Market saturation and competition are contributing factors to decreasing revenue on precision products. While precision service can be an equally competitive market, it is also one in which dealers have had success differentiating themselves and capturing more lucrative margins.
Dealers don’t want to become one-stop shops in the sense customers come in once and never return. They need recurring customers to build recurring revenue and much of that is rooted in being able to effectively bill for precision support, whether it’s per call, per are, per hour or per year.
During a dealer-to-dealer panel discussion at the 2019 Precision Farming Dealer Summit on Jan. 7-8, you will hear 3 precision farming managers share their foundational and progressive approaches — effective and experimental — to making billable service a bankable part of your precision business.
Speakers for this panel include:
Devin Dubois, vice president of Integrated Solutions, Western Sales Ltd., in Rosetown, Sask. Striking a profitable balance between technology troubleshooting and agronomic problem-solving is what led to the “eureka moment” for Dubois and Western Sales Ltd., 8 years ago.
That’s when the 6-store machinery dealership committed to bridging the service gap for customers, and developed its patented FieldSmart platform. Learning from early experience selling and supporting the recurring revenue program, Dubois helped expand the platform to include independent precision software support for 6 dealer groups in the region.
“It’s a unique approach because there is some overlapping territory among our dealer groups,” Dubois says. “But about a year ago, we saw opportunity to take that software and support outside of the dealership and make it an independent business and broaden it.”
Dubois shares the dealership’s newest revisions to its “free to fee” service transition and how to move away from the “widget mentality” when deciding how and when to bill out support.
Lanty “Spud” Armstrong, precision farming manager, Ag Technologies, Rochester, Ind. Getting traction with precision service plans can be difficult, which makes finding the right entry point essential. Armstrong struggled with establishing annual service packages as a consistent source of revenue and instead opted to focus on billing out the basics — phone support.
The 3-year focus has allowed the independent precision dealership — located 150 feet from its equipment dealership partner, New Holland Rochester — to strengthen its base of precision customers while also creating new machinery and hardware sales opportunities.
“When we started, about 10% of our customer base was enrolled, and we’ve tripled that,” Armstrong. “We’re picking up more each year and we’re keeping the ones we have, so it’s a growing part of the precision business.”
Armstrong shares his trial and error testing of phone service plan models to include attractive pricing, patience and the need to bend but not break with customer flexibility to maintain a margin.
Ed Pollock, sales manager, SDG Precision Ag Services, in New Era, Mich. Some dealers have had success increasing the scope of their precision services, enabled by growth in their precision staff. The latter isn’t a luxury Pollock has enjoyed, as a sole precision proprietor of the single-store, independent dealership.
But he’s been able to establish a profitable niche with precision service — especially billable phone support plans — which has contributed to a 400% increase in revenue since 2015.
“I have to recoup revenue for phone support because I can’t multiply myself,” Pollock says. “It’s adding value because customers are willing to invest in more hardware and software, so it’s been a big driver of overall business growth.”
Pollock shares the small-store challenges of competing and capturing recurring service revenue, setting realistic customer expectations and the keys to maintaining a near 100% renewal rate.
3 Things You Will Learn From this Session
- Methods for implementing, tracking and growing billable precision phone support
- Lessons learned on whether to expand or expire annual service contracts
- How to leverage billable services as conversations starters for additional equipment and technology sales
Co-located with the 27th Annual National No-Tillage Conference, the 2019 Precision Farming Dealer Summit will be held Jan. 7-8 at the Indianapolis Marriott Downtown. Among the Title Sponsors making the learning and networking opportunities possible for dealers are Charter Software Inc., DigiFarm VBN, Laforge Systems, Montag Mfg., Reichhardt, Topcon, AgDNA, AeroVironment, Praxidyn, Ag Leader, Precision Planting and Yetter Farm Equipment.
For more information and to register for the Precision Farming Dealer Summit click here or visit www.PrecisionSummit.com. Stay tuned for more updates and speaker announcements. We’ll see you in Indianapolis!