How outcome-based sales are transforming agribusiness partnerships

Outcome-based sales and servitization are changing collaboration in agriculture, placing greater value on shared goals and measurable outcomes

Innovation continues to shape the agricultural sector and the way agricultural input providers operate is evolving. Instead of focusing solely on selling products, many are shifting toward offering services and agribusiness solutions that emphasize results and collaboration. Today, they have evolved into comprehensive service providers, offering support services alongside a wide range of products including:

• Seeds and traits
• Seed treatments
• Herbicides, fungicides, and insecticides
• Biologicals
• Digital tools and data-driven solutions

This approach, known as outcome-based sales (OBS) or profit lever servitization, helps companies and farmers collaborate on shared objectives, focusing on proven results rather than transactions.

By integrating advanced technology, agribusiness consulting, and data-driven analytics, organizations can deliver tailored recommendations that optimize yield and profitability. This strengthens long-term partnerships and positions agribusiness companies as strategic allies in driving sustainable agricultural growth.

The agricultural landscape has become increasingly complex, with farmers facing challenges from climate change, resource scarcity, and evolving consumer demands.  

Meanwhile, falling prices and generic alternatives undermining the perceived value and uniqueness of branded products are forcing major agribusiness firms are reinvent themselves to remain competitive.  

In response to the multifaceted challenges, agribusiness corporations have expanded their offerings to provide comprehensive agribusiness solutions. This change isn’t just about adding more products or services. It’s an intentional move to adapt to shifting market demands. One of the driving forces behind this change is servitization.  

Servitization: An emerging trend in agribusiness strategy 

Servitization is an approach strategy that shifts the emphasis from simply selling products to delivering complete holistic, systemic solutions that combine goods with value-added services.  

In agribusiness strategy, servitization means moving beyond supplying seeds, fertilizers, or machinery to providing integrated services that enhance farmers’ productivity, efficiency, and sustainability. These agribusiness solutions include: 

• Advanced data analysis 
• Cutting-edge sensor technology 
• Expert agronomic consulting 

The concept of servitization represents a fundamental shift in how agribusiness corporations interact with their customers. Instead of one-time transactions, these companies are now fostering long-term relationships built on continuous value delivery. For instance, advanced data analysis services might involve real-time monitoring of crop health using satellite imagery and IoT sensors, allowing for early detection of pest infestations or nutrient deficiencies.  

Another example of serivtization in agriculture is expert agronomic consulting. This might take the form of AI-powered decision support systems that provide personalized recommendations based on a farm’s unique conditions and historical performance data. 

Alongside servitization, outcome-based sales (OBS) is also playing a major role in the transformation of agricultural industry. 

Outcome-based sales: A win-win partnership

OBS is an approach to building sustainable partnerships between agribusiness corporations and farmers. Here’s how it works: 

• Participation model: Farmers share data from sowing to harvest with the agribusiness corporation. 
• Outcome promise: The corporation guarantees specific results, such as a weed-free field. 
• Data integration: Farmer-specific data is combined with historical and current data, including satellite and weather information. 
• Tailored recommendations: Based on this comprehensive data analysis, the corporation provides customized advice to achieve the promised outcome. 
• Risk sharing: If the agreed-upon metrics aren’t met, the farmer receives compensation. 

The OBS model represents a radical departure from traditional agribusiness practices. It aligns the interests of the corporation and the farmer in unprecedented ways. For example, instead of simply selling a herbicide, a company might guarantee a certain level of weed control. This shifts the focus from product features to actual on-farm results.  

The data sharing aspect is crucial, as it allows the corporation to continually refine its recommendations based on real-world performance. This could mean adjusting application rates based on soil type, weather conditions, and crop growth stage. The risk-sharing component is particularly innovative, as it demonstrates the corporation’s confidence in its products and services while providing farmers with a safety net. This model has the potential to transform agriculture from a largely transactional industry to one built on deep, data-driven partnerships. 

Personalization as a key factor 

OBS relies heavily on the exchange of data and the use of personalized insights. This approach builds trust and loyalty through individualized support. It also allows for tailored product recommendations and helps farmers mitigate risks from unpredictable external factors 

Personalization in agriculture improves customer satisfaction as well as increasing the effectiveness of farming practices. By leveraging big data and advanced analytics, agribusiness corporations can provide insights that are tailored to the specific conditions of each field, or even each part of a field. 

This level of granularity allows for precision agriculture on an unprecedented scale. For instance, a farmer might receive recommendations for variable-rate seeding based on soil fertility maps, or get alerts about potential disease outbreaks based on local weather patterns and crop susceptibility. This personalized approach not only optimizes resource use and maximizes yields but also helps farmers navigate the increasingly unpredictable conditions brought about by climate change. 

Why OBS and servitization matter now 

The importance of adopting OBS and servitization models is clear. As agriculture faces increasing pressures from population growth, climate change, and limited resources. The need for more efficient and sustainable farming practices is critical.  

OBS and servitization models address these challenges head-on by fostering a collaborative ecosystem where continuous improvement is the norm and offering: 

• Market differentiation: In a commoditized market, service-based models provide a competitive edge. 
• Sustainable revenue: Continuous service models ensure steady income for agribusiness corporations. 
• Risk mitigation: Shared responsibility leads to better outcomes for both parties. 
• Innovation driver: The model encourages ongoing development of better products and services. 
• Data-driven agriculture: Facilitates the shift towards more precise, efficient farming practices. 

For agribusiness corporations, the shift to service-based models provides a buffer against the commoditization of physical products and creates opportunities for developing new revenue streams.  

For farmers, these models offer access to cutting-edge technologies and expertise that might otherwise be out of reach, potentially leveling the playing field between small and large operations. Moreover, the focus on data-driven decision-making aligns perfectly with the broader trend of digitalization in agriculture, positioning early adopters at the forefront of the industry’s transformation. 

From vision to reality 

The transition from traditional product-centric models to OBS is already underway. Leading agribusiness corporations are already piloting OBS programs, with promising results.  

For instance, some companies are offering leaf health guarantee programs for certain crops, where farmers pay a premium for crop protection products and agricultural support and receive compensation if the leaf health falls below a certain threshold. These early initiatives are showing significant promise, with participating farmers reporting improved yields, reduced input costs, and better risk management. As these programs mature and expand, we can expect to see a ripple effect throughout the industry, driving wider adoption of servitization and OBS models. 

As data analytics capabilities improve and farmers become more tech-savvy, we’re likely to see rapid adoption of these models across the industry. 

Adapting to change 

The shift towards servitization and OBS in agriculture is a fundamental reimagining of how the industry operates. For agribusiness corporations, embracing these models means investing in new capabilities, from data analytics to customer relationship management. It requires a cultural shift towards greater transparency and collaboration.

For farmers, it means being open to new ways of working, sharing data, and making decisions. The potential rewards are substantial: increased yields, reduced environmental impact, and improved economic stability.

The agricultural sector is approaching a phase where data, services, and outcomes are taking center stage. As these models gain traction, we can expect to see a cascade of innovations in areas like predictive analytics, autonomous farming systems, and blockchain-based supply chain management.

Driving sustainable growth together

Outcome-based sales and servitization are reshaping agribusiness, driving collaboration, innovation, and measurable results. As agribusiness corporations and farmers embrace these models, integrating them into a forward-looking agriculture business plan will be key to long-term success and sustainable growth.