Customer Relations
Background
Over the last year, Ali Piper, FS Grain’s origination leader, collaborated with Contango to build and test a suite of technologies that fast-track how her team gets insights about cash markets, customers, and prospects, all in the interest of buying more grain at stronger margins. After building the initial origination toolkit, we put it to the test to evaluate whether the tool supported the team in buying the right bushels at the right time. The results were compelling, and led to Ali’s entire team adopting the platform.
The Experiment
To evaluate how technology-driven insights can support originators in purchasing strategically, we divided Ali’s team into two groups based on a balanced distribution of their historical buy-basis values. Half of the originators had access to Contango, while the other half, the control group, operated as usual. At the end of the testing period, we analyzed buy-basis values across each group.
The Results: 2¢ per bushel of additional margin
“We don’t always want to handle the most bushels. We want to handle the most profitable bushels. Contango helps us do that.”
During the initial test period, originators with access to Contango secured a 2¢ per bushel lower buy basis than the control group. Not only did originators in the Contango group buy cheaper bushels overall, they consistently purchased grain below their territories’ median basis, 2.6¢ below, on average. In contrast, the control group purchased slightly above their territories’ median basis (0.2¢). To confirm the test results, we repeated the experiment at a later time when more grain was moving. The results were the same — Originators with access to Contango bought grain for 2¢ per bushel cheaper than the control group.
The experiment demonstrated how originators, equipped with the right tools and insights, can confidently and quickly identify the best margin opportunities in their territories and act on them, indicating an additional 2¢ per bushel in margin.
Key Value Drivers
Contango empowered FS Grain’s originators to spend less time collecting data and crunching numbers and more time acting on insights. Before Contango, originators often spent hours digging through customer lists and making cold calls. Now, they can easily see where customers and prospects are located and view the best freight-logical markets available to each farmer. “The biggest thing for me was being able to see where all the customers are,” said Nathan Goebel, an originator on Ali’s team. “It helped me figure out who to reach out to, who the competition was, and where we might have opportunities to buy bushels,” he said.
Contango’s bid-based heat maps make it easy to visualize what it takes to be a farmer's winning bid, where the highest back-to-back margin opportunities are, where competitors might be over or underpaying, and how these values fluctuate across territories. If, for example, a competitor happened to be overpaying to fill a short position on a given day, it was easy to identify the situation, and then pivot origination efforts to target a different region or wait to buy bushels until basis softened to buy bushels in the area.
With clarity where there had historically been a degree of complexity, the team could quickly and confidently decide whether to give a strategic push or buy at the posted bid. As Ali said, “We don’t always want to handle the most bushels. We want to handle the most profitable bushels. Contango helps us do that.”
“He started in June, and by October, he was making focused, intentional calls to the right people. Normally, it would’ve taken six months just to work through the list and figure out who’s who.”
For originators working in new territories, Contango helped to accelerate the onboarding process. At the beginning of the experiment, Nathan had recently joined Ali’s team. He quickly became a Contango power user and, subsequently, well-versed in the territory’s customers and market dynamics. When asked how Contango helped Nathan, Ali said, “He started in June, and by October, he was making focused, intentional calls to the right people. Normally, it would’ve taken six months just to work through the list and figure out who’s who.”
While FS Grain’s origination team has always understood their local markets, Contango helped them centralize and streamline the analytics in real-time. As a result, her team of originators could efficiently conduct in-depth market analysis and act on it, allowing them to achieve a stronger buy basis.
What's Next?
While Contango delivered the information needed to buy bushels strategically, Ali’s team’s commitment to integrating the platform into their day-to-day work made the additional margin possible. Since the successful experiment, Ali has rolled out the platform to FS Grain’s entire origination team so that each originator has the tools to achieve a lower buy basis. Looking ahead, Ali and the team are excited to implement more tools to guide predictive buying and prospecting, all in an effort to drive stronger margins through strategic origination.
