Do farmers care about service quality?

Agribusiness industries provide numerous services that enhance the value chain. There are veterinarian services, nutrition consulting, crop scouting, and financial management services among a host of others. By measuring service quality and customer satisfaction, agribusinesses can identify areas of weakness worthy of investments in improvement. Three general areas of service quality include interaction quality, physical environment quality, and outcome quality.

Interaction quality refers to the relationship the buyer has with the employees of a service provider, including salesmen, management, and front line employees that are actually providing the services. Physical environment quality refers to the physical structures and equipment and their appearance. Finally, outcome quality refers to the ability of a service provider to offer solutions tailored to the buyers' needs in a timely manner.

SO, DO FARMERS CARE?

The Center for Food and Agricultural Business at Purdue considered the perceptions of more than 100 agricultural producers in the Corn Belt Region. These producers' operations varied in size, but the operations were all dominated by corn and soybean production. A survey was conducted that inquired about suppliers of agronomic inputs, such as fertilizer and protection chemicals. Services offered by suppliers in the area included application services and crop scouting.

The first 35 questions asked the producers to rate as many as three suppliers on their performance in three primary service quality areas: physical environment, interaction quality, and outcome quality. Not surprisingly, primary suppliers generally outperformed alternative suppliers. Less than five percent of the respondents ranked their primary supplier less than a four on a scale from one (poor service quality) to seven (outstanding service quality).

Though not directly asked, the high rankings for primary suppliers might indicate that suppliers are often chosen based on their ability to deliver high quality service. Often in the process of conducting the interviews with the farmers, surveyors heard comments that were indicative of this preference. One farmer shared that a 10% discount on all products and services was not steep enough to cause him to switch from his reliable and trusted supplier.

This implicit value of service quality and service quality improvements is important for suppliers to consider. If management is considering investments in training and development for salespeople or other employees, it must be justified with value creation for agricultural producers. The three areas of service quality discussed here--interaction, physical environment, and outcome quality--provide a framework for managers to use when considering allocation of resources in service.

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IMPLICATIONS FOR MARKETERS

One of the most effective marketing tools for agribusinesses to use when targeting this producer groups is word of mouth and referral marketing. The most impactful advertisements and other marketing materials will rely heavily on testimonials from current customers.

Additionally, training salespeople to quantify the value of service quality for the farmer should also aid in selling. For example, a salesperson could demonstrate the value of reducing the amount of time a customer has to wait for chemicals and fertilizers to be delivered. Alternatively, he could show the amount of time freed up for the farmer by using the custom application services offered. Whatever the communication method, emphasizing service quality with farmers might provide the edge needed to beat out the local competitor.

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March 5-9, 2007

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March 20-22, 2007

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Michael Gunderson earned his Ph.D. from the Department of Agricultural Economics at Purdue University. He is now Assistant Professor in the Food and Resource Economics Department at the University of Florida. He can be reached at [e-mail].