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Hobby Farmers Offer Opportunities, Challenges for Tractor Sales

They have the land, now they need a small tractor. Dealers willing to cater to this new breed of customer are finding it is more than worth their while.

By Dave Kanicki, Managing Editor

In the past, they were often referred to as "gentlemen farmers." Today, they go by any number of names, from ruralpolitans to lifestyle farmers to sundowners to weekend guys. Most ag equipment dealers call them "hobby farmers." And to those who have chosen to cater to this type of ag equipment buyer, they are best known as "customers," and they are driving the explosive growth in the sale of compact tractors, the fastest growing segment of the ag equipment market today.

Few will debate that the "hobby" farmer is a unique brand of customer, very different from the professional farmers who most equipment dealers have traditonally built their businesses around. Even fewer will argue that ag salespeople require a different set of skills to succeed in this new land of "country living" folks. But one thing they can all agree on is that next to buying their land, the hobby farmer's next purchase will almost always be a small horsepower tractor.

Responding to a Farm Equipment survey on hobby farmers and compact tractors, a spokesman for manufacturer, Mahindra USA, answered "Compact tractors are not low volume models. They represent the largest and fastest growing agricultural equipment segment in the U.S. Buyers of compact tractors do not try to make money off their land. They own and work the land because it is a deeply rooted, highly emotional and satisfying experience for them. It cannot be thought of as simply a hobby. It is truly a way of life. This is the way they want to live. They are looking for a sense of freedom and independence."

The U.S. Dept. of Agriculture estimates that there are about 1.2 million "lifestyle" farms in the U.S., and 1.6 million if farms that produce less than a $1,000 in annual income are included. Considering the rapid expansion of these small farm units, most dealers have found this is a market worthy of their attention. And the growing sale of compact tractors and the attachments and implements that go along with them has been their reward.

Sarah Nettles of Nettles Equipment, Duck, W.Va, says that her store only recently added compact tractors to its product line but is already seeing the results. Popularity of the equipment has been such that the dealership is ready to invest up to $400,000 to expand their offerings and facilities to meet the growing demands of hobby farmers in the area. "So we can better serve this type of customer," she says. "They pay the bills just like everyone else."

Looking to improve the store's visibility to the general public, the dealership plans to build a new facility nearer a main road. "You really have to be looking for us to find us now," she says. Recognizing the changing needs and buying habits of this new customer, Nettles Equipment has already extended both daily and Saturday store hours to better meet the demands of this group of buyers who work full time off the farm. "Our posted hours are 8 to 5. But we're seldom out of here before 8 at night," Nettles says.

Fertile New Market

Few farm equipment dealers have not been touched by the emergence of the lifestyle farmer. More than 100 ag dealers responded to a recent Farm Equipment survey undertaken to investigate the level and impact of increased sales of compact tractors as well as the nuances of working with this new breed of tractor customer.

Nearly 45% of the ag dealers polled said that last year more than 25% of their "tractor" sales dollars came from "compact tractors." While a few dealers defined tractors at less than 60 hp in the category of "compact," an overwhelming majority classified "compact" tractors as those that were 45 hp or less. While the "used" small tractor market can also be lucrative, 94% of dealers say that the compacts they sell are "new" equipment.

Some 94% of respondents report that the sale of compact tractors has indeed increased since the start of this decade. Of that group, 64% say that compact tractor sales have grown by more than 25% since 2000. Nearly 12% of the respondents contend that their market for compacts has grown more than 100% during the past 5 years.

Independent tractor manufacturers contacted for this article also report a huge surge in sales of compacts during the past 5 years. What they classify as compact tractors range in horsepower from 25-57 or 33-48 pto hp, which one manufacturer qualified as the "high end" of compact horsepower.

Estimates for growth between 2000 and 2004 range from 80,000 compacts sold 5 years ago to 125,000 units last year. How the independents view this market segment during the next 5 years is disparate, to say the least. One suggests that compact tractor sales will grow by 100%, while another estimates growth rates at 40%. Still another is anticipating that this market is stabilizing and ready to level off.

On the other hand, some manufacturers see a slower increase in the growth in the number of hobby farmers between now and 2010. Their projections range from a leveling off in the demographic to a growth rate ranging from 5-20%.

John Sargeant, president of Landini USA, sees growth rates for both the hobby farmer and compact tractors slowing during the next few years. "I personally think that the market has grown so much in recent years and may be becoming saturated. I will be surprised if sales can be sustained at current levels. How the economy performs and disposable income holds up will be the most significant indicators as to the direction this market will go."

A 'Diverse' Customer Base

Key to effectively tapping into this new and expanding customer base is a keen understanding of who these new customers are and why they are moving to the country.

Asked to profile the typical hobby farm customer, equipment dealers describe a diverse group of individuals, ranging in age from their early 20s to 80 years old. They come from a variety of backgrounds and have wide-ranging interests. While it may be incorrect to give these new buyers of compact tractors a simple label like "hobby farmers," it is safe to say that this group of first-time tractor buyers are fueling the rapid growth of small-hp tractor sales in the U.S. and Canada.

Gene Saville, Lamb & Webster, Inc. of West Valley, N.Y., finds it difficult to place a single label on his hobby customers. "I do not think there is a 'profile' of these customers, other than they are people who do not want the 'suburban' life anymore. They are younger people who grew up in the burbs and older people who lived in the burbs and now want a rural life on the farm."

"Most of them are people who live on a few acres and need a compact tractor to help take care of their land," says Brent Vander Pol, Brim Tractor Co., Mt. Vernon, Wash. "For some, it's therapeutic. For others, they just want to get the job done faster so they can still play on the weekends."

David Courtney, Creel Tractor Co., Ft. Myers, Fla., characterizes his primary compact tractor customers as "new to rural life with horses and 5 to 10 acres. Most have the ability to pay cash and may never need to buy another tractor because their annual use will never wear it out."

Writing in a recent issue of Agri Marketing magazine, Susan Spaulding, president, Market Directions, Inc., Kansas City, Mo., summarized this group as "typically middle-aged, educated, married and having traditional values. In some case children are still at home; in others this lifestyle may follow an empty nest. Lifestyle farmers generally work full-time away from their homes in addition to working on their 'farm.' They have higher-than-average incomes, with a bulk of their earnings and assets not related to the farm."

Another significant factor to consider, Spaulding writes, is that "women are primary purchasers and users of products and services supporting the rural lifestyle. Gender differences in product and service evaluation criteria, as well as specific product and service needs, make understanding womens' needs important in order to understand the country living population."

Also noted in a study of the country living population recently released by Spaulding's firm is that there are three main reasons why hobby farmers choose this lifestyle:

• Love of the outdoors

• Interest in privacy

• Getting away from the city

Personal Attention Please

In many, if not most, cases, the hobby farmer represents an entirely new challenge for the experienced farm equipment sales person. One dealer put it this way: "You have to understand that many of our new customers don't know the front end of tractor from the back." In other words, success in selling to this growing group of hobby farmers calls for time, patience and a "personal" approach.

"This customer needs information, advice and operational training, service and maintenance," says Kelly Mathison, aftermarket manager/partner of Countryside Equipment, Brandon, Manitoba. "We have had couples shopping for small tractors that didn't know what a pto was or how a 3-point hitch worked. Some don't know the difference between gear and hydro transmissions.

"As dealers we must be understanding of the customer's situation and do our best to cater to their needs. Our staffs need to be conscious about how to communicate with them. From sales taking the time to explain the basic features of a tractor that would be common knowledge to our farm customers, to ensuring that our parts and service people understand that the schedules of these people are different, we have to make sure we treat these customers the same as we do our large commercial farm customers."

Enter the 'Sales Consultant'

As a reminder of who many of these new hobby farmer customers are and how staff roles in the sales process are changing, every dealership employee - sales, service and clerical - needs to keep two definitions in front of them at all times.

The first is "Novice:" somebody who just started learning or doing something new and has no previous experience in the skill or activity.

The second definition is "Consult: to ask for specialist advice or information, especially from a professional."

Lisa Jordan, sales manager, GW's Equipment, Cleveland, Texas, has been successful in dealing with the new, first-time tractor buyers because she can relate to them. "They are living their dream. Most of them have 5 or 10 acres of land and have never been on a tractor. They range from newlyweds to older folks who just want to get out of Houston."

When it comes to working with the hobby farmer, Jordan views her role as a consultant and advisor. One of the first things that she does when working with a first-time tractor buyer is to "show them how to read a spec sheet. They usually know brand names of equipment, but not what they should know in terms of specifications. For instance, we take the time to explain gpm in regard to hydraulics, the importance of tractor weight and why 3-point capacity is important. A lot of times, they'll want to pick a tractor that is too small for what they're looking to do with it.

"I spend whatever time I need with them until they feel comfortable." If need be, Jordan will put them in the tractor seat and demonstrate its operation. "These tractors we sell today are very user friendly and this makes it easier."

Her dealership's efforts to cater to the new compact tractor customer are paying off. The dealership has doubled its sales of compact tractors every year since 2000. "So far this year [July], we've already exceeded the number of compacts that we sold all of last year," says Jordan.

Like Jordan, Bob Michael is also an advocate of consultative selling. The general manager of Snow Creek Tractors in Bonners Ferry, Idaho, explains that "Dealers need to focus on giving these customers our expertise, time and patience," he says. "Our customers move to northern Idaho to enjoy the quality of life that's available here. They come here from as far away as California and New York. For many, if not most, of them, their knowledge of tractors, except for the big brand names, is pretty much non-existent."

Michael, who has been in ag equipment sales for "a couple of decades," realized quickly when he saw the trend developing about 5 years ago that this new brand of customer expected him to give them the time they needed. "They need to feel they will be catered to. Some are more needy than others. I've had customers come in 8 or 10 times before they finally bought a tractor," he says.

Like other successful dealerships, it's paying off as the northern Idaho dealership has seen its sales of compact tractors climb by 150% in the last 3 years. This year, compacts will make up 75% of Snow Creek's total tractor sales.

"The key is to spend as much time up front with them as they need," Michael says. "I ask a detailed set of questions starting with 'What do you need to do with your new tractor?' What kind of property do they own? Will you be operating on hillsides? Will you be doing ground-engaging work? Will the primary user be you or your wife? Who else in the family will be using it?

"All of this helps me match the tractor to the use and to the equipment's use. Sometimes you have to explain to them that they don't need a 50 hp unit to mow 2 acres of grass. If a wife or older children will be operating the tractor, a hydrostatic transmission is better suited to their use than a gear-shift tractor," says Michael.

"They have to know you will take care of them after the sale, too. Service is vital. Most of them came here to live and play and not to work. With equipment under warranty, we pick it up fix it and return it. No charge. No questions asked. Price may not be as important to these types of customer as it is to our commercial customers, but service is every bit as important."

Like any other business, relationship building is vital to retain customers after the sale and for referrals, Michael adds. "After set-up and delivery, I have customers who will stop in with a cup of coffee and just want to chat. Others, we never see until they need parts or an implement."

Tools Not Toys

For the commercial tractor buyer, equipment purchases are investments. Few hobby farmers look for a financial return when they buy a tractor. This can create another issue that dealers need to be alert to, says Michael.

"They want to get on it and go," he says. "We need to remind them that their new equipment is a powerful tool and not a toy. A lot of these customers don't know what a pto is yet will take the time to wash and wax their tractors and keep them in the garage."

Customer references or attitudes that compact tractors are no more than "big toys" wrankles some professional ag equipment dealers. One New York state dealer describes this new breed of customer as "A large pain in the butt who has just purchased a small tractor, which is his or her ultimate toy."

Comments like these and other references to customers as belonging to the "yuppie tribe" may signal dealer management that some sales people who have been successful in working with professional farmers are just not cut out to work with the hobby farmer. Rick Hirai, sales manager, Liberty Farm & Lawn, Quincy, Wash., says this can present a significant issue for dealers looking to grow the small-tractor segment of their market (see "Changing Customer Base Requires New Sales Approach," page 42).

Lyle Mellott, McConnellsurg Motor and Implement, McConnellsburg, Pa., does his best to discourage customers who look at compacts as toys. "I don't want to sell tractors to people who treat them as toys," he says bluntly. "I want them to work their equipment."

At the same time, Mellott feels that it is the salesperson's job to protect the novice tractor buyer from "overbuying." "We have taken 60 or 70 hp models in on trade and sold them a new 30 hp tractor because that's all they needed in the first place," he says.

Web-Savvy Customers

Assuming that all hobby farmers embarking on their first tractor purchase are completely oblivious to what they need can be fatal mistake. In many cases, the tractor sales consultant will be called upon to confirm or correct information that these would-be tractor owners have gleaned from other sources before they ever stepped through the dealership door.

In the Farm Equipment survey, many dealers, when asked to profile their "typical" customer for compact tractors, used the terms "yuppie," "baby boomer" and "affluent" to describe this new group of tractor buyers. What's also typical of this demographic is that they are web-savvy and more often than not utilize the Internet prior to major purchases.

While the web can provide a wealth of solid, helpful data, it proliferates misleading information as well. If customers and potential customers utilize this tool, equipment sales people need to have a keen awareness of what customers are reading.

A search of "compact tractors," for example, will take the web surfer to the to-be-expected wealth of advertising - an avenue that dealers should also be utilizing to create awareness of their product offerings. Chances are good, too, that it will take them to articles like Ken Burne's "How to Select a Compact Tractor."

This is a helpful article that describes he and his wife's search for a compact tractor after moving to rural Pittsburgh. The article discusses tractor sizes, implements, attachments and features. There's a FAQ on small tractors and an easy-to-understand glossary of terms.

Burne also provides a section entitled "Which brands of tractors are good and which are bad?" How did he rate the product line you are carrying? You need to know this.

In another part of the article he presented his "serviceability" ratings for a variety of tractor brands. Some are listed as "Service-Challenged" and others as "Service-Neutral." Where do your compacts fall in his rating?

Whether you agree or disagree with what Burne or dozens of other purveyors of compact tractor information have to say, chances are better than average that your prospective customers are reading it. Salespeople who have done their research can be better prepared to rebut misinformation and correct poor equipment perceptions. Sales work has become a full-time job.

Reaching Out to Customers

If it is a given that that the "typical" hobby farmer is a customer who requires much attention during the selling process, it also stands to reason that it will take more effort and a different message to get this group into "your" store in the first place.

In addition to traditional promotional efforts, including print advertising and direct mail tailored to these individuals, the Internet can be a powerful tool in getting your message out. Because price is not always an overriding factor for the hobby farmer, promotional efforts should be informational. These customers want to be able to ask intelligent questions before they walk through your door.

When developing this information, there is no need to re-invent the wheel. Again, the Internet is filled with solid data. Use it. Adapt it to the message you want to deliver. Just as importantly, make sure your sales force is working with the same information.

Make your message personal. Put a face on your store: "Stop in to see our complete line of compact tractors and ask for Betty." Give the new customer someone to talk to.

Relationships = Referrals

Few will argue that the best source for future sales are customer referrals. More often than not, good referrals result from what happens after the sale.

What is important to Mike Young, owner of Rockwood Tractor Sales & Service, Vidor, Texas, is the relationship he develops with his customers. "I like to get to know the husband, wife and their kids. I want them to be comfortable with us after the sale. They need to know they always have someone to call, a name they can use when they call."

After the sale, follow up is standard practice for Rockwood. "After a short while, we check back with the customer to make sure everything is working. We want to nip any potential problems in the bud. We make it clear that we're not making another sales call," says Young.

"When they get 50 hours on the tractor, we have them bring it back for scheduled maintenance. We take extra time with all of our new customers during that first maintenance visit to explain everything that we've done with the equipment. We also show them things they can check themselves."

They Want 'Good Stuff'

Most observers agree that the age of the hobby farmer is here to stay and their numbers will likely continue growing. David Shipley, Agri-Trac Equipment, Utica, Ohio, says that the hobby farm trend in his area continues to boom as acreages are carved up into small lots. While some buyers just want to mow their land and plow their drives, he said even greater profit opportunities exist by creating "packages" for the customer, which can include loaders, mowers (sometimes two at the initial purchase), backhoes and small spreaders. He agrees with the notion that these hobbyists want good stuff, and are willing to spend on their pastimes.

One sales key that he's found is catering to the female customer. "If we find out that the wife will be driving the tractor, and we get her on top of a machine that's both easy to use and is comfortable, it's often sold before her husband comes in the door," says Shipley.

By Rick Hirai, Sales Manager, Liberty Farm & Lawn, Quincy, Wash.

Dealerships that cater only to the traditional ag customers are becoming fewer and fewer. Every year there are fewer and fewer [professional] farmers and they are farming either the same amount or more acreage, but doing it more efficiently with more reliable equipment. The big operations usually are looking at price only and demanding more and more service. Smaller farm operators who still shop and appreciate good service are often at the mercy of the banks as to what they can or can't purchase. This is making it more difficult for dealerships to make a living.

While all of this is happening, our rural areas are seeing an influx of retirees and lifestylers who have money to spend, have a tractor for 2 acres of land, and are less dependent on the farm economy.

Whether we like it or not, we need these new customers to balance our business. This has created a problem in that catering to this customer is vastly different from the typical ag customer. Both want a salesman with a problem-solving attitude, but their problems are different. Hobby farmers are often unfamiliar with basic tractor concepts and can be easily run over by a salesman in a hurry to get back to his regular ag customers. Finding sales people to cater only to the hobby farmer is difficult and tough to justify. Getting over the hurdle of effectively serving this base of new customers with current resources and staff will be a major issue for dealerships to succeed in this emerging market.

By Gary Brown, Vice President , Ankeny Tractors, Inc., Ankeny, Iowa

Many new users don't use their heads when it comes to safely operating compact tractors. Being sued because of negligence on their part scares me to death. I used to tell people to use good common sense when using a tractor, but I've come to the conclusion that what I consider common sense and what they do are two different things. I once had a lady customer that drove over a tree. A limb went under the roll bar and, of course, when she gave it the gas, the front end raised off the ground. She was fortunate that it didn't flip her over backwards.

Loader use on a tractor is also a big concern, especially when operating on a hillside. I see people carry a full load with the loader way up in the air so they can see better. I've told them that doing so leads to a very unstable situation. I don't know if they get it or not.

Farming can be a dangerous occupation, and farmers are pretty smart and experienced with equipment. They still have accidents. Now add in the new tractor owner/operator and there is just an accident waiting to happen.

Dealers can tell the buyer things to be careful of, but who tells the wife and the kids? This safety issue needs to be addressed, not only for the safety of the user but also the financial safety of the dealership and manufacturers in this age of lawsuit happy consumers.

EDITOR'S NOTE: Mr. Brown wasn't the only dealer who expressed serious concern about safe operation of compact tractors by new tractor owners/operators. Some dealers say they adhere to strict manufacturer procedures of thoroughly reviewing operational and safety procedures prior to releasing new equipment, and require new owners to sign off that they are aware of all safety devices and have been advised as to their proper operation. Others indicated that they do not allow their service personnel to work on equipment where safety devices have been removed or disconnected. Others direct service technicians to reconnect safety gear and to ensure that all are operating properly prior to returning the equipment to the customer.

The National Educational Center for Agricultural Safety (NECAS) of the National Safety Council provides a wealth of information on the safe operation of tractors. Equipment dealers are encouraged to include these materials with operation manuals at the time of delivery. For more information, contact NECAS at 10250 Sundown Rd., Peosta, Iowa 52068, telephone 563-557-0354, fax 563-557-0353 or at www.nsc.org/necas.

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