Warranties have long been a tool that manufacturers and retailers use to get customers on board with innovative, unfamiliar, and higher-cost purchases. And while they’re common for sellers of farming equipment, they’re harder to come by for those selling crop inputs.
Our Crop Plan Warranty is changing that. Created specifically for sellers of crop inputs, it lets retailers communicate to farmers that they’re so confident in the the products they’re selling that they’ll pay cash if those products don’t perform.
There’s a lot of potential upside for retailers. There’s also a lot of room to create a warranty that works for your customers and sales goals. Here, we explore six ways a warranty product can help you grow revenue.
1. Drive Adoption of a New Product
Getting farmers to embrace an innovative product is always a challenge, thanks in part to the cognitive bias called loss aversion: losing something is more psychologically painful than gaining something of equal value is pleasurable.
Even when a trusted agronomist recommends a new product to help a farmer improve their yield or otherwise meet their growing season goals, they may be reluctant simply because of the danger of the unknown. Yes, the new product may be better – but the old product is a known entity, and known entities are safe.
In this case, a warranty that offers financial compensation in the event that the new product doesn’t perform as advertised can provide the nudge the farmer needs to make the purchase. Think of it as an extra weight on the balance counteracting the cognitive bias that makes us shrink from potential loss.
2. Drive Adoption of a New Practice
Maybe you’ve started selling crop inputs that, used together, deliver better yields with less environmental impact. But they require growers to embrace the full package: new seeds, new fertilizer, new fungicide.
Or maybe you’re selling a crop input that relies on a new technique – targeted fertilizer for certain acres instead of a uniform spray for a whole crop, for example.
In these instances, you’ll have to overcome not just loss aversion but fear of the unknown. A warranty can help. When you bake a warranty into an agronomist’s prescription, your customer is no longer grappling with the unknown. There’s the potential upside of things going well and a clearly defined outcome – in dollars and cents! – should things not go well.
3. Incentivize Purchase of a High-Margin Product
Another way loss aversion can rear its head is in preferring products that cost less now and deliver less benefit down the road over those that cost more in the present and have the potential to deliver more in the future.
Again, because we tend to over-index on losses, we (as a species) are biased toward minimizing the “pain” of loss in the short term – aka buying the less-expensive product.
For retailers, this often means low-margin products move more easily than those with a high margin. For farmers, that means it’s easier (less painful) to purchase less expensive products even when a more expensive product can deliver outsized benefits come harvest.
In this context, adding a warranty to the higher-margin / higher-yield product can help everyone get better results: farmers get the nudge they need to invest in better-performing crop inputs, and retailers can sell products that have better profit margins.
4. Increase Wallet Share
Let’s put loss aversion aside for a moment. Another hurdle ag retailers face is habit. In many cases, farmers purchase certain crop inputs from the same sellers year after year. That might mean ordering seed from a seed distributor and turning to an ag retailer (like you) for fertilizer and fungicide, then turning to a third provider for fuel and equipment supplies.
If you can convince your customers to buy more than fertilizer and fungicide from you, you can grow your wallet share. And because habits can be difficult to break, a warranty can be the boost necessary to convince farmers to change their behavior.
Key to making this work: to stick, the new habit (buying seed from you, for example) should come with some type of positive reinforcement (like a warranty that protects the farmer from loss).
5. Increase Customer Loyalty
Executives tend to underestimate how much product quality affects customer loyalty. In reality, though, the quality of a product can impact customers’ loyalty even before they’ve made a purchase.
As a retailer, there’s no better way to communicate the quality of a product you sell than by backing it with cash. A warranty does exactly that. By communicating from the earliest sales conversations that you stand by your products’ quality, you can help build customer loyalty.
The terms of the warranty can cement that loyalty: by greatly reducing the risks farmers face from unknown forces like weather, you make a compelling case to return to your store again and again.
6. Strengthen Manufacturer Relationships
When it comes to getting innovative crop inputs into the hands of farmers – and ultimately into fields – retailers and manufacturers can be valuable partners to each other.
While any warranty you build will benefit your customers, you can also consider crafting one to strengthen relationships with manufacturer partners. The maker of an innovative fertilizer, for example, may be interested in sharing the cost of the warranty as a way of driving early adoption of their product so they can gather more data to use in future sales pitches.
To Grow Revenue, Remove Risk
Equipment manufacturers have been able to lower the risk of large purchases via warranty for decades. With the Growers Edge Crop Plan Warranty, retailers can use a similar tactic.
We’ve outlined several use cases in this article, but there are, of course, many more ways to use a warranty to better serve your customers and support the growth of your business. If you’re interested in talking through your ideas, don’t hesitate to reach out. We love helping retailers develop warranties that meet their needs and those of their customers.