Joint business plans are often meaningless

Joint business plans are often meaningless

Suppliers are thinking “must get next year’s customer business plans agreedbefore Christmas”. Meanwhile, those customers are threatening to cancel themeeting because they can’t get payment of unearned retro in this year’s plan.

At its best, customer business planning (CBP) creates certainty for supply andincentive for growth. At its worst, it’s just another way for the customer toextract more commercial income from the supplier, and like on pricing, there isno provision for it in GSCOP.

Along with selling and negotiation, the competencies of planning form thebackbone of the account management role. However, ‘customer planning’ is theleast well understood. The most misused term is ‘joint business planning’ (JBP)– this term alone has cost suppliers who crave annual plans millions. Thecurrent reality is that JBPs are overwhelmingly a supplier initiative,resulting in a document that has little retailer input besides generic needssuch as ‘no margin dilution’. The only joint aspect is the fact that after aprotracted negotiation the customer agrees it, whilst chuckling quietly abouthow much they are getting for a simple signature on a meaningless plan. Itought to be a red flag to the supplier when one of the negotiation factors inagreeing a JBP is the payment of an unearned bonus from last year’s plan.

To understand if you are a victim of the JBP illusion, reflect on last year.Unless the customer gave meaningful creative input to the plan, you don’t havea JBP. If they blamed you for underperformance instead of moving to an agreedcontingency, then you don’t have a JBP. And if the customer is now wranglingover the payment of an unearned bonus, you most certainly don’t have a JBP. Inmost such cases the supplier would be better off without the plan at all.Business would roll on without being dressed up as a ‘partnership’.

Every account should have an annual plan, but suppliers should begin to resettheir expectations by at least internally referring to this as a CBP. It shouldbe sold into customers, but customers don’t have to agree with every element,and they don’t need any input. For most customers, this will be as good as itgets, as many of them don’t have the will or skill to do otherwise. This is ashame, because if done correctly a true JBP can really steer both businessestoward incremental goals that work for both sides.

With our clients, we ensure expertise in CBP methodology is embedded into anorganisation, showing simultaneously how to identify accounts which can domore: those that value collaboration and your products or expertise, haveskills and resource to bring to the party, and will commit at all levels. TrueJBPs are in the minority, but once achieved can become aspirational casestudies for account managers to follow.

Don’t waste internal resources trying to force-fit a JBP to a difficultaccount. You can still do great business with all customers.

Sentinel Management Consultants deliver sales, negotiation, planning and finance training courses for our clients worldwide.