By Kelsie Stelting, Contributing Writer
When Scott Meldrum became Van Wall Equipment’s Integrated Solutions manager 3 years ago, he had a goal — to make the precision farming department cash positive. At the top of his list was transitioning to a billable service model for precision farming services.
“When precision first started, it was auto-steer,” Meldrum says. “As we got into the more complex application, as in row shutoff and more documentation, there was a lot more time that needed to be devoted to serving the customer on the technical side of things.”
Meldrum says the first step to charging for services was to make sure everyone at the dealership was on the same page and creating a way to track services. “It was not hard to convince people at the dealership, but when we first started to charge growers, it was an adjustment process.”
Van Wall provides its customers with several service plan options, including a comprehensive plan, phone assistance, data management and per-hour assistance. The comprehensive plan is a “one-time, all-encompassing fee” that depends on the size of the customer’s operation, Meldrum says. “The only thing [customers] would pay for on the precision side of things would be parts.”
For the phone support option, which costs about half of the comprehensive plan, Meldrum says, “Some growers want strictly to be able to call and ask questions over the phone. They know that they can call us as much as they want, but the minute it requires a visit, it’s converted to an hourly charge.”
The $125 per hour fee has a one hour minimum, and Meldrum also emphasized that Van Wall doesn’t charge customers for the trip, so this pricing model is transparent and consistent.
An important aspect to providing these plans is accurately tracking service hours. One tool Meldrum’s team uses is Google docs and sheets, which serves two purposes. It allows the team to record information as well as share information quickly with each other and the customer. Meldrum says it’s imperative to provide the grower with as much information as possible so they know what they’re getting charged.
Part of what’s made the transition from free to fee so successful is the department’s commitment to service. Meldrum emphasizes working with the customers to reach a “trusted advisor stage,” where the customers rely on Meldrum and his team and trust them for support.
“It’s made us a lot more trusted throughout our area of responsibility, because we make sure that our integrity as a dealership is very high,” Meldrum says. “[Customers] trust that if we are going to charge them, we’re not going to over-charge them.”
Van Wall has seen success with this outlook, and since moving to the billable service model, Meldrum says his department has reached his goal of becoming cash positive. Some 60% of Van Wall’s precision revenue comes from service and support, well above the 17.3% reported by respondents to the 2017 Precision Farming Dealer Benchmark Study.
Looking forward, Meldrum sees challenges and opportunities for growth. He says it’s important to treat specialists well to prevent turnover and ensure customers are being billed fairly for employees who are learning on the job.
With the goal of becoming profitable achieved, Meldrum now aims to make precision service 75% of total precision revenue. He is constantly looking for “other forms of revenues” as precision farming equipment is quickly “becoming more and more a factory-installed option.”
Some ways Meldrum has prepared for this is by offering crop insurance through the dealership, providing agronomy services and working toward becoming more involved advisors.
Charging for precision farming services is one way many dealerships are becoming more sustainable and providing improved services to customers. For any dealership looking to move to a paid model, Meldrum has a few words of advice: “Treat everybody fairly and have a well-thought-out plan.”