In this article, learn about:
What a joint business plan is
The benefits and drawbacks of joint business plans
Best practices for creating a joint business plan
A joint business plan (JBP) refers to a collaborative strategic document between two or more businesses, outlining shared goals, initiatives, and actions for achieving mutual success. For suppliers and retailers, JBPs encourage holistic, long-term planning by emphasizing shared business practices and goals, data-driven decision-making, and mutual accountability.
At their most basic level, JBPs bring retailers and suppliers into alignment on the basic metrics for sales, item placement and pricing, and new product launches. Some JBPs require further planning and business integration, with these JBPs aligning retailers and suppliers on plans such as technological innovation, demand forecasting and planning, and localized assortment, among others.
Different retailers might have different discussions and requirements to form a JBP, depending on their size and business practices. Established and larger retailers often consider JBPs to be a standard practice, whereas smaller and emerging retailers might have less systematized JBP processes.
What Are the Benefits of a Joint Business Plan?
Without a JBP, retailers and suppliers may inadvertently create conflicts between their marketing and sales strategies. For instance, if a retailer promotes a certain product feature that the supplier ends up cutting from the final market version, sales could be negatively affected. By creating a JBP, retailers and brands can be aligned on strategy, benefiting both businesses.
A JBP can improve return-on-investment (ROI), reduce costs, and enhance the customer experience.
Improved ROI: JBPs encourage strategic promotional pricing and bundle pricing, which can help sales and lead to greater returns. Retailers’ and vendors’ sales and marketing teams can collaborate to create campaigns for improved market saturation and consumer interest.
Reduced costs: Working in tandem with a retailer can help to drive down costs, as expenses and responsibilities can be split between the retailer and the supplier. In turn, this business alignment encourages both parties to maintain accountability and creates further clarity.
Enhanced customer experience: Retailers and suppliers working together can help to improve product availability, as both entities can react quicker and more accurately to stock issues when in collaboration. Additionally, customers will notice other benefits, such as more timely promotions and more consistent messaging, leading to higher customer satisfaction and increased brand/retailer loyalty.
Related Reading: The Ultimate Guide to Walmart Marketplace Promotions
However, JBPs aren’t entirely free from drawbacks, as they can be one-sided in favor of larger retailers, especially if the suppliers are comparatively small. Walmart, for instance, recently pushed its brands to increase their retail media spending by 25% year-over-year as a part of their JBPs, despite many suppliers reporting stagnant ROIs on these recent investments. Vendors should weigh whether the benefits of pursuing a JBP are worth the potential costs of pleasing the retailer.
Joint Business Plan Best Practices
If you decide to pursue a JBP, here are some best practices for you to follow to make sure that you’re achieving the most beneficial agreement for your business.
Determine an Individual Business Plan Before the JBP
Before entering into an agreement with another company, vendors should ensure that they’re fully aligned internally and operating as a single unit. If a supplier has set goals and settled on strategies before creating a JBP, then they’ll be in a much better negotiating position than if there is internal disagreement.
Create an Omnichannel JBP
Many retailers and vendors maintain separate JBPs for different business channels. For instance, e-commerce promotions, marketing campaigns, and in-store discounts would all receive distinct plans, allowing for specialization in each area. However, in recent decades, the distinction between physical and digital shopping has increasingly collapsed, and omnichannel strategies have gained prominence.
Omnichannel JBPs involve a range of stakeholders, such as the merchandise, marketing, e-commerce, operations, and analytics teams all working in tandem, which can be a difficult proposition. However, this strategy can result in more efficient resource allocation, an improved customer experience, and more comprehensive data, leading to an overall benefit for both retailer and supplier.
Determine a Communications Strategy
A benefit of a JBP is that it encourages mutual respect and close collaborations between retailers and vendors. However, this benefit becomes a drawback when communication channels break down and working relationships become antagonistic.
No matter the terms of your JBP, setting a communications strategy is of paramount importance. Vendors and retailers should be in alignment on the various responsibilities of each party and who is accountable if issues arise. Ensuring that your communications strategy is firm promotes accountability and reduces mistakes.
Create Frameworks for Data and Analytics
JBPs are generally a boon for data and analytics, as they often allow for further transparency and data sharing between companies. Additional data can help both retailers and vendors analyze sales trends and consumer behavior, which improves revenue and reduces errors.
However, retailers and vendors need to agree on frameworks for data and analytics when creating the JBP, to ensure that both businesses are using the same metrics and analysis. These frameworks reduce the number of instances where retailers and vendors misalign on metrics, helping to avoid preventable mistakes.
Related Reading: Retail Data Explained: Descriptive, Predictive, and Prescriptive
Monitor the JBP on an Ongoing Basis
Continual monitoring of the JBP allows brands and retailers to assess progress toward mutual goals and identify gaps in strategy. This monitoring also creates opportunities for both retailers and vendors to react quickly and accurately to changes in the market, keeping goals and strategies both relevant and flexible.
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