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Alex: We’re two people who get turned on by elite status. I think cheap is our starting point.

Ryan: There’s nothing cheap about loyalty.

Have you seen this beautiful rom-com movie Up in the Air? If you are in the Friday mood, you should definitely check it out.(Hint: It is in Amazon Prime).

The movie tells the story of Alex, played by George Clooney. Alex is one of those globe-trotting, high-flying consultant types. Alex is that kind of frequent flyer who, when you ask him, will tell you precisely how many frequent flyer miles he has accumulated so far. And if you prod him about his secret desire, he will tell you that he aspires to be the seventh and youngest person to earn ten million frequent flyer miles with American Airlines.

Early in the movie, Alex meets Ryan, another frequent flyer junkie, while having a drink at an Airport Premium Lounge. They hit it off right away from the word “go” and look what happens in this scene when they get drunk.(Check the image above)

Alex and Ryan are on a high, smitten by each other, and are now flaunting to each other the loyalty cards they have in their wallets, as if they were some prized hunter trophies.

Ever since I saw this movie, this scene was etched in my mind for a good reason: Loyalty is a tough dragon to tame and train for growth and Channel Loyalty in agri-input distribution? Let’s just say, things are 10 X more complex than what it seems.

If you bravely managed to read through the 2000+ word long article I wrote last week on “Channel Loyalty Conundrum“, I am sure you would know what I am talking about.

After the article was published, I received interesting comments of all stripes from my readers.

I received generous praise from industry veterans (“I do believe you are onto something, most of us in this industry fail to see”). I also received questions for which I had no ready made answers ( 1.How does Channel Loyalty programs affect farmers? 2. How does your Channel Loyalty software “show incentives without one other stakeholder feeling he received less“?).

And most importantly, I also received valuable criticism which grounded my technological optimism (“What were you thinking when you built this model to evaluate channel loyalty strategies of agri-input firms?“)

Allow me to address this very important criticism.

My thinking hat in such matters comes from my six years of technology strategy consulting experience. The model I presented originates from the stables of my favourite data scientists, Dr. Michael Wu.

Dr. Michael Wu looked at the common loyalty tactics and strategies seen across industries, and built this framework to systematically organize and evaluate these loyalty approaches through fundamental organizing principles.

All I did through the article and model I built was this.How would this model look like in an agri-input distribution context?

Therefore, any criticism towards the model should ask a basic question: Can the understanding of Loyalty programs across various industries teach us something about the unique challenges we face when we are designing Loyalty programs in agribusiness for trade channel partners such as distributors and more importantly, retailers, who remain the truest face of the brand?

To address this important question, let us ask an everyday question: How does air line industry reward flyers with loyalty program miles?

When I book my tickets in an airlines website or an aggregator website, the data captured during my purchase transaction (personal details, food preferences, contact details) are sent from the website to the airline carrier CRM database.

And when I visit the airport and get my boarding pass, I am physically present inside the airport, as an authenticated, ID-proof bearing captive customer, inside the airport precincts, captive in both literal and metaphorical sense, to enjoy/hate the customer experience offered by the airlines, in collaboration with the airport staff.

Irrespective how my experience of flying with the airlines turns out, my flyer points are accumulated based on the transaction data the system has captured.

Now, let us play a game of contrasts when agri-input manufacturers reward loyalty points for trade channel partners in emerging markets such as India, Malaysia, Philippines etc.with largely informal distribution networks.

When a farmer buys an agrochemical product (or hybrid seeds, although the dynamics vary significantly in the case of seeds), he buys mostly based on the local trust he places on the nearest retailer. The retailer, during the time of purchase, captures the details of the purchase with pen in his hard-bound register notebook, updates his daily inventory count and completes the transaction.

Now Let us break this micro-moment down. (For most you reading this, all of this is so obvious as to hardly be worth stating. However, indulge me for the sake of our discussion).

In most cases, retailer doesn’t want to share neither the inventory nor the liquidation details captured in his register. In some cases, the retailer has employed an accountant IT executive who manages accounts and inventory through on-premise Tally Software.

In both the cases viz., the unorganized and the relatively more organized retailer, the agri-input manufacturer doesn’t receive any details about the history of transactions happening at the retail store.

Now, if you naively ask him why he is not sharing these details with the agri-input manufacturer, you will get a piece of his mind, along with a litany of complaints.

He is probably angry with the agri-input manufacturer’s sales representative for abruptly changing the price-point of a particular block-buster product mid-way during the season, when he has already sold few SKUs on credit with the previous price point.

He is also probably angry with the Loyalty Program design in which the distributor always ends up taking in the cream of the margin benefits, product discounts and the loyalty benefits that was originally meant for the retailers (by virtue of being both the distributor and sub-dealer/retailer at the same time).

Why should he share the details of his commercial transactions, when he knows that he gains an upper hand by being tight-lipped, in the long, ongoing power struggle between retailers and distributors? Why should he share the details of the transactions, unless he is sure that he will be rewarded by this act of data sharing?

Mind you, although the retailer, in some cases, knows the farmer by his first name, the retailer doesn’t authenticate the farmer through any system (except in the case of fertilizer, with Adhaar ID in India for subsidies)

And likewise, in most cases, the farmer mostly doesn’t authenticate the product for its genuinity (notable exceptions include hologram initiatives in agro-chemical firms and most recently Rasi Seeds’ Gen-check program). For all you know, the farmer could be buying a genuine product or a fake facsimile product created by a fly-by-night operator looking to earn a quick buck by leveraging the seasonal trends.

If you are with me so far, considering all of these complexities, this is the million-dollar question:

How on earth can agri-input manufacturers create ongoing loyalty programs for products that may or may not be genuine, to end customers who may or may not be in the their CRM database, with trade partners who are not ready to share details of neither the inventory nor the transactions they do with the end customers using the products?

For Agritech SaaS software players like us, such complex problems are exciting.They hold the promise of disrupting the industry status quo and also addressing the longstanding concerns in the the lives of more than 1.2 lakh agri-input retailers in India.

When we designed our loyalty business process workflow, which ties in the challenges of inventory visibility with incentives of retailer loyalty, it was our earnest attempt to create systems which create a win-win partnership between the agri-input manufacturers and agri-input retailers.

And with our ongoing experience managing Channel Loyalty programs for our premium customers in the past 5+ years, we are constantly striving to build better software systems which take into account all these on-ground complexities and so much more.

There is so much more to explore beyond what I’ve covered. There are challenges of retention, of managing physical and digital payments, of covering different retailing models, of addressing different distribution structures, of addressing counterfeit challenges and so much more.

In your leg-on-the-ground experience, what complexities have you uncovered? I have written all of this, based on my field experience in Indian markets largely. How do these complexities vary in the case of other South Asian markets?

How are agri-input retailers in other countries/ markets authenticating farmers currently? Please chime in, if you wish to share with the agribusiness community at large.

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