At InfoAg 2017 in St. Louis, finding effective and lucrative avenues for billing precision support and streamlining delivery of data management services, were among the trending topics discussed by dealer attendees and speakers during the 3-day event.
Here a some of the key takeaways shared by Steve Cubbage, president of Record Harvest in Nevada, Mo., Farm Equipment’s 2007 Dealership of the Year, and Tim Norris, CEO of Ag Info Tech in Mount Vernon, Ohio, Precision Farming Dealer’s 2015 Most Valuable Dealership.
Building Big Data From the Ground Up
With so much excitement geared toward variable-rate seeding, targeted fungicide treatments and other industry breakthroughs, Cubbage fears that farmers and manufacturers could be taking shortcuts in data management basics.
He outlines the importance of conventional data management practices, including field boundary setup and crop protection product listing, as a means for building a reliable base of information in the field. Cubbage likens the alternative process of picking and choosing data to having “as many holes as Swiss cheese.”
“You can walk out to a trade show and see a lot of different things, but it’s really a log jam because if they don’t have the basic, foundational data, big data doesn’t work,” he says.
As the need for conventional data becomes recognized, incentive programs for farmers have simultaneously expanded. More often than not, relying on free data (known as “freemiums”) from growers is insufficient and lacks the incentive for quality information, says Cubbage.
In response, tech companies looking to solidify their databases are paying growers $1.50-$2.00 per acre to collect planting and yield records, Cubbage explains.
While strong in theory, Cubbage says the information still needs to be properly managed for the programs to succeed, which is where “precision accountants” can step in, as Cubbage coins it.
As the third leg in the incentive program tripod, these “precision accountants” ensure that boundaries and records are adequately kept so growers can sell data legitimately. In return, the typical “accountant” receives anywhere between 50-75% of the per-acre payment.
Notable examples of companies teaming up to work with farmer networks include ADM and General Mills, as well as FarmMobile and Cubbage’s own Record Harvest. So far, Cubbage says around 25 farmers are currently working in their program successfully.
“We’re able to create that data foundation and the grower didn’t pay for it,” Cubbage says. “And once the data gets into FarmMobile, the grower can sell the data again and again.”
Assessing ‘True Cost’ & Getting Creative with Precision Services
Norris encourages dealerships to avoid playing too nice when it comes to billing what deserves to be billed, specifically for precision services. Citing the typical $15 per hour service employee as a baseline example, Norris takes a deeper look into the ‘true cost’ of that worker, considering vacation time, training requirements and benefits.
In total, these additional factors cost a dealership nearly twice as much for that tech as the on-paper salary would indicate (closer to $50,000 than $30,000).
With ‘true cost’ as a primary component, Norris believes the ideal blueprint for dealership success is a 50/50-profit split between services and equipment sales.
In order to do so, he says adequate billing for all services, be it a 5 minute or 5 hour job, is a necessity, although the abundance of dealerships that don’t charge anything make the scenario difficult.
“As an independent, we’re competing with companies that are willing to give that service away,” Norris says. “That makes it harder for us to charge what we really should charge.”
The best strategy to effective billing in a tough economic environment is to increase the amount of billable hours, providing a lower and more appealing rate to customers, Norris says.
“We’ve implemented service plans to get equipment ready for spring or fall that allow us to work off-season, and a program to inspect planters in the summer before being put away for the winter,” Norris says. “All of these have helped grow the percentage of available hours that we bill.”