Everyone wants to understand their customers better. Everyone wants to understand their market better.
It’s such a common desire that being “customer-centric” is a common phrase not just in agriculture but virtually every industry.
For many people “understanding your market” means getting on the phone with customers. And that’s the right place to start. But you can only have so many of these conversations.
Understanding your market in a true and deep way requires understanding your customers at scale.
As the market continues to evolve and times change, agribusinesses are relying heavily on deep insights:
- Strategic revenue growth to expand market share or wallet share requires detailed information on both current customers and your prospects.
- Targeted and personalized marketing -- which is becoming more and more expected of agribusinesses -- requires that you know exactly which message and product a given farmer is interested in.
- Sales conversations that solve a problem rather than simply sell a solution require your salespeople to understand the scope and depth of the operation so they aren’t wasting the farmer’s time with something they don’t want or even need.
If you want to grow your market share, or improve relationships with growers, or launch digital marketing campaigns that truly resonate with your target market, then you have to start with a clear picture of who your customers are and where you stand with them.
Here are three key questions to ask to better understand your customers and the market as a whole.
1. Who is your customer and how can you serve them?
“It all starts with the customer.”
We say this all the time, but how are you putting it into practice? What active steps are you taking to better know your customer and understand the various ways that you can serve them?
Every farmer farms differently. The more knowledge you have about the farmer the more you can understand whether they’re a good fit for you.
Any effective marketing campaign must start with a clear picture of who your ideal customer is, and the best ways for you to reach them. This impacts everything, from messaging to product to timing.
If a farmer is a part of your target market, they have to have an addressable need that your product or service effectively solves:
- Product-farmer fit. A common phrase in the startup world is “product-market fit,” which describes how to find the right market that the product can best serve. The same is true in agriculture with “product-farmer fit.” A buyer persona is a helpful tool for figuring this out.
- Price point. Getting a farmer to do business with you requires that they’re able to meet your price point.
- Geographic location. If you can’t get your product to the farmers, they’re not a good fit for you.
Spending time to get this definition right -- and to make sure it’s informed by accurate agriculture data -- will help you be more effective in understanding your customers how your agribusiness is best positioned to serve them.
2. How are you performing in your market?
When you understand your customers and who they are, you can clearly define your market.
Only when you have a clear definition of your market -- meaning the market you actually have a shot at doing business with -- the more effective you’ll be at gauging how you’re actually performing:
- Profitability and return on investment. Are the farmers you’re going after generating enough business to justify your marketing and sales efforts? If not, that’s either a sign that you need to improve your effectiveness, cut costs, or that you’re simply going after the wrong people.
- Market share growth. Since agriculture is a zero-sum game, if you want to grow revenue, you’re going to have to take it from a competitor. However, how much market share is available to you is going to vary based on your type of business. Understanding your customers helps you get a clear sense on where you stand in your addressable market.
- Increased wallet share. There may be a significant portion of your current customers where you aren’t maximizing the potential there. How much you’re realizing this potential can be crucial to how you’re performing.
There are a limited number of farmers out there. The only way to grow your market share is to take it from a competitor. Conversely, the only way to lose market share is to have a competitor come and steal it from you.
That means one of two things. First, a solid strategy requires you to know where you stand in the market so you know the real opportunity out there. And second, if you have to out-maneuver a competitor to grow that market share, you need to be highly targeted and specific in how you communicate with them.
This means that not only should you focus on your addressable market, but you should understand the full extent of what your customers are facing so you can propose a valuable solution to them.
For some customers, this could be helping them switch to a new hybrid. Or it could mean getting them better equipment to manage their large operation. If they’ve been having a lot of success, they could be looking to purchase land and would be open to taking out a loan.
Whatever the specifics, understanding your customers is critical to not only gauging but improving your performance in your market.
3. What potential new opportunities are out there?
You can only do business with the farmers in your footprint. But there are many ways to expand your footprint -- whether through geography, product or pricing.
But how do you know the best places to expand your footprint? This is where understanding your customers can be very helpful.
Perhaps when analyzing your customers, you find a few outliers. They don’t fit the same persona as the majority of the people you do business with.
It could be that these people are genuine exceptions and that there’s nothing there. But what if those outliers are pointing you toward a potential new market full of opportunities?
When expanding your footprint, there are a few things to consider:
- Base your decisions on facts, not assumptions. Start with those customers who you know or are at least fairly certain can end up being profitable. Expanding your footprint is risky, so you want to use knowledge to mitigate that risk.
- Consider the real limitations to your addressable market. It’s possible that your market doesn’t have room for expansion, at least as it stands right now. This means you either need to improve your relationships with your current customers or take a serious look at what new products or geographies you can break into.
- Understand that it could just be an aberration. As we mentioned above, an exception could be just that -- an exception. These things happen. Always dig deeper into potential opportunities to ensure there’s something there. If there’s not enough spend potential to justify the investment, for instance, then you probably shouldn’t go after it.
With a market size of over 2 million potential customers and $311 billion in potential revenue, there’s certainly the possibility that there are pockets of opportunity that you aren’t realizing at this moment.
Your outliers could provide a clue as to where those potential opportunities are. Do some research on them. See if there’s real spend potential. And if you can expand your market, go for it.
The better able you are to understand your customers, the better you’ll be able to make the necessary strategic decisions to grow your agribusiness and realize success over the long haul.