Market Closeout
You have one boss.
It is often said if you set aside God and your spouse, you have only one true boss — the customer. In most successful businesses, the focus is overwhelmingly on creating more value for the customer. In the cattle industry, however, this has always been a bit more difficult to conceptualize. Commercial cattlemen rarely know who their customer is going to be. In fact, in many instances they have no direct contact with that customer before or after the sale.
Ironically, cattlemen take great pride in building relationships and in the value of integrity. Most producers have strong working relationships with their suppliers, whether it be the feed supplier, veterinarian, nutritionist, seedstock suppliers, sale barns, etc. It isn’t that they don’t want to know their customers and understand their needs. Nearly everyone I know wants to create a product with more value and to get rewarded for doing that. However, our commodity marketing system was created in such a way that direct communication with our customers is nearly impossible.
That lack of communication has created some attributes that are fairly unique to our industry. Instead of working with individual customers to tailor solutions to their needs, we are forced to characterize our customers into large groups. We know that for the average feedlot operator, his value is created by having black-hided cattle that have had proper nutrition, vaccinations, and low-stress management; and that have the genetics to grow, convert efficiently and hang a carcass that fits within industry specs with as much marbling as possible.
This system has worked pretty well. In fact, we have been able to grow beef demand and improve value to the consumer as a result. But the feedback mechanism is largely nonexistent. This makes it difficult to determine if there is a breakdown in the system or ways to improve the value of our product for customers.
The second result is instead of seeing our customers as bosses, we tend to see them almost as adversaries. They are competing to pay as little as possible, and we are trying to get paid as much as possible. In most business transactions, the communication begins with the exchange of money. In the cattle business, the transaction tends to reduce the exchange of information.
Obviously, this is a broken model. How can one improve one’s product without getting feedback on how the product performs for the customer? Our primary role or responsibility with the AngusLinkSM program is to put more dollars into the pockets of commercial cattlemen. We primarily do this by helping producers differentiate their product through the Genetic Merit Scorecard® (GMS) and through the various process-verified programs we provide. We also provide marketing assistance for those calves enrolled in the program.
Yet, increasingly we see our role as helping commercial cattlemen build relationships with their seedstock supplier and with the customers of their calves, so they can work to create and capture more value, more consistently over time.
One of my favorite quotes is from Zig Ziglar: “You can get everything in life you want by helping enough other people get what they want out of life.”
If I were to modify that quote for the cattle industry, it would be: “You can capture the most premiums by creating value, creating relationships, and by providing the right product at the right time to the right customer.”
If you feel that your marketing program and strategy has room for improvement in any of these areas, please give the AngusLink program a call. We understand that you have only one boss, and our only boss is you.
Editor’s note: Troy Marshall is the director of commercial industry relations for the American Angus Association.
