Selling Value to farmers in today’s Ag economy – part 2

Time Value

Have you ever heard: “Time is money”?

Do you believe it?  Have you ever stopped to consider how much your time is worth in real dollars?  What about your customer?  What dollar value do they put on their time?

Well, if you haven’t thought about these questions before, you might be missing out on an untapped value that you and your products provide to customers.

As you approach a customer to figure out how much time value you provide, there are a few things to explore with them:

• Are they a DIY (Do it yourself) kind of person?
• Or, do they go to the other extreme and hire almost everything out?
• Do they have a lot of time on their hands, or are they constantly under pressure to keep up with their schedule?
• If they did have more time, what would they do with it?  And what would that mean to them financially?  Emotionally?
• If they are a DIY, how much value do they put on their time? 
• Do they staff their farm or business for the busy season or for the slow times?  If they staff for the busy season, do employees need to be kept busy during slow times?  If they staff for the slow season, how do they get everything done during the busy season?

Here are some basics to think through as well:

• Hourly pay is roughly half of the annual salary.  For easy math, if your customer is paying an employee an annual salary of $100,000, it equates to $50/hour.  Use this method to convert a customer’s time and their employee’s time into a dollar value.
• Go to your manager or truck fleet manager and find out what the mileage cost is for your fleet.  You are looking for the cost, not what you charge your customer.  As a salesperson, you should already know your company’s per-mile rate.  When you discuss trucking with your customer, you want to get their opinion of what their trucks are costing them.  Many of them might know the cost of the truck, but fewer will put a real value on the time it takes them or their employees to drive.  Their cost needs to include their driver’s time, even if it’s the customer is the driver.
• Very important: Do not calculate the time it takes you or your company to do something.  Instead, calculate the time it takes your customer to do it.  Most likely, you and your company are tremendously more efficient at a task than your customer.  You will get the job done much faster than they would.  For example, last weekend, I had a new roof put on my house.  Now, I could have done most of it myself.  I know how to strip a roof off, rent a dumpster, buy the supplies, staple on tar paper, hammer shingles, do a poor job at the peaks and valleys, etc.  It would have taken me weeks and had the risk of getting my roof wet while doing it.  The crew I hired did it in one day.  The time value that I put on this job is not one day.  It’s the weeks of my actual time it would have taken. 

During difficult financial times (especially now), Ag producers are going to scrutinize every expense and try to save by doing it themselves.  This might be frugal, but it can end up costing much more.  Here are some questions and thoughts to uncover when you approach a customer who is considering doing it themselves.

Questions for the DIY Guy:

• Is it something they can do, and they have plenty of time?
• Is it something they can do, but don’t have the time?
• Is it something they can do, but do it very poorly? Is it something they can do, but too complicated for anyone else to do on the farm?
• Is it something they can do, but takes tools, equipment, or assets that need to be replaced or maintained?
• Lastly, what are the risks if they do the job poorly?  In my roof example, there could be water damage while roofing, leaks after roofing, or the cost to have my new roof replaced and done correctly.

So far, we have mostly referred to product transactions such as trucking, spraying, and providing finished products to our producers.  What about services such as consulting?  Many in agribusiness provide advice in the form of consulting or coaching.  How much is that advice worth in time value? 

The answer to these questions is extremely important for service providers in tough financial times.  They are some of the first expenses a producer will cut.  Unfortunately, the answer to those questions is the proverbial “It depends”.  It depends on the knowledge and resources of the consultant and the individual customer.  In some cases, a consultant is extremely knowledgeable and experienced compared to their customer.  And versus their competition.  For example, a very experienced dairy nutritionist who works with multiple large dairies in the area versus their competitor, who is new to the industry.  There is no question that this experienced consultant is going to help their customers become more efficient and effective in their feeding programs. 

In other cases, you, your customer, and your competition are equally knowledgeable. In these cases, it’s important to remember that you are there, standing in front of the customer.  Your competition is not.  Knowledge and experience might be equal, but you are taking the time to be on the farm and work with the customer. 

The time value you provide is harder to determine, as it varies from the busy season to the slow season in agribusiness.  It changes from year to year for you and your producer.  If you are new and have few customers, then you have more time to spend on your customers.  As you get busier in your sales, your time becomes more valuable to you and to your customer.  For your producer, they may not have the financial resources early in their farming business to hire services.  Later, as they become more profitable and experienced, their time value increases as well.  They understand that spending to have someone else do a task might be the less expensive route to take.

There would have been a day when I roofed my own house.  But certainly not today.  My time spent doing so versus the time left and the risk is just too high to be on a roof for weeks.  Which gets us to the third value factor: Emotion! 

Join me right here next week when we continue with how to sell on the Emotional value you provide to your customers.