The word "sales" carries a negative connotation with a lot of cattlemen. It often conjures up visions of used car salesmen with pinky rings, or the local horse trader who thrives off the motto, "buyer beware."
However, there's an undeniable trend in the cattle industry -- a shift away from commodity production to value-added. Most progressive producers welcome the shift, but it does force the adoption of a whole new skill set to their management repertoire -- the concept of being a salesman.
I read a lot of books on salesmanship. Those books detail a whole passel of important factors for success in sales, everything from listening skills and visualization to persistence and closing the sale. All these aspects undoubtedly are valid but successful salesmanship in the cattle industry is best measured by selling a high-dollar product.
While high-return producers always have a keen eye on production costs, what really separates them from the pack the significantly larger margins they enjoy. These larger margins are achieved in large part by maximizing revenue. While this statement is controversial, I believe it's true most of the time.
The best way to increase margins is to sell a high-end product. You can get rich by selling syringes, for example, but you're more likely to get rich selling the vaccines/medicines that go in the syringes.
Raising the right genetics, managing them properly, and responding to your customers' needs definitely requires more technical expertise and effort than what was required in the old commodity marketing system. The potential to increase margins, however, makes it well worth it.
There's more profit potential in selling a 500-lb. calf for $125/cwt., than a 500-lb. calf for $100/cwt. There's more profit potential in selling a fed steer for a $50 premium over market price than selling one at market price.
Sure, some will argue the premiums come at too high a price. Admittedly, if it costs you $600 more to sell a $1,400 bred heifer than a $1,050 bred heifer, you're better off selling the cheaper one. But I believe it's rare for the costs of moving up the quality scale to outweigh the premiums for doing so.
If this is so, why doesn't everyone do it? The answer is simple -- one doesn't have to "market" their product if it's sold as a commodity. One has to become a marketer to move up the margin food chain.
There may be far more margin in selling a Mercedes than a used Ford Pinto, but the buyers of Mercedes cars will expect a whole lot more from their supplier. Salesmanship is about always putting the right product in front of the right prospects, and providing them the info they need to understand why they need your product and why it has more value.
In the book, "How to Become a Rainmaker," Jeffrey Fox compares selling to fishing. The most important thing you need for fishing isn't the bait, the pole or the hook, he says. It's the fish. That's why it's so crucial to find the proper value chain in which to get involved.
If you're going to fish, you might as well fish where the big fish are. Who are the best feed yards, the best packers, the best order buyers, best retailers? Are you selling the best product they purchase? If not, what changes can you make?
Your goal should be to sell the highest valued product you can produce with your given resources to the best customers in the industry. -- Troy Marshall