In addition to canvasing growers, Farm Equipment editors reached out to several dealers to ask how they perceived brand loyalty to have changed in recent years. Feedback from dealers was mixed, with some reporting more loyalty to their brands and others reporting less. Surveyed dealers also offered varying analysis on how changes in brand loyalty affected their dealerships. 

Some see less brand loyalty as being traded for “dealer loyalty,” where customers are more focused on the quality of service and communication from their dealership rather than the dealership’s specific mainline OEM. Others say decreased brand loyalty has led to more price shopping and the loss of long-time customers. Those reporting increased brand loyalty by-and-large agreed it has a positive impact on their business.

In Farm Equipment’s previous 2017 Brand Loyalty Report, around two-thirds (62.5%) of surveyed dealers reported a decline in brand loyalty, 24% believed brand loyalty had remained unchanged and 14.5% saw an increase. This represented little change from 2014, when 64.3% of surveyed dealers saw a decrease in brand loyalty. More recent data, however, shows that number beginning to fall. A Farm Equipment poll asked dealers to describe the brand loyalty of their customers to the major OEMs over the last 3 years. Among responding dealers, 49.3% saw their customers as less loyal to the mainline brands, 37.4% saw customers about as loyal as before and 13.3% perceived their customers as more loyal. 

Though not all dealers agree on the state of brand loyalty among farmers, most agree in striving to use changes in their customers’ loyalty to better their quality of service, whether that be through more aggressive on-farm visits or better leveraging their OEM’s technology. 

Click to enlarge

Click to enlarge

Brand vs. Dealer Loyalty

Among dealers reporting less brand loyalty, opinions were mixed on whether it brought a positive or negative impact to the dealership. Brian Carpenter, general manager at Champlain Valley Equipment, a 4-store Case IH, New Holland and Kubota dealership based in Vermont and 2006 Farm Equipment Dealership of the Year, says experiencing more dealer loyalty puts a spotlight on the quality of their labor. “I think we’ve seen less brand loyalty,” he says. “It feels like there’s more dealer loyalty. It’s more about who can give customers their uptime, who can take care of them when they need it. We’ve seen some conversions as a result of this mindset.” 

Shawn Skaggs, president and CEO of Livingston Machinery, a 4-store AGCO dealership in Texas and Oklahoma, thinks the shift toward dealer loyalty has been impacted by the arrival of a younger generation of farmers in the ag industry. “The older generation is still very much brand loyal, brand is very important to them,” he says. “This next generation is a lot more open to looking at alternatives, especially at what makes more economic sense or can give them more efficiency. They might be more willing to make the change if there’s a monetary incentive.”

Skaggs also points out that, depending on the impact it has on the different segments of a dealership’s sales, decreasing brand loyalty can be either a good or a bad thing. “We’re seeing both sides of brand loyalty and I think most dealers are probably in a similar situation,” he says. “Changing brand loyalty can be good or bad depending on what side of the fence you’re on. We’ve found we’re switching more farmers to our mainline on the tractor side with our technology offerings. At the same time, on the hay equipment side, where we’ve been the dominant player, it’s been good that brand loyalty has remained.”

Several dealers talked about tough economic times as a possible source for a perceived shift away from brand loyalty, with price-checking and a more “dollars and cents” mindset becoming more and more common. 

Casey Seymour, vice president of sales at 21st Century Equipment, a 16-store John Deere dealership based in Nebraska, talks about how even when he sees brand loyalty increasing, the more economic mindset can still prevail among certain customers. “There’s a strong segment of our customer base that’s very price conscious,” he says. “They’re going to go with the cheapest thing they can get.”

Carpenter notes how a rough patch in the ag economy can play an important role in the severity of the decline in brand loyalty, particularly in one of Champlain Valley Equipment’s main customer segments, dairy farmers. “Our most significant market is dairy, which has had 5 down years in a row,” says Carpenter. “It’s possible the degradation of brand loyalty among the dairies is more a result of needing to survive and preserve their cashflow. Whatever the deal of the day is may be more important to them than their underlying brand loyalty.”

When it comes to dealers reporting increased brand loyalty, one reason given is simply having better manufacturer offerings than those of competing brands. “For us, our brand loyalty is coming from the technology side of the equation, not the iron side,” says Seymour. “And it’s not just the guidance technology. It’s more about the data-collection, the ease of transferring data from one place to the other.”

Kenney Gulley, general manager at Rose Farm Supply, a single-store New Holland dealer in Kentucky, says his location has seen more mainline loyalty, at the same time that their lower cost tractor lines have done poorly. “I’m seeing a little more brand loyalty to the mainlines,” he says. “We’ve had a few economy tractor lines open up and then close about as quickly, that have left individuals with no dealer support and very little value in their equipment. Service is becoming more of a selling point as well. This is a positive trend for our dealership.”

Mike Carley, vice president and COO of Birkey’s Farm Store, a 17-store Case IH dealership based in Illinois and 2007 Farm Equipment Dealership of the Year, says he’s seen a decline in both brand and dealer loyalty for all farm equipment dealers. “We’ve seen less loyalty period, and it’s not been good for any of our dealerships,” he says. “We recently lost a big customer we’d been doing business with for around 20 years. They priced the competition against us every year and we just couldn’t get the numbers to match up for them. We have had the same thing happen to our benefit as well. The economy has driven some of this. When times were good, we didn’t see as much jumping back and forth between brands and dealerships. It wasn’t all dollars and cents like it is right now.”

Leveraging Your OEM

A big part of dealers pulling in customers from rival brands is demonstrating the additional value their own OEM will bring to the table. Dealers were asked how they utilize the strength of their mainline OEMs when trying to win over a customer from a rival brand. Many mentioned the competitiveness of their precision technology as a key part of the process. 

Tom Rosztoczy, president and CEO of Stotz Equipment, a 25-store John Deere dealer in the Southwest and 2013 Farm Equipment Dealership of the Year, says the technology of their mainline has played a large role in these conversions.

“The thing that has changed in the last few years is our advantage in technology,” he says. “It is greatly enhancing our ability to differentiate ourselves from competitive dealers through our ability to turn that technology into information that helps our customers make better decisions.”

Skaggs says showing customers the resources and support his dealership gets from its OEM can illustrate by extension how far Livingston Machinery will go to serve the customer. “We try to leverage the support and people we get from our mainline, whether that be the field reps or product specialists,” he says. “Whenever we’re trying to get a bell cow type customer, we’re able to bring that whole team out there. This shows the customer not only what the equipment can do but what kind of support we will deliver after the fact.”

Other dealers like Seymour see OEM programs as their most important tool in winning customers over to their brand. “It’s a price sensitive point of entry for us,” he says. “We try to get them in through captive leasing via John Deere Financial. The programs, interest rates and structuring we can offer help us more than anything.”

Showing the strengths of a mainline manufacturer can be doubly effective when framed in the context of another mainline’s failings. Carley says he’ll follow this model when trying to move a farmer over to his brand. “There are certain things Case IH does better than the competition and vice versa,” he says. “You usually try to find the positives in your line so you can point those out to the customer during the sale.”

One dealer pointed out leniency from their mainline toward shortlines was one of their strengths, as it allowed their dealership to better serve their customers. “New Holland is fairly liberal when allowing their dealerships to carry shortline equipment,” says Eric Walker, store manager for New Holland Richmond, one of the 7 locations in Indiana owned by New Holland Rochester. “I view this as a strength, as it allows us to have a more diverse selection of product. This can bring in customers that aren’t finding what they’re looking for at rival stores, where they’re pushed toward the mainline brand only.”

Farmers Want Better Service

Amid mixed reports of rising brand vs. dealer loyalty, dealers are more homogeneous about why customers start looking for other brands of equipment. The most common point made among dealers was farmers look for a new dealership and are willing to make a mainline brand switch when they have a bad experience with their former dealer.

“Any manufacturer is only as strong as their dealerships,” say Seymour. “The farmers we’ve captured have usually had some issues with their dealer group. It could be a performance issue or it could be some technicians or a certain sales rep have left.” Seymour says it’s common for good technicians to bring their old customers with them when switching dealerships.

When trying to bring over a customer from a different brand, Carpenter sees it as an opportunity to display the value of their OEM. “One big reason farmers move to a new brand is a problem with the quality of a rival brand’s product, particularly a failure in uptime,” he says. “We have to be able to prove our brand can do better.” Carpenter personally recommends asking customers for testimonials on the quality of their equipment, which can be useful ammunition.

Some of these conversions boil down to a desire for specific capabilities of a different brand. Skaggs talks about customers looking for more efficiency: “For a lot of farmers, it’s about efficiency,” he says. “That could be about fuel efficiency or speed in the field, it depends on the application. But where they’re able to gain efficiency, that’s a primary factor for a lot of people who have switched brands.”

Stacey Smith, a store manager at Hoober Inc., a 9-store Case IH and Kubota dealer on the east coast, says he sees how the high prices of major repairs may cause a loyal customer to consider another brand. “Customers may have had a service experience that stings,” he says. “Sometimes they’ve had a huge breakdown, like losing an engine or transmission, then gotten a huge, surprise bill. The amount spent on repair bills can be shocking today, it can end up costing farmers more than what they remember paying for the equipment.”

Several dealers mention the price of equipment as a reason for farmers to start looking for a new dealer. Kent Grosshans, president and CEO of Grosshan Inc., a 2-store Case IH dealer in Nebraska, sums it up best when he says, “Price is always an issue, no matter what they say.”

Dealers Blamed for Brand Switches

Dealers seem to agree the dealerships share more of the fault than the manufacturer when a farmer switches their mainline brand. When asked what circumstances would most likely place that blame on the dealer’s shoulders, most examples pointed to failures in dealer interaction or product offerings.

Walker of New Holland Richmond believes personal communication needs to be kept up by dealers if they want to retain their customers. “In our area, I have found the competing dealerships do not do farm visits like they used to,” he says. “I push my sales staff to be in front of the customer as much as they possibly can and it pays off. Customers have made statements saying they do not see other brand salesman often, sometimes never unless they go to their store.”

Other dealers agreed slacking on the relationship aspect of the business can be a potential problem. Carley say the manufacturer a dealer carries is arguably less important than how well you take care of a customer. “A lot of it comes down to parts and service,” he says. “It’s also relationship-building. We know these customers and we’ve done business with them for years. It’s all about how you, the dealer, take care of them and serve them.”

Gulley mentioned more price conscious customers might prefer cheaper equipment options than major brands carry, taking a little blame off dealers. “Some farmers place more emphasis on a lower price than other factors,” he says. “That usually puts mainline manufacturers, who have more overhead in sales, service and marketing than shortlines, at a disadvantage. Most dealers are going to offer low cost alternatives to the mainline manufacturers rather than lose the business.”

Outside of the a few rare machinery failures, manufacturers have very little to do with the sales process, making dealerships responsible for the success or failure of their machinery sales, according to Seymour. “The manufacturer is responsible for making a good product and offering programs to help sell the product,” he says. “It is the responsibility of the dealership to foster the relationship with the customer and find how the product fixes a problem they have. The sales battle is won at the dealership level with help from the manufacturer. 

Measuring Customer Loyalty 

Surveyed dealers were given a chance to answer a hypothetical question about loyalty at their dealerships. The question asked, if the surveyed dealer were to end their mainline OEM contract tomorrow and start to carry a different mainline, what percentage of their customers would they retain?

Answers varied heavily. Some dealers opted out of answering the question, saying there are simply too many factors to account for. For example, Stu Kinne at Salem Farm Supply, a 2-store Case IH and Kubota dealership in New York and 2015 Farm Equipment Dealership of the Year, says the question, “ … is very hypothetical. So much would depend on why your present OEM canceled your contract and what other contracts might be available, as well as how far would customers have to travel to get to the next in-line dealer.”

Others were confident about the strength of their stores against the pressure of switching colors. “I would say history shows most customers would migrate to locally sold brands over time,” says Grosshans. “It might take 5 years, but it will happen. Dealerships carry more weight for the local customers than the manufacturers. Major manufacturers don’t give the individual dealerships enough credit for the customers buying their products.”

“This is a very hypothetical question, but I can give a general overview of how I see it. We have a lot of big customers in our market and getting them to change that whole fleet over would be a bit tricky, especially in a down market,” says David Meyer, chairman and CEO of Titan Machinery, the largest Case IH dealership in the U.S. and 2006 Farm Equipment Dealership of the Year. 

“I think customers prefer to keep their equipment the same color. I’m guessing about half our customers would stay loyal and try to switch their brands over to the newly acquired OEM brand. The other half would need to reluctantly go down the road to the nearest dealer of our discontinued brand, because it would be too great a financial burden to switch everything. We would also pick up customers from the newly acquired OEM,” he says.

“Before we expanded to other stores, I would have projected 50%-75%,” says Carpenter. “Surprisingly, as we’ve bought dealerships throughout the state and changed some of the prominent brands, we’ve retained over 90% of our customers and even gained customers in some occasions. I think it’s about customers wanting to deal with a store with strong staff, good personality and good culture. I’d say over 75% of our customers would stick with us. And I’ve seen it happen personally. We have a dealer who changed brands a couple times over a 25 year period and kept most of his customers.”

Is Farmers’ Traditional Loyalty to Ag Equipment Colors Fading?