Client-Vendor Relationship

Changing How We Regard Vendors

If you are like the typical client who looks at vendor services as a basic commodity-for-cash transaction, you probably have difficulties with many of your internal and external vendors.

“After all,” you probably think, “vendors of this product or service are a dime a dozen! I am in the driver’s seat. He/she has to make me happy or I’ll look somewhere else!”

Would you take that same idea that a “vendor is just a basic commodity-for-cash so I do not have to worry about how I treat him/her” viewpoint with…

• Your doctor?

• Your mechanic?

• Your lawyer?

• Your accountant?

Most people would say something like, “No! They take care of my personal life and would be too hard to replace!”

However, ask yourself if their services-for-money relationships with you are truly different from a vendor at work or have you just never thought of them the same way?

If there were a way that you could feel the same about a workplace vendor that you feel about your personal physician, mechanic, lawyer, or accountant, could that possibly

1. Improve the way you deal with the vendor and,

2. Possibly improve the service that you get from them?

This is the viewpoint we take with this article: you can improve your vendor’s service if you will consider improving the way you view them.

What Vendors Want

Do you think this statement, “When your employees get what they want, you’ll get what you want” could be applied to a vendor as well as employees? Why?

A response from vendors who say they want:

  • Respect – The vendors’ senior executives want access to their customer counterparts. “If the CIO doesn’t want to meet with me, then that’s an indication of the value that I’m bringing to the relationship.”
  • Consistency – Vendors know that some of them are treated as commodities and others as partners and they understand that. However, what they do not want is to be treated one-way one day and the other way the next. That inconsistency causes many problems.
  • Guilt-free profit – Vendors need to make a profit, too, if they are to stay in business and support their clients. If deals are only structured to benefit the customer, then do not expect the vendor to invest their best resources in the account.

Complaints about Vendors

Typical complaints from clients about vendors:

1. They are always selling, never solving

2. It’s always about them, never about us

3. They bombard us with much-too-complicated billing and labor intensive account-relationship trivia

4. Once the contract is signed, the relationship changes dramatically

5. The highly-qualified consultants that helped close the deal are suddenly unavailable

6. The vendor blames you or your staff for the failure to show progress

7. The vendor bills plenty of hours but actual progress doesn’t occur

The good news is there is a way to improve the relationship!

Starting with the Outcome

“You’ve gotta have a dream

If you don’t have a dream,

How you gonna have a dream come true?”

-Rogers and Hammerstein’s South Pacific

Before you start looking for a vendor for your next outsourcing project, take some time to visualize what you want the relationship with that vendor to look like, act like, feel like, and sound like.

As strange as it may seem, those Rogers and Hammerstein lyrics from South Pacific can apply to the business world when considering a relationship with a vendor: if you don’t have a dream, how you gonna have a dream come true?

We begin by thinking about a “dream” relationship with a vendor. Collect your project team (or the key people who will have a say in the vendor selection and managing the relationship) and brainstorm these questions. (Remember that in brainstorming there are no value judgments made about responses. Just collect the ideas and evaluate them later.)

1. What kind of SOLUTIONS (not deliverables) do you desire regarding these issues? (Hint – a successful relationship with a vendor, a friend, or a spouse involves much more than just the product.)

a. Billing statement format and accountability

b. Missing deadlines (such as product delivery [vendor] or payment [client])

c. Resolving issues not specifically addressed in the contract

d. Scope changes made that were not properly authorized first

e. Oral, verbal, and written communications between vendor and client

f. Replacement of project team members if requested by “other side” (If the vendor’s representative had problems getting along with their client counterpart, how would this be resolved?)

g. Educating each side about the other’s values, concerns, and aspirations

2. What kind of different tasks are you and they involved in if you had a dream relationship with them? (Such as sharing employee development opportunities and costs!)

3. What kind of reporting would you want from them and what would you be willing to give to them?

4. Review your thoughts on typical vendor relationships. How much would you be willing to rethink the way your organization deals with vendors so that your comments were balanced between the client and vendor instead of tipped to favor the client?

5. How can you handle scope changes so they do not become a source of contention in the relationship?

6. Are the desired products or services from the vendor tactical or strategic? Which is best for your situation? (Are you more concerned with what they can do -strategic- or how they will do it – tactical?)

7. What behavioral traits would you want in the ideal vendor representative? What kind do you think they want from the client’s representative?

8. Southwest Airlines (the only profitable major airline in the US) uses this to guide their hiring – “Hire for Attitude, Train for Skill.”

Why would that be a smart approach to hiring in a service-related industry?

(A customer-focused attitude is essential in a service industry like the airlines. People are born with that attitude, it cannot be taught as technical skills can. Southwest admits that while it can teach technical skills such as ticketing, cabin service, or baggage handling, it cannot teach people to be caring and concerned about their customers.)

How could that same philosophy be useful in selecting a vendor?

(Time spent searching for a vendor AND THEIR REPRESENTATIVE who is genuinely focused on providing customer service before haggling over deliverables will provide a stronger, longer relationship. CAUTION – the client must be equally dedicated to the success of the vendor or this becomes too one-sided and will deteriorate.)

Developing the Foundation for a Relationship

Let us take a moment to summarize where we are:

1. We suggest that a vendor is actually no different from an employee of our organization (employees and vendors are paid to perform specific tasks.)

2. The employee/vendor – not the employer/client – determines where they work within the performance gap

3. There are some specific techniques that can be used to motivate employees

4. We can choose to view vendors like we do professionals in our personal lives

5. Vendor wants and needs, from a business perspective, are not really much different from ours

6. We can describe what we would expect in a “dream” relationship with a vendor

7. We can use that description (# 6 above) as the foundation of our strategy if we are willing to take an unorthodox approach to dealing with vendors.

RFIs, RFPs and Teambuilding

This article presents broad guidelines for a new approach to creating a successful relationship with vendors. It is not intended to be a procedural guide for developing RFIs, RFPs, or contracts because there is plenty of information about those topics already in the marketplace.

We believe in the premise that if you help people clearly understand the “why” of something, they can figure out the “how” that is best for them.

The Request for Information (RFI)

We believe the foundation for a successful relationship with a vendor begins with the Request for Information (RFI), which includes the strategy we describe in this article.

The RFI is used traditionally when a potential buyer needs to determine what is available from suppliers who may respond to it. Additionally, buyers can use this to determine whether their expectations are realistic and if solutions exist in the market place.

Finally, it also gives potentially interested vendors a chance to influence the Request for Proposal (RFP) that follows by pointing out potential problems or unrealistic expectations (as written) that may prevent anyone from bidding later.

Vendors responding to the RFI are probably following the old supplier adage, “If you don’t help write the RFI, don’t bother with the RFP!”

The Request for Proposal (RFP)

A RFP can be many things to many people. An IT client seeking a software solution may structure it differently than a government agency looking for a food service provider. Regardless of the nature of the writer’s industry, the common elements of a typical RFP include:

1. Allowing a buyer to notify the market of its desire to obtain new technology or services, lay the foundation for the project that will deliver the technology or services, and manage the project itself

2. Forcing suppliers to create competitive solutions for the buyer’s problems

3. Providing a common base of requirements for all bidders thus reducing the potential for claims of unfair competition from losing bidders

4. Making it easier for the buyer to understand the differences between bidders

Team Building with a Vendor

Our unorthodox approach to developing a successful relationship with a vendor is very much like designing a team building activity. (When you think about it, a client-vendor relationship IS ALL ABOUT TEAM BUILDING!)

When a team building facilitator is asked to develop some activities to encourage groups to work together better, some of the first questions asked are, “What will success look like? What are your interests and concerns? How will you know that I’ve earned my fee?”

Questions like that force the potential client to think in terms of interests, needs and services – the strategic “what” – rather than specific methods of delivery – the tactical.

Think about this… When visiting your dentist for relief of a toothache, are you more concerned about relieving the pain or how it is done and at what cost?

We become less concerned with price when more of our needs and interests are being met.

“If that’s true, then why do so many RFPs focus on deliverables?” you ask.

The reasons are simple yet difficult to overcome:

  • The client knows his/her needs better than the vendor and then makes the natural leap to specifying what he/she thinks is the solution for that need.
  • There is a natural distrust of “outsiders” and we do not want to give them any more latitude than necessary for fear of paying too much or being at their mercy.
  • It is how we have always done business with vendors.

Now let us go back and look at those same reasons from a different perspective.

  • The client knows his/her needs better than the vendor…We agree and do not argue with this part!

“…and makes the natural leap to specifying what he/she thinks is the solution for that need.”

Here is where we disagree! If the client had a toothache, would he tell the dentist how to provide relief? Of course not!

Likewise, if we consider potential vendors to be experts in their fields instead of just commodities-for-cash, then we must allow them to suggest a remedy for our organizational pains. (It is still our choice whether to accept that advice!)

We cannot expect them to provide expert advice and help for us while treating them like a necessary evil that we must endure while getting our problem solved.

(Would you treat your dentist that way?)

  • There is a natural distrust of “outsiders” and we do not want to give them any more latitude than necessary for fear of paying too much or being at their mercy.

Here, again, we disagree with the traditional approach to dealing with vendors. Think about buying a car. For many people, this is an activity to be avoided at all costs because we are afraid of paying too much and being at the mercy of the salespersons.

However, suppose we prepared ourselves better for the car-buying experience by doing some homework first before we stepped on the car lot.

We can take time ahead to:

1. Define our interests and needs so we can say “No” when a salesperson tries to lead us down a path that is not best for us.

2. Determine what “success” looks like in terms of down payment, monthly payments, interest rates, and options instead of allowing the salesperson to push us.

3. Learn more about dealer costs via some ‘Net surfing to give us more options for striking a satisfactory deal.

4. Learn how many different manufacturers and models would provide the “transportation solution” we are looking for so we do not feel trapped by any one dealer.

We gain confidence and power with knowledge of our needs and options. Suddenly, the sales representative is not so intimidating any more!

Why should we not take that same approach with a potential vendor?

“However, are you saying that we should NOT focus on deliverables, terms, conditions, and cost but only on our interests?”

Of article not! But if you focus MORE on defining “the dream”, sharing that definition with your vendor, and getting your dream satisfied and less on deliverables, you have a greater chance of a satisfying relationship with your vendor.

The more satisfying your relationship becomes, the stronger your links to each other’s success and the greater the chance to avoid expensive disputes.

Think about this… can marriages with pre-nuptial agreements (sometime called divorce planning) have as much hope of success as relationships who focus on making it work?

It seems that when participants in a relationship focus more on the terms and conditions of it than on its ultimate success, they practically invite disaster!