the ones that are in it, typically they have been raised in that world. I wonder if a lot of our young customers are coming from an environment where they’re less like their generational cohorts.
But then the challenge becomes that the retailer is having an increasingly difficult time hiring young people with a farm background, and those they hire likely came from an environment that’s more typical of generation Y. Is there a potential that we have employees that are consistent with the millennial mindset, but our customers are not consistent with that?
EC: Yes! In Canada, there’s a dearth of young people going into farming, who want to stay on a farm as their career. Those who do pursue that option are those who have thought about it, and are committed to that profession. They’re probably not the same type of young person who is going into a corporate environment and thinking they will do five different things over the next 15 years.
JF: In his presentation, Allan touched on the fact that it’s increasingly hard to find good candidates for jobs in agriculture. I remember doing a program for an agri-retailer client in Ontario, and their challenge was this: I can’t challenge, or discipline my employee. Because there are so many choices, they can quit and go work for somebody else. A lot of it may stem from a feeling of entitlement.
DRB: Justin, do you have thoughts on how retailers might prepare their salespeople to connect with the customer?
“Maybe save the product conversation until later, until you’ve had a chance to develop a bit more trust and rapport.” – Justin Funk
JF: There’s no silver bullet. But it’s key to recognize that products and services do not create loyalty. And we spend a lot of time training on product knowledge – which is fine, and I’m not advocating for not doing that. But if I put myself in the position of a young salesperson just getting out of school, and being handed the keys to a truck and a customer list, and being told to go sell so many tonnes of certain products, that’s a daunting task.
We have to understand that, and give salespeople the confidence and the tools that they can use to not go out and only talk product, but to really get to know the customer better. Because the customer is saying they want their salesperson to get to know them at this level, and ask the personal questions.
Maybe save the product conversation until later, until you’ve had a chance to develop a bit more trust and rapport. Because the product message you’re selling isn’t any different than what the last guy who pulled into the laneway was saying.
Read our Panelists' Follow-Up to this Discussion
The three panelists from the conference discussion on customer loyalty each answered a follow-up question after participating in the panel.
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