Most farmer-focussed software products fail to meet market uptake forecasts. Sometimes the shortfall is large – say budgeting on 2000 farmer subscribers by the end of year two but achieving 187. Clearly, this sort of shortfall will get investors twitchy, so let us look at how these assumptions can be so wildly inaccurate.
- Number of farmers. The NZ Census records 49,530 farmers. As it includes small holdings it is too high. If we only count those farms that can support the owners without outside income there are around 10,000 dairy farmers in New Zealand and around 15,000 sheep and beef farms. These numbers are for New Zealand as that’s the market I know best, but you’ll find equivalent differences between census numbers and serious farmers in most farming countries.
- Not all farmers are in the market. In my experience a large proportion (perhaps 50%) of farmers are busy with other hurdles to their business; farm succession, fixing infrastructure after a flood, refinancing after a marriage break up, health issues including depression – it’s a long list. These issues need resolving – until that time there is no one to seriously consider your value proposition.
- Under-valuing farmer’s time. I have worked with farmers for 37 years and nearly every one of them is understaffed. They have a backlog from which a dozen things would be worth $1000/hour to resolve. Farmers have a range of values for their time – things that they are keen on they will do more eagerly, maybe $100/hour. If your software is agony to set up and use, it is not respectful of farmer’s time and using it will be viewed at the full $1000/hour – this is what you are really competing with.
- Market segmentation. As a product developer, it is easy to see a wider market than farmers will give credit. Sometimes you must ignore your own positive marketing, wear De Bono’s “black hat”, and really question why someone would spend money with you when they don’t need to. What sort of farmers are the ideal user? Is it dependent on farmer age, is it better suited to finishing farms or is it a technology aimed mainly at beef production? How many are in this more defined niche?
- Lack of validation. If you are simply multiplying the number of farmers by an uptake figure, you need to get in front of farmers you think should be using your product. By showing the concepts of your solution to different farmer groups and asking the hard question – “what would stop you using this product” you will get feedback both on the nicheness of the product and the likely uptake. If you have only worked closely with 2 or 3 farmers to develop the concept you most certainly need to take this out to more farmers.
- Dependencies. If uptake requires other planets to line up, for example the software requires monthly pasture cover measurements from all paddocks, or condition scoring each ewe mob, then the software is limited to the farmers who are keen on and can implement these requirements.
- Total cost of ownership (TCO). What is required by the farmer to succeed with your software product? To provide value, many farm management systems require the farmer to measure certain things and then make informed decisions. For example, if a tool requires measurement of animal weights through the year, even sample weighing may require 30-40 weighing events for each of eight stock classes. Farmers may not have adequate satellite yards, and each weighing will tie up two staff for most of a day. Sure, half of these weights may be able to be done alongside other animal husbandry tasks but, in my experience, the TCO is 3 to 10 times higher than the software subscription fee.
Getting your pricing right can only be done on good estimates of the size of the market. Most farm management software expects a higher level of precision farming than implemented by the average farmer. Uptake is then dependent on changes to farm practice. The problem arises when uptake assumptions are not well validated. Consequently, farmers are expected to change faster than is realistic. Investors consider the uptake is inadequate when the real problem is a lack of support to farmers who need confidence in changing the way they run their farm. In this way many innovative products have been lost to the industry.
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