Strategic Solution To Capturing Revenue Growth In A Declining Customer Market

On average, ag retailers experience an annual 3 to 6% customer churn¹. That means more dollars are spent prospecting, sourcing additional products to sell, and using valuable salesperson time to counter the churn. This impact can be attributed to shifts in today’s production agriculture industry. 

According to the USDA’s Economic Research Service, the number of farms in the U.S. saw a 7% decrease from the 2017 census. The number of acres per farm, not surprisingly, increased. 

If the U.S. is experiencing fewer farmers and increased consolidation of acres farmed, this should force us to address how customer patterns will change. Whether it be economic pressures or generational transfers driving the consolidation of land, you will have less farmers to sell to, and each farmer will be more valuable to your business. 

That means the focus must shift to customer loyalty  for ag retail revenue growth to be achieved.

The strategic solution, commonly adopted by non-agriculture industries, all vying for share in their respective markets as well, lies in customer loyalty programs. According to Forbes, 90% of businesses in 2024 have some type of loyalty or rewards program. 

Customer churn may be inevitable in business, but given the shrinking and consolidating nature of the agriculture industry, we cannot rely on acquiring new customers for growth as we once did. Instead, in a declining market, the critical goal is to maximize the revenue and wallet share of existing customers. 

You might say, “We already offer everything we can to gain that potential revenue!” The problem likely not in your service or product offerings, but rather in increasing your share of the farmer’s wallet. If you have, on average, 50% of your farmers’ input purchase spend each year, but the number of farmers is declining, you now need to acquire 60%, 75%, or even 80% and higher to counter a diminishing customer base.  

While quality service, no doubt, is important to retaining customers, we’re up against many other factors in ag retail impacting farmers’ purchasing decisions. The right loyalty program is integrated into the ag retail business to encourage retention and revenue growth. It will drive farmers to consolidate their purchases with one retailer by incentivizing and rewarding future sales across their offerings.

Tied to the idea that today’s modern consumer rewards programs provide the buyer with loyalty points and offers on future purchases, the loyalty program built by GROWERS, brings with it the opportunity to enhance customer retention through a system that carries that same feature. 

This first-of-its-kind loyalty program presents customers with the ability to collect loyalty points for future purchases with a specific ag retailer. The farmer, knowing they will need to make continued purchases on seed, crop protection, fertilizer, and application services, among many others, continues to see cost savings with each purchase they make. The retailer-branded, points-based system locks in future business by storing those customer’s rewards directly into a digital wallet.  

Its ease of use for the farmer customer to build loyalty points is a key feature, but the GROWERS loyalty system took it one step further by ensuring it seamlessly integrated with an ag retailer’s existing internal systems.

The ultimate goal of a loyalty program is to effectively steer the desired behaviors of a customer. When you take a flexible system like the GROWERS Loyalty Program and combine it with the actions you would like to see your customers take, the opportunities are nearly unlimited to generate consistent value.

In an industry seeing shrinking market opportunities and increased size of customers, loyalty reigns king. While some may choose to compete solely on price, reduce offerings, or dip further into profit margins to retain customers, a more strategic response is to focus on customer loyalty systems and culture.

To achieve revenue growth in ag retail today, an integrated loyalty program is not only a nice-to-have, but a critical tool to remain competitive in a narrowing agricultural market.

¹ Analyzed from GROWERS ag retailer customer transaction data