Farming News - Placemaking should be part of diversification planning
Placemaking should be part of diversification planning
Farmers who are considering diversification should consider 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 we believe has huge potential as farms and estates look to develop new diversified enterprises,” says Ed Mansel Lewis, head of Strutt & Parker’s Rural Ambitions team.
Rural Ambitions is a new part of the Strutt & Parker business which is focused on providing entrepreneurial consultancy to help farms and estates create successful, customer-facing places in the rural landscape that generate growth.
Mr Mansel Lewis says with Basic Payments now starting to be phased out, many landowners are keen to reinvent their business model through the creation of new trading businesses and joint enterprises.
“Rural placemaking is a process which can help an estate to produce a commercial masterplan which will give any new business activity the best possible chance of success,” he says.
“Placemaking is essentially about how to create a location in which people want to live, work and spend their leisure time and money.
Traditionally, many farm and estate owners approach diversification on a piecemeal basis, rather than stepping back and really considering how everything works together in terms of the customer experience.”
Mr Mansel Lewis 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.”
KEY PRINCIPLES OF PLACEMAKING
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 is the key, identifiable reason that customers would choose to visit a place. For farms and estates, 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 and rural estates already own and run an amazing 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
Connected to the power of 10+ concept, is the challenge of how to go about creating clusters of like-minded businesses, which have shared values and complement each other by appealing to a similar sort of customer. Farms and estates 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.
Strutt & Parker has recently published a report on The Future of the Estate which examines the role of placemaking in creating successful diversified businesses.