Suppliers are thinking “must get next year’s customer business plans agreed before Christmas”. Meanwhile, those customers are threatening to cancel the meeting 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 and incentive for growth. At its worst, it’s just another way for the customer to extract more commercial income from the supplier, and like on pricing, there is no provision for it in GSCOP.
Along with selling and negotiation, the competencies of planning form the backbone of the account management role. However, ‘customer planning’ is the least well understood. The most misused term is ‘joint business planning’ (JBP) – this term alone has cost suppliers who crave annual plans millions. The current reality is that JBPs are overwhelmingly a supplier initiative, resulting in a document that has little retailer input besides generic needs such as ‘no margin dilution’. The only joint aspect is the fact that after a protracted negotiation the customer agrees it, whilst chuckling quietly about how much they are getting for a simple signature on a meaningless plan. It ought to be a red flag to the supplier when one of the negotiation factors in agreeing 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 have a JBP. If they blamed you for underperformance instead of moving to an agreed contingency, then you don’t have a JBP. And if the customer is now wrangling over the payment of an unearned bonus, you most certainly don’t have a JBP. In most 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 reset their expectations by at least internally referring to this as a CBP. It should be 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 it gets, as many of them don’t have the will or skill to do otherwise. This is a shame, because if done correctly a true JBP can really steer both businesses toward incremental goals that work for both sides.
With our clients, we ensure expertise in CBP methodology is embedded into an organisation, showing simultaneously how to identify accounts which can do more: those that value collaboration and your products or expertise, have skills and resource to bring to the party, and will commit at all levels. True JBPs are in the minority, but once achieved can become aspirational case studies for account managers to follow.
Don’t waste internal resources trying to force-fit a JBP to a difficult account. You can still do great business with all customers.