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The heart of the deal

How significant is the local dealer in determining what you buy?

One evening a year or so ago I sat in a hotel lounge in rural England with a couple of other ag machinery writers. We were gathered there for a machinery event and were all staying in the same hotel. We spent part of that evening discussing the differences between farmer perceptions of machinery in the U.K. and North America.

The number of dedicated farm machinery-focused publications in the British Isles is very large. Here in Canada, on the other hand, it’s pretty small. That, said one British editor, was hard to believe. Why, he wanted to know, are there so few?

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tractor at a farm show

Often farmers I speak to here seem to know a lot about “their” brand, but not necessarily much about what’s on offer under other marquees. By contrast, farmers I’ve spoken to in the U.K. seem able to quote a wide variety of specifications about many of the machines on the market there.

Of course there are many exceptions to those rules, but they do seem to be a reasonably accurate generalization.

Although the explanation for the differences calls for a bit of speculation, I wonder if it’s down to one simple reason: brand loyalty. Or maybe that’s better stated as dealer loyalty.

In the relatively wide-open spaces in Canada, are farmers’ relationships with local dealers, which aren’t exactly on every street corner, the deciding factor in the question? Are farmers here more likely to buy machinery from the best dealer available, regardless of where the brand technology and efficiency stands on the engineering scale, and then display nothing more than a passing interest in other colours?

A recent survey conducted in 2017 in the U.S. by Farm Equipment magazine, a publication that caters to North American ag equipment dealers, offers some support for that idea. Granted, it’s not a solely Canadian survey, but farmers on both sides of the 49th parallel often seem to share a lot of opinions on the topic of equipment.

FE’s survey found that roughly 75 per cent of producers considered themselves “brand loyal.” That’s a big number. What’s more, farmers who report less than $1 million in annual revenue say they start the machinery buying process by looking first at the same brand they already own 74 per cent of the time. That number jumps to 82 per cent for producers who gross more than $1 million annually.

But there were some exceptions to farmers’ desire to keep a consistent colour across their fleets. When it comes to hay and forage equipment, 31 per cent of those in the under-$1-million income group opted for something from a different brand. For the over-$1-million category, that number fell to 24 per cent.

For tillage equipment purchases, 47 per cent in the lower-income group chose a different brand, while that number increased to 53 per cent for the other producers. That could be a reflection of the surge in imported short-line tillage brands in recent years that have significantly pushed the technology level in that equipment category. And, you could argue, these short-lines caught the major brands sound asleep on that front.

The survey also asked producers how willing they’d be to switch mainline brands.

Given the current very difficult economic environment in the U.S., roughly half said they would, and the main reason revolved around — you guessed it — dealers. The over-$1-million group named dealership service and repair, while the lower-income group cited parts availability.

Those reasons make sense when you consider that lower-income producers often keep machines longer, and that getting parts for older equipment isn’t always easy, while larger farmers typically run more modern fleets and need to keep them running to cover big acres in a short amount of time.

“The local dealer network is going to be the differentiator,” says Case IH’s Jim Walker.
photo: Case IH

Both groups’ desire for better overall engineering was secondary to those concerns. And both of those primary reasons hinge, at least in part, on local dealerships.

Jim Walker, vice-president of Case IH, said he recognizes the critical role dealers play in putting the red brand’s equipment into farmers’ yards. And that role may even increase as the industry evolves.

“When we look at our brand advantage, at the end of the day the local dealer network is going to be the differentiator of the future,” he told a group of machinery writers in August. With fewer and fewer producers, and with technology becoming more innovative, he said, “the distribution is going to be the difference in the marketplace.”

That point of view seems to mirror what the FE survey revealed. So, Walker said, manufacturers need to offer very strong support to their dealer networks, particularly with prompt parts delivery.

“Parts distribution is very important,” Walker said. “When you’re in the agricultural business, you can go one of two ways: you can have a third party that’s very good at logistics and management of parts do it for you when you’re growing as a business. Or, you can do it yourself and have full control over it. We (CNH) do that with 59 different parts distribution centres around the world on five different continents. We’re very happy with our fill rate. We’re consistently either at or above the average of that industry.”

Building the right kind of dealer network is also key, he noted. Initially, Case IH broke away from the pack when it came to the kinds of dealership chains other brands were fostering. It allowed the formation of mega-dealer networks like Titan in the U.S. and Rocky Mountain Equipment in Western Canada.

“When you look at our global distribution network, we have over 3,000 dealers of all brands and over 1,200 in North America we’re certainly proud of,” Walker went on. “When you look at that model we employ with the dealer network, one of the facets of moving to a product marketing concept is that you have a new relationship, if you will, or a new focus in your relationship with customers and dealers. And that’s the B-to-B (business-to-business) relationship.

“By that I mean Case IH might own the dealer agreement, but we have to depend on a dealer network to sell our products. The dealer might be independently owned, but they have to rely on us for innovative products. Finally, the customers may be independent, but they have to rely on that dealer to provide leading-edge technology solutions for their problems and, certainly, the product support.

“It’s mutually beneficial and very much an interdependent process and business model. That’s where we’re at today. We have quite a bit of resources and planning going on that will focus on how we drive that interdependency.”

Walker notes that the red brand has made a big acknowledgement that dealers are often the deciding factor in growing the brand’s sales in its strategy.

“The key in [our vision statement] is the customer focus is very prominent and the dealer focus is very prominent,” he said. “Three of the five drivers in our new strategic plan have to do with dealers, the first one being to enhance our interface.”

Walker noted that “interface” enhancement involves many things, from technology to training and product support. And both the manufacturer and the dealer need to be on the same page with the same goals and objectives.

“Next is to achieve alignment with our dealers,” he explained. “In essence, we have to be going at this battle in the marketplace in unison. We have no benefit of driving the strategic plan to a place the dealers don’t want to go. The third and final of the three is focus on dealer capabilities and health.

“Clearly having a dealer network that is well capitalized to invest in training, personnel, capitalization, to be able to run and grow the business is paramount for us.”

About the author


Scott Garvey

Scott Garvey is a freelance writer and video producer. He is also the former machinery editor for Country Guide.

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