Get Started with Customer Business Plans
Learning Objectives
After completing this unit, you’ll be able to:
- Explain the benefits of customer business plans.
- Describe the layouts and building blocks of customer business plans.
Before You Start
Before you start this module, consider completing the following recommended content.
The Need to Plan
Consumer goods companies deal with multiple products and customer accounts, so customer business plans are essential. Typically, the account manager is responsible for developing these plans as part of the business strategy. However, creating detailed business plans can be daunting due to the potential number of products manufactured by a company and the many steps in the planning process.
Account managers often face these challenges in creating plans for their accounts.
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Sales targets: Having sales targets handy for every account they manage — for the account as a whole and for the individual products sold from the account.
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Promotion performance: Identifying promotions that are running well to decide whether to continue them or create new ones.
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Possible scenarios: Comparing different variations of a business plan to identify the best one.
Sales Targets and Strategies
Gustavo De Luca, a key account manager (KAM) at Alpine Group Nutrition & Beverage, manages the Northern Trail Outfitters (NTO) customer account. He’s committed to achieving the sales target that Alpine Group’s Finance Manager, Carol Lee, has set for the year ahead.
[Alt text: The Key Account Manager of Alpine Group, Gustavo de Luca.]
Like most KAMs, Gustavo has all the sales figures to hand. He knows the average number of units for each product that Alpine Group sells during a year. Using this data, he can estimate the number of units he can sell for the next year.
However, creating strategies to meet the sales targets presents some obstacles:
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Identifying potential products: For a promotion to be successful, an account manager must first identify the products that need a boost, and then create a plan to lift sales. For manufacturers that sell hundreds of product types, identifying those products isn’t easy.
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Understanding promotional performance: Creating promotions from scratch is a cumbersome job, especially due to the sheer number of different products. To determine which promotions to keep running, which to discontinue, and any new promotions to create, the account manager must understand the effectiveness of all the current promotions.
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Handle data manually: Think of a spreadsheet with hundreds of products, each with multiple performance indicators. And then imagine an even more complex spreadsheet for multiple promotions containing variations of those products. This adds up to vast quantities of data for account managers to manage.
A Critical Discovery
A few months before the start of the next financial year, Gustavo meets with Carol to discuss his obstacles in business planning. An expert in Trade Promotion Management (TPM), Carol introduces him to Customer Business Plans (CBPs). Using a CBP, you can:
- Create a sales strategy for each account and each product category you manage.
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Analyze account and promotion performance through key performance indicators (KPIs).
- Respond to changes in business strategy by adjusting KPIs.
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Compare promotion combinations to support decision-making.
[Alt text: The Key Account Manager of Alpine Group, Gustavo de Luca, and the finance manager, Carol Lee in a conversation.]
Gustavo’s challenges have a tangible solution, so he gets straight to work creating a CBP.
In this module, Gustavo discovers the advantages of CBPs, creates CBPs for his NTO accounts, experiments with KPIs, and finalizes the best CBP option.
A Real Plan
As you learned, a CBP is an account’s business plan for the year. Here’s an example CBP for the NTO Detroit account.
[Alt text: The Customer Business Plan page showing the business plan for NTO Detriot.]
In a CBP, you can adjust KPIs, add promotions in various combinations, and see how the changes should impact the account sales in the future. Using a CBP is way easier and more efficient than large, clunky spreadsheets.
Building Blocks of Customer Business Plans
It’s time to explore the building blocks of a CBP—products and KPIs.
Products
Alpine Group manufactures over 1000 products. Only 600 of those, which belong to the Nutrition and Beverage categories, are sold through NTO. To start planning, Gustavo usually has to search through one-thousand-plus products to find those related to NTO. This leaves him feeling overwhelmed, and stressed!
The good news is that his Salesforce admin has added all the NTO-sold products to the NTO assortment.
[Alt text: The Assortment page showing NTO’s products.]
Now, Gustavo sees only the relevant products as he creates the CBP, and he can manually add products if needed. With his new-found knowledge, Gustavo is cool as a cucumber.
KPIs
In addition to products, you can add KPIs to your business plan. For example, to be able to check whether a promotion is effective, you can configure KPIs that show promotion targets and actual sales.
Out of all the KPIs you can add to a CBP, the baseline volume is the most important. It’s the total units or volume of a product that is usually sold through an account in a week. The baseline volume helps define the number of products that an account manager must sell more of to meet their sales targets.
It's critical for a business to understand their baseline volume because it gives them a reference point for evaluating product sales. Adjusting the baseline volume based on the changes in customer buying patterns and comparing sales targets to the changed baseline volume tells you when to adjust the business strategy.
To illustrate the concept of baseline volume, here's an example. Over the past month, a company sold an average of 80,000 beverage units a week, which forms the baseline volume. To increase sales and profits, next month's weekly target volume is 100,000 units for beverages. This means the account manager must sell an additional 20,000 units each week to meet this goal, so they reflect this target volume in their business plan.
In the coming weeks, the weekly sales increase by 10,000 units. This means the account manager must adjust the baseline volume to the actual additional volume to sell. Now, instead of 20,000 additional units, the account manager needs to sell just 10,000 extra. Therefore, they need a much simpler plan. Knowing the accurate goal makes it so much easier to plan, isn’t it? Gustavo is convinced that he is on the right track.
Options for Data Display
A CBP often contains lots of data, so it’s helpful to see the data in different ways. The first method is to view by product category.
[Alt text: The Customer Business Plan page showing the options to select a category in a CBP.]
When you set a product category, only the KPIs related to the category are shown. However, this option has a limitation. Even for a CBP with multiple categories, you can choose only one category at a time.
The next option is to choose the levels of the product hierarchy that you want to see on the CBP page.
[Alt text: The Customer Business Plan page showing the options to select product levels in a CBP.]
Select multiple levels to group products according to the product hierarchy. Then, choose a layout.
[Alt text: The Customer Business Plan page showing the layout options.]
In this example, the available layouts are KPI/Product x Time and Product x KPI/Time.
Next Up
Gustavo now understands the importance of CBPs, their building blocks, and the different layouts. In the next unit, follow Gustavo further on his CBP journey.