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Will ISO & CRM Become Part of Your Business?
by Glen Ludwig

Every successful agribusiness has a strong focus on generating net income. But as agribusinesses continue to respond to consolidation, technology and a global market, the strategies to achieving that important return are likely to reveal some interesting changes. This article explores two relatively new strategies or tools being used in agribusinesses that well may be in your company’s future: operational excellence and taking your company to a new level of marketing relevance.

Most of you who read Grain & Feed Marketing are owners or employees of firms serving agricultural producers as customers. Most of you are in the feed or grain business, if not both. In many cases, you also are active in marketing agronomy inputs and services, all of which are traditionally commodity based.

Companies that are successful in a commodity market have by necessity structured their business for efficiency--handling large quantities of products efficiently at low per unit margins. Due to the commodity nature of the products bought or sold, there is limited opportunity to create marketplace differentiation. Therefore, service becomes more important as the platform upon which unique value or image can be created. Better service, therefore, is an opportunity for agribusinesses to set themselves apart from their competition.

Providing exceptional service requires investment in both hard and soft assets. Traditionally, agribusiness leaders have paid most attention to hard asset investment and management. Having the plants, mills, elevators and equipment to efficiently accommodate the operational needs of a commodity business is a major focus. If your role is to handle, store, process and distribute in a commodity market environment, success requires operational proficiency.

But, as globalization continues to impact agriculture, ISO certification is becoming more common. ISO certification is being pursued and achieved by a wide range of ag linked firms--from global players, such as Pioneer Hi-Bred International, a subsidiary of DuPont, to country elevators and even down on the farm by producers.

ISO stands for “International Organization for Standardization.” The ISO Web site states that “ISO standards specify the requirements for state-of-the-art products, services, processes, materials and systems...” It further suggests that ISO standardization will facilitate trade, spread knowledge and share technology and good management practices on a global basis—all good things in a business environment going global.

Of the many advantages linked to ISO, it seems that improving integrity, structure and efficiency to the operational portion of an agribusiness would be an important benefit. The food chain trend, “genetics to plate” traceability, could drive many agribusinesses to consider ISO certification. ISO seems to offer the most value to agribusinesses in the operational arena and to the establishment and maintenance of credentials as food chain players with integrity and a focus on quality. These are important attributes in a marketplace that demands greater efficiency and with consumers interested in high quality, safe and low cost food supplies.

Looking in the other direction from your business, back to the producer, there is little doubt that significant change continues to occur. If you are in the feed business, odds are you have already seen significantly more change in your customer base than those who are in the grain or agronomy business only. This is linked to the more accelerated pace of consolidation and commercialization in meat, milk and egg production.

Regardless of your producer profile, customer needs and expectations are changing. The change is not simply a shift, but also a complex diversification of needs. If you are structured and operating with a “one-size-fits-all” approach for creating customer satisfaction, your customer base may already be at risk.

Based on the strong operational service focus of many companies, agribusiness leaders can be susceptible to being lulled into a comfort zone related to customer relationships. The easy answer, but not the best, is to keep doing more and better of the same. There are flaws in that approach: the traditional producer customer base is changing; the producer’s needs and expectations are becoming more diverse; and the stakes are higher as the loss of even one large customer can be devastating.

In response, customer relationship management (CRM) is becoming a more important skill and strategy. CRM already has a high profile and is widely used outside of agriculture. It may be defined as “an established strategy and system for managing business relationship transactions to best satisfy the unique needs and expectations of specific customers and customer segments.” Firms with highly effective CRM strategies are operating on the opposite end of the spectrum of those still using the one-size-fits-all approach to serving and creating customer satisfaction.

For an agribusiness that has traditionally focused on “operational excellence” as a business generation and retention strategy, embracing and executing a CRM strategy can be an important step toward being a new generation marketer. With the continuing decline in numbers of ag producers, good customers are becoming a diminishing resource for many agribusinesses. You might consider CRM as an intense resource management system. It is simply good business to better manage a vital resource that is shrinking.

Effective adoption of a CRM strategy is not quick or easy. It is far more than a new twist for “public relations” with your customer base. In all cases, it requires employee training and usually the broad adoption of new business philosophies to replace some no longer appropriate customer service concepts and beliefs.

The payoffs from CRM can be big. What company or manager wouldn’t want to have a higher level of confidence that each customer experience is being professionally managed? That each producer is provided service and attention that is timely and relevant to his needs? That the business is earning a more unique, defendable marketplace position each day?

Both ISO and CRM are expected to be more widely adopted and used in agribusiness in the next ten years. Both are tested and proven management strategies that have been used successfully outside of agriculture for years. The consolidation and industrialization of agriculture occurring today will likely accelerate in the future. This trend supports the need and motivation for consideration of one or both of these processes as your agribusiness positions for a more successful tomorrow.

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