Artificial Intelligence in Agriculture Helps Retailers Reduce Churn and Improve Back-Office Efficiency

Are you looking to minimize customer turnover and increase back-office efficiency? Ag Retailers Association (ARA) examines how the power of artificial intelligence (AI) in agriculture empowers ag retailers to utilize existing customer data to tackle today’s most pressing challenges head-on.

Turnover, or “churn,” costs billions of dollars each year. It is the biggest challenge facing retailers today. Customers typically disappear without leaving a clue that there was any problem. AI promises to catch warning signs that were previously almost impossible to detect. AI also makes sense of the reams of data stored away in the back office.

Identify churn before it happens

Steven Valencsin, CEO of GROWERS, identified churn as a $5.4 billion problem. “Retailers lose 7.2% of their revenue and 11% of their customers every single year,” he said.

“We figured out that churn is predictable, which means it is preventable,” said Valencsin. AI scans and aggregates customer data to warn retailers of potential issues. “Our churn model predicts churn 88% of the time, 90 days in advance. You are alerted well enough in advance to take corrective action and stop churn before it happens,” he added.

Artificial intelligence in agriculture can track signals that are too subtle for retailers to spot by looking at changes in transaction data. It then flags any customer who may be at risk so the retailer can immediately follow up. 

Identifying and stopping this turnover is important to reach your growth goals. Assume that you target 5% growth a year. If you experience the industry average 7% churn, you would need to increase revenue by 13% to hit that 5% growth goal. Using AI to retain customers allows you to get off the treadmill of constantly trying to replace lost revenue.

Artificial intelligence in agriculture streamlines the back office

Garrett Asmus is a business analyst at Asmus Farm Supply, an independent third-generation ag retailer and an ARA member in north central Iowa. He said retailers face intense competition as customers continue to consolidate. Artificial intelligence provides an edge by compiling data analytics in the back office. 

The customer data is available, but gathering usable insights requires preparation and time. “Right now, programmers or data analysts need to generate the reports. However, AI can streamline that data and identify important customer trends that impact our business,” said Asmus. 

“It can be difficult to track whether you are gaining or losing customers,” said Asmus. For instance, a customer planting more beans would result in a lower spend than if the customer planted corn. The owner of a farm might spend less as his sibling takes over and starts to order more products. The retailer needs to understand what is happening to determine if business is being lost. AI can be a useful tool to interpret data while saving labor.

Asmus said he envisions AI being able to help humans do more. It will be able to generate reports or give you information that previously might have required programmers or data analysts. That can streamline efficiency when looking for specific information.

“We have all of the data. It is sitting there,” said Asmus. “It is just having the time to prep and organize it.” AI can help identify what’s going on behind the scenes to make sense of the data.

The challenge for ag retailers is gaining usable insights from data to drive business goals. Artificial intelligence in agriculture promises to bring customer data to life without requiring the time and resources of data analysts and programmers.