Why Revisiting JBP is important?
We are in a challenging economic situation where cumulative trends are creating tension for both retailers and their suppliers:
- Decreased spending power
- Fear of an economic Recession
- Cost increases leading to both inflation and availability challenges
Besides, a few new business drivers have changed during the last years, challenging the existing business models:
- Rise and fall of e-commerce despite heavy investments
- Multiple assortment rationalization
- Lower shopping frequencies and basket value
- Thinner margins for both Suppliers and Retailers
In such a context, JBPs must ensure they address 5 requirements:
- Flexible Range Management to respond to shortages. quick shopper demand’s changes and maximize the sales of existing SKUs
- Much higher effective promotion plan to deliver higher returns on investment
- Integrate the diversity of each sales channel’s business drivers
- Ensure Shoppers (and their characteristics) are truly at the heart of each decision
- Your business with the Retailer is B2B, meaning that your JBP must fit in and support their business plans.
Remember that Retailers and Manufacturers are facing similar challenges. A well-planned and executed JBP is one of the difference makers that can promote your company as a Preferred Strategic Supplier. In this article, we share 9 ideas on what you can do to become this Preferred Strategic Partner.
Definition
A Joint Business Plan (often called JBP) is a process that helps retailers, and their suppliers solidify the objectives, the activities they want to execute and jointly monitor to achieve these objectives and their respective conditions for success.
JBP is not new and has been a well-known practice for years, and is part of Key Account Management Activities, as described below by Bain & Company.
9 directions to revamp your Join Business Plan
1. Align your Mindset
It’s all About the Category and its Shoppers -Not your Brand
Of course, the JBP you are building is about your Brand. But remember: Retailers’ goal is to increase their category sales by increasing Shopper traffic and spending. Your Brand is just a tool. And you want your Brand to be one of the best – if not the best Tool – retailers will use.
What retailers are looking for when they build their categories plan is:
- Ensure Range completeness, and appeal to all Shopper Groups by Store format
- Product Availability
- Attractive Promotions, but not create Promo Picker habits to Shoppers
- Price Image competitiveness compared to other Retailer competitors, not necessarily to be cheaper on all items • Make it Easy for Shoppers to find the products on the shelves (physical or digital)
When reviewing your JBP, ensure you are ticking all these boxes and can substantiate each point.
2. Know Your Retailer better than they know themselves
Share their performances in the market
Whatever the strengths and depth of Retailers’ research capabilities, they can’t know everything. Still, retailers feed their decisions with numbers and data. And like their manufacturers, gaining market share is part of their priorities.
Every bit of meaningful and quantified information you can share with retailers about their performances and benchmark, from your own Brands to the categories you service, will have 2 benefits:
- Increase the Retailer’s perception of the value you deliver
- Establish a legitimate and data-based benchmark to substantiate some of the activities and decisions you recommend in your JBP.
Below is an example of calculating Lost Opportunities Values by using other retailers’ performance data.
Such an approach should be applied to other metrics as well: volume, penetration, basket value, promotion intensity, …
3. Put Shoppers at the Heart of the Discussion
Share about your understanding of Shoppers Decision Trees.
Shoppers satisfaction is the end goal for Both Retailers and Brands. Sharing critical shopper insights (from the retailer or from other retailers). Such an approach can bring massive value in building the Category together. A robust Shopper Decision Tree with well-defined product attributes and the ranking of their importance is one of the most important insights into each Category.
With such insights, Retailers can identify their Range Gaps (and maybe your range can fill some of these gaps), and improve their displays.
Therefore, you can use Shopper Decision Tree insights to share your proposed action plan on
1. New Items to close Category Range Gap
2. Product Display to ease Shoppers in finding your product on the shelf
4. Strengthen the fit between your range and retailers’ expectations
Make Range efficiencies as the Corner Stone of your Approach.
Shoppers visit stores because they want to buy the products that they want. To state the obvious, the range is the foundation of the Category (as well as the majority of its sales and profitability)
With limited space for each Category, Retailers need to ensure that the selected items being displayed on the shelves deliver an optimal good return space.
It’s therefore critical for you to know what is the effectiveness of your Brand’s range. If your Brand’s sales contribution is higher than your SKUs’ contribution, you are in a good place. When your Brand offers products that are present across several sub-categories, you want to know what your effectiveness by sub-categories (see example below) is
The below chart presents Sales Share (Blue) vs SKU Share (Yellow) by subcategory. The higher Blue over Yellow, the better it is.
In summary, you will always want to measure your Brands’ effectiveness in 2 perspectives:
• From a sub-category view, to identify potential new items or items to remove
• From a Brand view, to benchmark your Brand with the competitors
Below is the action summary for each
5. Fish in pounds where Fishes are
Focus on your Targeted Shoppers
The end of Covid19 restrictions in most markets generated a massive return of shoppers to stores. At the same time, the current economic recession has pushed shoppers to decrease their spending. More than ever, Promotions have become the major tool to entice shoppers and win as much share of wallet as possible.
In this context, traditional mass promotions might not always be the best option: they impact the margin of both Retailers and Brands. Additionally, the return on investment they deliver (in sales, in penetration, in basket growth…) is not optimal.
Therefore, targeted promotions or campaigns can be an attractive alternative to consider for both parties. A collaborative approach using Loyalty data can be easily setup as soon as both agrees on:
• Which customer segment to target (you want both to focus on big spenders)
• Which products to select (you don’t want their promo selling price to be too much higher than the average selling price)
• Which mechanics to choose
6. Make each planned campaign count
Be more precise and quantitative about the objectives and the tactics you choose
In addition to the standard financial KPI you can assign to your campaigns, understanding how shoppers respond to your brand activities can also be very valuable.
The first thing you want to do is to be crystal clear on what you want the campaign to achieve.
Do you want to drive traffic to your brand (i.e. acquire new shoppers, even if they don’t spend much, so you can work with them again later)? In that case, penetration and number of transaction growth will be important to measure.
Or
Do you want to drive spending to your brand (i.e. existing shoppers will spend more)? In that case, the number of items purchased as well as the average selling price of the items purchased will be important to measure.
Once you have solidified your objectives, the 2nd thing you want to do is, with your retailer, ensure that the mechanics you will select will support your campaign objectives.
7. One size doesn’t fit all
Strengthen the offer by channel to gain Shopper wallet share.
One shopper could shop for all the store types. However, they chose the store format differently based on their shopping mission.
Multi Format Retailers is an excellent place for your brands to please the different Shopper Types. You can drive the commercial offers for
– Family shoppers to do one-stop shopping in Hypermarkets
– Household buyers in Supermarkets
– Conveniences Shoppers in Convenience stores
The more you study about each channel’s shopper behaviors, the more you can build collaborative tactics that will deliver results. This channel-based approach should ideally be applied to each of your Brand’s sales drivers.
Below is an example of the offer’s differentiation by channel
8. Give meaning & Purpose to Business Reviews
Make it collaboratively and ensure it delivers a Win for the Category
Remember that for your retailer counterpart, his or her performances are assessed on the Category growth, not your Brands’ growth. In their perspective, a great JBP is on which clearly explains and details how the Category is going to be (positively) impacted.
This fact should be the beacon that drives your approach at each stage of the JBP, from the analyses of past performances to measured deliverables you expect to achieve with your proposed strategy and tactics.
“Them, us, fit and action” is the structure to be systematically applied.
An obvious recommendation: the review of each of the retailer’s business performance you address in your JBP is factual, not judgmental.
9. Leverage technology in the meeting room to accelerate & improve Decision Making
Don’t be stalled because you didn’t have the right numbers.
Each of the actions you will propose must be legitimated by numbers. Some of the actions will be agreed, some adjusted, some challenged, some rejected. The point is that for all the arguments you will make, they also need to be supported by data if you want to have a chance to influence and convince.
You can prepare some of the objections in advance ,identify some of the decisions you know will be a hard sales. But you can’t prepare them all.
Still, you must be ready to provide supporting numbers and analyses at any time. So, bring your online category management tool with you and run, jointly, all the analysis and diagnostics you need in no time. Decide. Move to the net point.
Below is an example of a category diagnostic tool
