Customer's perceptions of business units within an agricultural business in South Africa

English: The benefits that customer relationship management bring forth are critical factors such as customer satisfaction and loyalty Customer satisfaction is a well-researched subject in Management and has been referred to as God, King and beyond. Companies are dependent on customer satisfaction and/or positive customer perceptions in order to survive, in that the existence and growth of companies depend on customers’ repeated and increased purchases due to positive feelings towards the company. Also, customer satisfaction may increase the good reputation of a company and lead to positive wordof- mouth advertising that may in turn bring in new customers. Agricultural businesses are an important vehicle of agriculture growth in South Africa; however, research on customer satisfaction among agricultural business customers is scarce. Agricultural businesses (previously known as cooperatives) were established on the notion that through cooperation between the various farmers, they could obtain better services and products at reduced prices that would add value to the farmer on his farm (farmer-centred). Cooperatives were a viable business form until 1996, when the Marketing Control Board and subsidised interest rates were abolished. The majority of the agricultural cooperatives were converted to investor-oriented firms (IOFs), that had the primary goals of being profitable and maintaining a valuable share price (corporate-centred). Agricultural businesses, however, are complex due to the fact that the customers of an agricultural business are in most cases also the shareholders of the company. Also, agricultural businesses serve a niche market (farmers) and the relationship between the organisation and its customers differs from that of other industries. Traditional customer satisfaction research has focussed on using the SERVQUAL method, which in effect only tests service quality. This study aims to simplify the measuring instrument, but also add other drivers of customer satisfaction; namely, satisfaction concerning price, product, personnel, service and management. The agricultural business consists of various business units that are managed as smaller businesses, which all form part of the larger agricultural “umbrella” company. It is, thus, the primary objective of this study to determine the relationship between the drivers of customer satisfaction (price, product, service, personnel and management) of the various business units and link it to the profitability of these units; and to determine the impact of these variables on the customer satisfaction with the company. Secondary empirical objectives include determining which of the drivers of customer satisfaction have the biggest impact on customer satisfaction of the overall company; determining which of the business units have the biggest impact on overall satisfaction; determining if the frequency of the use of the different business units affect the overall satisfaction of the agricultural business and lastly, determining whether the perception of performance by customers of the business units has an influence on profitability. The study was of a quantitative nature, making use of mailed questionnaires sent to the total population, that is, members of a major agricultural business in Central South Africa that provide more than R100 000 in business to the agricultural business. A total of 963 questionnaires were sent out and 345 useable questionnaires were returned, making the response rate 35.8% of the total population. The main results indicated that satisfaction concerning retail shops, insurance and mechanisation (workshops) have a statistically significant relationship with overall customer satisfaction, which indicates that in order to increase overall customer satisfaction, satisfaction with these three business units should be looked at first. Product, service and satisfaction concerning management, as drivers of customer satisfaction, all have a statistically significant influence on overall customer satisfaction. Also, when the various drivers inherent in the various business units were tested against overall customer satisfaction, the results indicated that there were two significant drivers inherent in a business unit, namely retail shops product and grain marketing price. In addition, statistical significant results indicated that the more often a business unit is used, the more satisfied customers are (except in the case of retail shops). The average contribution to net profit of each business unit was calculated over a five year period and it was compared to the average performance of each business unit. The graph indicated that there is a definite correlation between contribution towards profit and customer satisfaction. Retail shops as a business unit provided interesting results that indicated that retail shops price, retail shops product, retail shops personnel and retail shops service had the biggest impact on all the overall drivers of customer satisfaction. This indicates that retail shops are seen as the “window” to the agricultural business by the customers. The respondents were also asked to indicate what they perceived to be the primary objectives of the agricultural business versus what they felt the objectives should be. Very importantly, the results were significant in determining that they perceived the objectives of the agricultural business to be company/corporate-centred. In contrast, they felt the objectives should be farmer-centred. Specific recommendations were made with regard to bettering especially retail shops and increasing the availability and quality of retail shops product in an effort to maximise customer satisfaction.