It’s hard to believe that only a year has passed since our editors assembled the first print edition of this publication. Reading through that inaugural issue again, one of the first things that came to mind was how much the precision farming industry has evolved in just a short time.
Certainly, developing a profitable business model for precision data management services and the promise of ISOBUS remain squarely on the radar of precision dealers. And tapping into the vast potential Unmanned Aerial Vehicles offer in agriculture is also high on the checklist of some dealers.
But during the last 12 months especially, there’s been an interesting shift in the mindset of dealers and how they intend to not only survive, but thrive in the precision ag business for years to come. Today, profitability still largely begins with precision hardware sales. Technology tools remain the backbone of the industry.
However, savvy dealers, especially those that sell farm equipment, are realizing the backbone of their precision business today won’t be able to support their need to grow and evolve 5 or 10 years into the future. The need to charge for service and support is emerging as — at minimum — a way to supplement hardware sales and ideally, serve as a recurring source of revenue.
Talking with dealers moving toward for-fee precision services, it’s clear they are accelerating implementation of service plans partly in response to fluctuating commodity prices and an increasingly saturated precision product market.
“There are so many choices today, and it’s getting a lot harder to distinguish one manufacturer’s display or guidance system from another,” says a precision specialist from Indiana. “And customers really aren’t that interested in the subtle differences or features. The only thing they care about is that it works when they need it to.”
After all, precision technology is supposed to simplify farmers’ lives, not complicate them. This message could probably be printed on bumper stickers and posted on every precision service truck. Most technicians and precision specialists will bend over backwards for their customers, but for years, many have been doing so without recovering a nickel for their dealership.
“While hardware sales skyrocketed, it was easy to give away the service,” a specialist from Iowa says. “We never considered charging for service, because the bottom line looked great.”
Not to mention the fear of losing longtime customers who had grown accustomed to free technology tune-ups or in-field service during the peak of planting or harvest. For some, alienating customers remains a barrier to charging for service. But those who have incorporated or at least test-marketed precision service plans, customer loyalty tends to trump the sticker shock of paying for support.
And despite the upgrades and updates to precision hardware, over time the pool of new products will only get so deep. Is the industry nearing that point? Probably not yet. There is still seemingly something new being introduced on a regular basis. But in the future, it’s not that hard to imagine precision service revenue eclipsing hardware sales at many dealerships.
Understanding that precision farming is a rapidly evolving and ever-growing business, we’re continuing to grow as well, and hope you find long-term value between the covers of this edition. And coming this fall, there will be the second of two print issues of Precision Farming Dealer in 2014, because a lot can change in just one year.