So, the pandemic is over, supply chain issues are returning to normal, and you assumed your customers would come back. You’re not alone.
Thanks to the pandemic, equipment dealers felt the effects of major supply chain issues, causing buyers to turn to brands they might not have considered previously. But not all buyers are going back to the brands they were once loyal to and some dealers are duly concerned.
What’s Happening to Brand Loyalty?
In 2022, Randall Reilly conducted a survey of ag equipment owners to get their input on the current state of brand loyalty. What they discovered is that brand loyalty is currently eroding.
Often, loyalty erosion is driven by dissatisfaction with equipment or disruptive innovation, but according to this research, it seems supply chain issues have created an environment where brands have the ability to increase their market share – or lose it.
In the survey, Randall Reilly asked their respondents about their primary brands and if they bought from other brands due to supply chain issues. And 17% said they did.
Randall Reilly then asked those who switched to new brands what they would do in the future and only 16% of them said they would definitely be going back to their primary brand. That means a large percentage of respondents who had to buy other brands due to supply chain issues are at least considering that brand for future purchases.
Essentially, their loyalty is disappearing, and businesses are already feeling the effects.
When Iron Solutions asked John Hoffman of Atlantic and Southern Equipment if their customers are brand loyal, Hoffman had this to say, “Not as much as they were. As the year went on, we kept ordering and ordering and [orders]kept backing up and backing up. But toward the beginning of this year, we did get a lot of new equipment.
“And, as it turns out, a lot of the other brands did not. So, if somebody that needed a new tractor because their old tractor was coming off lease … we actually had a good amount of Fendt tractors [that met this demand]. Last year was really tough on new equipment. It almost caught us by surprise.”
It caught a lot of people by surprise – which is why now is the time to act.
Which Brands Were Most Affected?
It was no surprise that when asked which brands of ag equipment farmers tend to buy, their top two choices were Deere at 56% and Case IH at 40%.
However, when asked which brands farmers went to due to supply chain issues, at the top of the list was Kubota, with 26% saying they purchased other pieces of equipment from them.
That means Kubota really benefited from this scarcity in supply, being the number one response.
What Can You Do About It?
If you find yourself questioning how these brand loyalty changes might affect you in the future, or if you’re already feeling those effects, it’s helpful to have some strategies in place to make sure you don’t miss out on crucial opportunities. Those strategies include:
Finding Conquest Sales
The current state of brand loyalty is ripe for finding conquest sales, especially because farmers might be more open to purchasing new brands.
Start your search for prospects who have recently purchased a brand of equipment you offer. Based on our survey, they might have seen the benefits that the new brand offers and be more willing to buy it again.
You could also search for prospects who have recently purchased a different brand altogether. Even if it’s not the brand you offer, it means the buyer might be open to trying new brands in the future.
Focusing on Parts and Services
We all know that parts and services are where dealers typically find profit margins. Farmers who’ve had to buy new brands due to supply chain issues are going to need someone who can help with repairs and maintenance.
Find prospects who recently bought the brand you sell and offer up your repair services. Because of brand loyalty erosion, there might be new prospects in your AOR for these services that you haven’t considered previously.
Finding New and Protecting Existing Customers
Dealers have a number of ways to monitor customers’ brand choices in ag equipment. They can rely on their own data, their observations from the field, and public records like UCC filings.
Another resource being used is EDA Data, which collects UCC data and provides an interface for dealers to see which growers in their area are financing equipment, and for which type and make. Taking advantage of these data sources can help to protect or grow a dealer’s market share according to their strategic objectives.
Protecting Your Market Share
In the survey, Randall Reilly covered more than just brand loyalty. They also talked to farmers about their buying behavior. When asked about when they start planning their purchase for pieces of equipment, over 42% said they plan six to 12 months in advance.
When asked what most influences them to replace their equipment, 40% said tax provisions.
With those pieces of information, you have everything you need to start protecting your market share during this time of brand loyalty erosion.
Knowing that your past buyers and new prospects think about buying equipment far in advance, you can reach out to them when they’re more likely to be in their buying cycle.
And knowing that about 40% purchase new equipment due to tax provisions, you can bring up certain tax codes, like Section 179, to sell your equipment more effectively.
Section 179 is an IRS tax code that allows businesses to write off the full price of qualifying equipment or software in the year it was purchased. In 2023, the deduction limit was raised to $1,160,000 and the total equipment purchase limit was raised to $2,890,000. So, let your prospects know that now is the time to buy and make sure you can sell your equipment before your competitors do.
We’re currently experiencing a time of brand loyalty erosion. Supply chain issues have lessened, and we all expected farmers to come flocking back to the brands they knew and loved. But it’s just not happening.
If you’re an ag equipment dealer, now is a good time to reevaluate your market share and find ways to protect or gain it. Otherwise, you might start to feel the effects of brand disloyalty – if you haven’t already.
Article Written by Edward Pronley
EDWARD PRONLEY is the Marketing Content Manager at Randall Reilly. Having researched and written various articles for industries such as trucking, agriculture, and construction, Edward aims to uncover and share insights that can help readers better understand trends in these industries and how best to navigate them, especially for those maintaining, selling, and working with heavy equipment.