Customer loyalty pays dividends

Not often have we seen a farmer make an impression in the media but recently Mathias von Mirbach from Schleswig-Holstein did just that – thanks to a financial investment brainwave.

The organic farmer found himself needing €20,000 for his rented 150-hectar farm so he could buy cows from his partner who was leaving. No bank wanted to give him a loan because he did have enough security and all hope seemed lost.

A cowherd with an annual return

It was then that the 50-year-old came up with a very unusual idea to raise the money quickly – the cow share! He offered his customers shares in his cowherd. To be precise €500 a share. In return shareholders would get an annual return of 2.5 per cent in cash or 5 per cent of the natural produce from his farm shop.

Mirbach’s plan was a great success. He sold so many cow shares that in addition to the money he needed, he was able to build a new barn, new gates and better feeding grids. He made €75,000 from the venture. He told Spiegel.de: “You have to think outside the box.”

In reality, the cow share is not a real share – more a bonus share or coupon. The buyers of the “share certificates” have no rights in business decisions nor do they own any part of the farm. What they do get for their money is the cash or produce return and a yearly report about the herd.

Winning customers and their loyalty

The cow share is a great idea for making money, no doubt about that. But many critics miss the fact that the idea is also a phenomenal tool to win new customers and keep them loyal.

The idea was born from the need for new capital. But what is more impressive is the way the farm is being promoted. A campaign like this brings much-needed positive publicity – and with it new customers to the farm shop.

Shareholders, of course, will only want to buy products from “their own farm”. The impact of such a campaign is just as important in the long run as the immediate cash flow solution.

Mirbach agrees. “There are similar projects like pre-schools or nurseries at the farm, and farm fetes. All these things are important to promote the understanding of producing agricultural products. In the end, our funding idea is only another tool to keep our customers loyal,” »he told ZDF«:(http://www.zdf.de/ZDFmediathek/beitrag/video/835490/Mit-einer-Kuhaktie-gegendie-Not#beitrag/video/835490/Mit-einer-Kuhaktie-gegen-die-Not).

Eleven year ago, Mirbach had a similar idea. He invented the farm shop flat rate. Customers were able to buy a certain amount of farm products for €150 a month. In this way, he secured himself an income regardless of marketplace pricing.

He told Manager Magazine that he counts on a milk price of 55 to 60 cents a litre – more than three times the normal price at the moment.

What do you think? Could Mirbach’s ideas be used on all or many German farms? Have you used or are you planning to use similar ideas on your farm? Please leave your comments.