Farmers who are considering diversification are being told to look at how the principles of ‘placemaking’ could help to drive up the number and quality of customers they attract.
Placemaking is relatively new in the context of the rural sector, but it is a process that Strutt & Parker believes has huge potential as farms look to develop new diversified enterprises.
Rural placemaking can help a farm to produce a commercial masterplan which will give any new business activity the best possible chance of success, the firm says.
Essentially, placemaking explores how farmers can create a location in which people want to live, work and spend their leisure time and money.
Traditionally, many farmers approach diversification on a piecemeal basis, Strutt & Parker says, rather than stepping back and considering how everything works together in terms of the customer experience.
Ed Mansel Lewis, head of the firm's Rural Ambitions team, explains that placemaking is frequently discussed in relation to urban planning, but the principles are equally applicable in the countryside.
"Crucially, it is a concept that has a multiplying effect on some established financial metrics which anyone running a customer-facing diversification will want to monitor anyway - the Customer Acquisition Cost (CAC) and Average Basket Value (ABV).
"The former is calculated by dividing the costs of marketing and sales by the number of customers acquired, the latter is the total value of goods sold, divided by the number of transactions to give an average spend per transaction
"A lower CAC is better, as it means it is costing less to win customers and a higher ABV is better, as people are willing to spend proportionately more when they buy goods or services compared to when buying from others in the same sector."
Businesses winning new customers at a relatively low marketing cost are often those situated in places that enjoy lots of footfall, and where there are long dwell times and high return rates, says Mr Mansel Lewis.
“Effectively, they are businesses in lovely places that people enjoy visiting and where they want to spend their time. This simple understanding is at the heart of placemaking.”
What are the key principles of placemaking?
Strutt & Parker has recently published a report 'The Future of the Estate' which examines the role of placemaking in creating successful diversified businesses.
Below are some key points from the report for farmers to consider:
Taking a customer-led approach: For any new business, the starting point should be understanding who the customers are and what they want. Decisions about what services to provide and where to place them should be guided by careful customer data analysis.
The Anchor: The anchor is the key, identifiable reason that customers would choose to visit a place. For farms, the anchor is likely to be the opportunity to spend time in the countryside, connecting with nature and enjoying the views.
The power of 10+: Another of the main principles of the placemaking concept is that places thrive when people have a range of reasons (10+) to be there. There is no magic in the number 10, rather it is a reminder that more is better. Farms already own and run a variety of individual businesses, but the art of placemaking is considering how to create a ‘destination’, giving visitors even more reasons to visit and increase the length of their stay.
Creating clusters of like-minded businesses: Create clusters of like-minded businesses which have shared values and complement each other by appealing to a similar sort of customer. Farms can sometimes end up letting space to a collection of businesses from different sectors, which do not complement one another. Taking a more editorial approach to the businesses that are clustered together, means the whole becomes greater than the sum of the parts.