Selling in today’s volatile Ag economy

How to navigate the risks and opportunities when selling to farmers and Ag buyers

Volatility is great for Ag salespeople,

If they recognize the opportunity.
If they can sort through the noise.

Volatility is bad for Ag salespeople,

If they fail to recognize the risk.
If they ignore it and don’t get in front of it.

As salespeople, we love selling into a booming market. By booming, I mean a steady and profitable customer base that sells an in-demand product well above break-even. Those are great days. Everyone is increasing productivity and making a margin as they expand their business. However, in 35 years in agribusiness, there may have been maybe six years of this type of booming Ag economy. The rest of those years, I would consider to be “volatile”. Odds are high that you will spend the majority of your agribusiness career selling to customers who are having difficult times.

We work in a commodity business. Even though we offer value-added services, our vendors provide commodity products. Our inventory costs and our customers’ selling prices are tied directly to commodity markets and, very often, to international commodity markets.

All that to say, enjoy the good times in selling to farmers and Ag buyers, but don’t expect it to be the norm.

That’s why you need to look at volatility through a different lens than your customers and, more importantly, differently than your competition. Let your competition go out on the farm and commiserate with farmers. Let them try to connect with customers by being a bigger downer. It may feel good for your competing salesperson to do so. Yet, it does nothing for the customer.

Volatility examples:

Transition: Your customer is reaching the age of transitioning the farm or agribusiness. Maybe they have brought their adult children into the big decisions on the farm. They aren’t keeping up with maintenance/replacement on key pieces of equipment. Major shifts in the way they are financing items, such as their operating note. Maybe they are asking for payment terms instead of using their operating note.

Changes in the financial stability of their end user. This really pertains to niche markets. For example, non-GMO beans. The Midwest was a great supplier of non-GMO beans to Japan until the Japanese economy had problems. Overnight, the premium for non-GMO beans dropped quickly, as did the grain elevator specialty programs. In the early 2000s, the Korean market was buying up as many deer and elk products as could be produced. Again, their economy hit hard times, and inventory prices for deer and elk products plummeted.

A major life event happens to your customer. This is not meant to be predatory by any means. However, you have a company of people, equipment, and resources that are depending on you to make sales. So, if your customer has a major medical event like a stroke, cancer, or loses a family member, then obviously, this can trigger a major change in their business plans. This type of event is a sign for you to pay closer attention to this customer. Allowing them time to get their life back together, you can ask them about the impact this event might have on their future plans.

Competition makes a major shift in the way they do business. They may merge or shut down a production facility. Maybe they sell their trucks and outsource trucking or production. Their ownership changes hands from one generation to the next. Their salesperson for your area retires. Maybe they change their Go-to-Market strategy. It does not take a lot of change by your competition to make customers upset and open the door for you to revisit your prospects.

The goal for a salesperson during volatile times is two-fold.

First, if you have the business, your goal during volatility is to keep it and make sure it survives the volatile events.

Secondly, if you do not have the business, volatile events like these can be opportunities to open up discussions with them. This is when being in the number two spot with a prospect is key to reconnecting and potentially gaining a customer.

Considerations

Keep your eyes and ears open. Look for those areas that are or could cause volatility. Ask your customers, your peers, and complementary vendors about these topics. Don’t expect it to come from your marketing department or main office. You know far better what is going on in your specific territory.

Too many eggs in one basket. If 10% or less of your customers make up 90% of your sales, then you are at risk of those customers’ profitability and patronage. Make efforts now to broaden your customer base. 80-20 is typical, but even that has some risks. This also applies to products. If 90% of your sales come from one or two products, you are at risk of having too many eggs in one basket.

Narrow your Niche. This is great advice for the salesperson who is either newer in their sales career or doesn’t have market share. This is also the opposite of my previous point. However, if you are not known for a specific skill, product expertise, or customer type, then you are mediocre at all of it. You run the risk during volatility of being overlooked. In tough times, customers look for specialists. By narrowing your niche customer, you can increase your reputation as an expert.

Volatility and tough times can easily be looked upon with fear and uncertainty by anyone in agribusiness. In sales, we are exposed to this fear and uncertainty all day long, from our customers to the media. Our role as salespeople is to help guide our customers and prospects through these times as best we can while returning on the investment our company makes in our territory.

You will spend a career working in and out of volatile times. Learn how to view them as opportunities.