Accepting precision farming as a necessary evil is an approach that some farm equipment dealers take to justify their investment in a business they perceive to be only a complement to machinery sales.

This may be a safe and sometimes even practical strategy, depending on the dealership. But without risk, there is diminished opportunity for a sustainable reward. During the last decade, Hoober Inc. has established, expanded and evolved its precision farming business into a profitable part of its 9-store Case IH dealership network based in Intercourse, Pa.

The 2016 Precision Farming Dealer Most Valuable Dealership has increased annual hardware sales to near $4 million (split nearly even between aftermarket and factory-installed components). But its 8% growth in precision service revenue during the last 3 years, bolstered by a universal commitment to customer support, are the foundations for future growth.

“More than ever before, buying decisions are being based upon the level of precision support that can be provided after the sale,” says Ken Diller, Hoober’s precision farming network manager. “When a customer spends $275,000 on a new tractor that’s equipped with technology, we’ve got to support that investment because precision is much more integrated into the machinery today.”

‘Service is Our Business’

Since its inception in 1941, service has always been the cornerstone of Hoober’s business. The reputation earned by the company’s machinery technicians is modeled by the precision farming department as well. But each of the 10 members of the precision team understands they can’t rely on history to keep customers happy.

“We have the tagline here, ‘Service is our business,’ and that’s the way we approach every day,” says Dave Wharry, southern regional precision director for Hoober. “The company has a long tradition of taking care of customers and the ownership understands that if we do that, the financial side will take care of itself.”

About 7.5% ($15 million) of the dealership’s $200 million in annual sales come from service and support of farm equipment. But on the precision side, nearly 20% of revenue comes from service and support of technology.

During the last 5 years, the dealership has annually increased precision service revenue by 2-4% and from 2014 to 2015, increased billable precision hours from 3,300 to 4,300.

“We’re not operating on any type of commission or sales incentives,” says Marc Yoder, northern regional precision director. “Our motivation is to keep the customer happy and make sure the job is done right. We want the repeat business and not a one and done relationship. If they have technology on one tractor or implement, we want to show them why it should be on everything they own.”

For hardware sales, Hoober offers special financing to all of their customers for precision components. The dealership works with a lender they use for wholegoods sales to offer customers a base 0% financing for 3 years. Hoober then subsidizes the amount of buydown that it takes for the customer to take advantage of this program.

This has been a popular option for customers, in conjunction with a major driver of increasing service revenue — Hoober’s Precision Ag Uptime service plans, which were implemented in 2010. The annual service contracts cover maintenance, updates, pre-season inspections, data downloads and training for all precision componentry.

With a reputation for reliable support, Hoober precision specialists embrace the dealership’s longstanding motto “Service is our business.” This mindset has helped increase precision service revenue annually by 2-4%.

“We’re charging $400 per unit which is cheaper than some of our competitors’ packages, but the additional value is that these get us face time with customers and on their farms,” Yoder says. “We’re able to get on a competitor’s farm and get our foot in the door. That will often turn into a parts or equipment sale.”

He recalls a recent situation where Hoober and another local equipment dealership were competing for a new tractor sale, factory-equipped with a guidance system and auto-steer. Although Hoober’s overall price was about $30,000 higher, the customer chose them based on their precision service reputation.

“This particular customer was the neighbor of a farmer who purchased a tractor and RTK subscription from us about 5 years ago,” Yoder says. “He remembered the support we provided his neighbor and that won us the deal.”

The dealership has about 120 customers enrolled in its precision plans, and includes incentives such as free loaner console and phone support, a 5% discount on parts and 10% discount on labor. Those customers who chose not to enroll in the annual plans are subject to a $25 charge for each service call longer than 10 minutes and a $250 fee for a loaner console.

“Customers have to see the value,” Wharry says. “They are more reliant on technology to keep their planters and sprayers running at optimum levels than ever before, and they can be overloaded. It’s stressful, and one of the things we try to do is be an honest advisor.

“There may be a new software update, but uploading it right before planting might not be in the best interest of the customer if we know there are some glitches and it’s not going to maximize their uptime.”

In 2014, Hoober got a sense of how popular their Precision Ag Uptime plans were with customers. The dealership rolled its precision and mechanical support into one plan, but received a flurry of calls from customers asking why they didn’t receive a renewal form specifically for precision service.

“That experiment proved to us that the precision plans are worth something, and that customers want them and will use them,” Diller says. “We went back to them in 2015 and had a record number of farmers enroll.”

VIDEO:
Ian Watkins, a precision farming specialist with Hoober Inc., discusses why the dealership developed its Precision Ag Uptime service contracts.

Structured for Stability

When Diller helped start Hoober’s precision department in 2005, he had full support from ownership. This backing has remained constant, even as the structure and size of the department has gone through change.

During the last 3 years, the dealership expanded from 5 stores to 9, which in addition to Pennsylvania, Delaware and parts of New Jersey, broadened its service area to include all of Maryland and most of Virginia. With the acquisitions, the distance between Hoober’s northernmost store in Mifflintown, Pa., and southernmost location in Wakefield, Va., is more than 320 miles, which made it difficult to efficiently manage precision operations from a central location.

This rapid growth spurred an internal evaluation of how the dealership structured its precision department. Having originally formed precision farming as it’s own department, the decision was made in 2014 to decentralize the department.

“We decided to have all the specialists report to their store managers who run the precision business from each location, rather than reporting to one person from a central location,” Wharry says. “It’s still a work in progress, but so far, it’s been a good transition because it’s giving our precision team more flexibility and freedom to service an increasingly large service area.”

Hoober has two regional managers for precision ag, Wharry and Yoder, whose support responsibilities are split between the northern and southern stores. They conduct weekly conference calls with each store in their region and coordinate field days and demonstrations.

At the store level, Hoober has 7 precision specialists, who are each responsible for sales and support. They also work closely with the service department and there are 8 shop technicians designated as the go-to people in their particular shop for installations and setups.

“The benefit of us having a big precision team is that we can cover for each other in different regions,” says Chuck Hoober, one of the dealership’s owners. “Plus, we have depth of knowledge at each location. It’s not just one person’s responsibility and that allows us to get the customer the right answer or solve their problem very quickly.”

Hoober recently decentralized its precision department, putting store managers in charge of each location’s precision business. This transition has provided more freedom and flexibility to specialists and also increased integration with the dealership’s service technicians who can support and install components.

But perhaps the biggest asset to the strength of the precision department is its stability. Turnover has been almost unheard of, with Hoober only losing one precision farming employee during the last 10 years.

The precision staff attributes the consistency to constant communication, genuine pride in the work they do and trust from ownership to always operate in the best interest of the customer.

“We try to communicate to the team as much as possible, how important they are to the total customer-dealer experience,” Hoober says. “Our precision specialists are a very intricate part of the whole buyer experience with our company.”

Training & Innovation

The ability to maintain a high level of customer support is rooted in a willingness to learn. While Hoober’s core precision products are Case IH and Trimble, the dealership sells and services nearly a dozen different precision brands.

Keeping pace with the evolution of technology is challenging enough, let alone allotting the time for specialists to sacrifice their daily duties to attend multiple manufacturer retreats.

To minimize disruption to day-to-day operations, and to maximize training investment, Hoober routinely designates specialists to attend certain training sessions and then report back to the entire precision team and sales staff.

“Each specialist kind of has their niche,” Diller says. “In some respect, we’ve taken the same path our shop technicians have, because they tend to be specialized in combines, planters or tractors.

“We have a couple of precision specialists who know Raven or Ag Leader really well and this works as long as the communication lines stay open and we can all keep each other informed.”

Hoober’s precision team also welcomes the opportunity to innovate on its own. They’ve designed a mobile precision farming training trailer and retrofitted a Case IH Scout with more than $25,000 in precision spraying technology for demonstrations.

The UTV features a Case IH display, Capstan Ag’s PinPoint application system, Raven CANBUS nodes and telematics capabilities and is designed to replicate the functionality of a 90 foot sprayer.

“Not a single part of componentry on that vehicle is supposed to work together other than the engine and the transmission,” Wharry jokes. “But this was an excellent learning project for each of our specialists because we probably found five ways to do it wrong before finding the way that made it work.”

Now in it’s fourth iteration, the Scout has proven to be a valuable mobile training and sales tool. One of the simulations the precision team performed recently at a university field day was creation of a Normalized Difference Vegetation Index (NDVI) map of a field.

The imagery was then used to create application prescriptions, which were sent to the cloud. Students were then able to upload the prescriptions to the Scout and spray the field.

When used for customer demonstrations, the unique vehicle also grabs plenty of attention, which often translates to a sale.

“It’s a showstopper,” Yoder says. “When it’s running and all the nozzles are pulsating back and forth, people just stop and stare, and once they walk up, we have them. At the first farm show we brought it to, we sold $50,000 in equipment.”

Yoder adds that “a little bit of everyone from our precision team” is part of the Scout. While it took a substantial investment of time and money to develop the mobile tool, it’s the type of project that Hoober’s specialists are encouraged to pursue.

“We’re never afraid to take a brand new piece of equipment and gut it, add some technology and take it to the farm and run it,” says Ian Watkins, precision farming specialist at the Ashland, Va., store. “A lot of times, we want to see if things work together and demonstrations are a great way to try components on a small scale before we sell them to customers.”

As Hoober expands into data management, they’ve developed three tiers of service along with four different equipment calibration options. The dealership hopes to carve out a niche equipping manure tanks with precision hardware to collect, map and track application of dry and liquid manure for customers.	Now in its fourth iteration, Hoober’s precision team modified a Case IH Scout with more than $25,000 in precision hardware to use as both an internal training tool and mobile demonstration vehicle for customers.

Mapping Future Success

Hoober’s progressive nature is leading them to explore revenue opportunities with data management service as well. While Diller acknowledges that this isn’t an area that all farm equipment dealers will pursue as part of their precision strategy, he sees it as a driver in the future use of the technology.

“We need to strike a balance between being a traditional machinery dealer and leveraging our expertise in equipment and precision to create our niche in this space,” he says. “Whether this comes through partnerships and collaboration with co-ops and consultants is something we’re exploring.”

Hoober currently offers three tiers of data management service for customers — a basic, standard and deluxe package. The basic package includes farm field set-up, guidance line management and uploading of data cards for $0.75 per acre.

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Hoober’s mobile precision training trailer allows specialists to provide specialized training to customers, as well as internal training on one of 10 different precision brands the dealership carries.

Read More About the Precision Training Trailer

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With the $1.75 per acre standard package, customers also receive harvest calibrations and data collection, and the $3.00 per acre deluxe plan adds basic display training, loaner equipment and planter data collection and reports.

In addition to the data collection packages, Hoober also offers specific calibration packages for yield ($500 per crop), guidance ($375 per unit), planter ($100 per row) and sprayer ($800 per unit).

The diversity of offerings is designed to give customers flexibility when deciding which package suits them. But Hoober’s precision specialists also advise customers based on need and seasonal goals.

“We want to be a processor of data and help customers make use of what they’re collecting,” says Chris Morrison, precision specialist at the Seaford, Del., store. “Some customers want us to develop reports from 10 years of SMS data and others want us to take their planting and fertilizing data and create a report so they don’t have to carry around huge Farm Service Agency (FSA) books with pencil marks all over the pages.”

Morrison adds the dealership is building business relationships with local co-ops, including Crop Production Services (CPS), Aurora and Willard Agri-Service for agronomic and prescription-writing services.

Another data collection opportunity Hoober is aggressively pursuing is manure application mapping. With increasing scrutiny on how and when fertilizer is applied in the Chesapeake Bay region, Yoder says the dealership is trying to establish itself as a leader in helping customers accurately track both liquid and dry applications.

They’re working with a manure hauler in Pennsylvania to outfit tanks with Digi-Star scale heads for dry manure and Krohne flow meters for liquid manure application.

“We’re trying to gather the data and offer discounts on the hardware and installation, but we think this can be a strong niche market for us,” Yoder says. “It can be $10,000-$12,000 to outfit a tank with the precision hardware to track application and if a commercial operator has 10 tanks, that can add up pretty fast.

“We’re also seeing more interest from customers in having a monitor where they can add their farm and field and record field information so if they get audited, they will literally have documentation that will hold up in court.”

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