How To Select The Right Vendors For Your Company’s Projects
by Blackwood Impact Group
It is rare for a business to have every resource it needs amongst its internal staff. In order to gain specialized resources and expertise for assistance with various projects, your company will likely need to hire outside contractors or vendors.
It can be hard to tell in advance which vendor will be the right choice. You won’t know until you are deep into the engagement whether or not your decision was the right fit for your company. What complicates the selection process is the fact that you are reaching out for help in an area where you don’t have expertise. As such, you and your team may not know the right questions to ask or what to be on the lookout for so that you can avoid making the wrong choice.
Selecting an incompatible vendor and not having projects completed adequately can be costly and a colossal waste of time. In this article, Blackwood Impact Group is distilling our years of experience with vendor selection and relationship management into six key points to consider when selecting your outsourced help. These tips are designed to help you hire with confidence so that you can have a smooth and profitable relationship with a vendor that is the right fit for you.
Step #1 – Understand What Your Vendor Is Supposed To Do For You
Many might be tempted to think the first step in selecting a vendor who provides “X” service is to make a list of every company or freelancer who offers that service. That is actually Step 2. You should first educate yourself on what you need your vendor to do for you. You don’t need to research with the intention of becoming an expert; you only need to know enough not to be duped.
Your research can consist of diving into a few industry white papers. Books and podcasts from thought-leaders are also a great place to start. Consider watching webinars and YouTube videos on the subject from a variety of sources. Follow industry hashtags on LinkedIn, Twitter, and Facebook. You can also ask your internal team or colleagues outside of your company for their recommended references. Don’t feel you should spend tons of time doing this research. Your goal is just to familiarize yourself enough to make an informed decision about who can best help you.
Let’s say your company is looking to contract an outsourced customer service call center. Maybe you need a CRM (Customer Relationship Management software) or want to improve your online marketing results by focusing on SEO (Search Engine Optimization). Whatever your need is, conduct enough research until you feel you can answer basic questions about the field. Do you know what you should expect from outsourced call centers? Do you understand how a CRM can help you advance your business goals? Should you expect your website to reach the 1st page of Google in a week after implementing new SEO strategies?
The point of researching your potential vendor’s industry is for you to gain a basic understanding of what they will be providing you with and why. You are hiring them because this isn’t your area of expertise. But it wouldn’t be wise to enter a contract entirely uninformed. Misaligned expectations are usually at the root of projects, budgets, and business relationships that go awry.
Having a basic understanding of your potential vendor’s industry and its norms will help you speak your vendor’s language. You will have the insight to know when a potential vendor is making unrealistic or bogus promises. You will know in advance what you are getting into, and you will be empowered to select the best vendors for your projects.
Step #2 – Research Specific Vendors
Armed with basic information, you are now ready to start exploring service provider options. In the course of doing your research, you probably happened upon authoritative content from some leaders in the field (or at least the ones who are adept at content marketing). Start making a list of your potential vendors, then begin drilling down to find out more about their company.
A good idea is to create a shortlist of at least five potential vendors to compare. You may not want to enter the full sale cycle with all five as it might be overwhelming. But you can compare them on various criteria to whittle the list down to the top three vendors you would like to enter the full sales cycle with.
Feel free to compare on pricing; if a vendor is too high for your budget, they may be eliminated. If a vendor is priced significantly lower than their competition, try to figure out why. You can also use the company’s values as a point of comparison; do their values line up with yours? You can also consider how they support their clients through the process by exploring their reviews, testimonials, or case studies.
Step #3 – Get Clarity on Your Prospective Vendors’ Scopes of Work
Once you have your top three vendors, it is time to request their proposals. While your vendor is in the business of providing similar services, they should understand that each company is different. As such, you should vet the information listed in their proposal. Don’t accept cookie-cutter solutions, especially if your project requires massive development or customization (such as digital software integration).
To receive an accurate scope of work and quote from your vendor, you need to be clear about your business goals and the outcomes you want to see. Be sure you have fully explained your business’s goals, processes, and wish-list to your prospective vendor. Confirm that the products or services in their proposal reflect their clear understanding of what you need. You want to make sure you are not buying a package, solution, or service that doesn’t suit your business or help you adequately achieve your goals. Before you sign any contracts, it is your responsibility to be sure you understand exactly what they will be providing for you and the terms of that service.
Step #4 – Make Sure Your Vendor Can Adequately Handle Your Job
It is essential to verify that the vendor you finally hire can handle your work. Years ago, some enterprise-level companies might check into the financials of their potential vendors to ensure they were stable enough to manage their projects. While that may not be a standard (or acceptable) practice today (most small businesses are not public and are probably not going to hand over their financial records to you), you can assess your potential vendor’s capacity for handling your work in other ways.
You can start your due diligence process by exploring if they have a BBB (Better Business Bureau) rating. See if they have any online reviews. Read their publicly available testimonials and customer case studies. Then take it a step further and ask to speak with two or three references or past clients. Do not ignore any red flags you may uncover. Question your potential vendor about them and see how they respond.
Another aspect you should understand is how they work so that you can avoid what we call “scope creep.” Be sure you are clear on their processes and procedures, especially if you are being charged hourly; you don’t want to be invoiced for additional items, services, or time unaware. Know in advance what all is included in the package they are offering you. For example, that may consist of knowing how many hours and what services or products are in the package. You should also understand what will take extra time or cost extra money. Be sure you are clear about all parameters before entering an agreement.
Finally, be sure you ask plenty of “what if” questions during your vetting process. Find out what happens if you were to change your mind on any aspect of the project. How will that affect deliverables and time frames? How will it affect the price? Having as much full disclosure before you sign a contract is key to a smooth working relationship and successful outcomes.
Step #5 – Negotiate Terms If You Need To
Once you have identified the provider who is your front-runner, you may want to negotiate the terms of your agreement before signing any documents or paying any deposits. Blackwood Impact Group is not necessarily suggesting that you “haggle” with your vendor on pricing; their price is their price, and you want to respect that. If they are out of your budget, don’t try to get them to lower their pricing for you. Either select a lower package option or merely find a lower-cost provider.
The points we are making here assume you are agreeable to the pricing presented. But your chosen vendor may have their standard policies and terms which may or may not work for you and here is where you can see if there is room for flexibility. You are within your right to negotiate for that better suits your company’s goals, cashflow, and other aspects of your business operation.
One item you can consider negotiating is payment terms. Maybe your vendor’s payment dates don’t work for you. So ask if you can pay on a different day. Perhaps the deposit is rather large with a few subsequent payments. See if you can make a smaller deposit and spread payments out longer. You can also ask if signing a more extended contract would result in better rates.
What are the time frames for the deliverables? How will you be communicated throughout the process? Especially if you are hiring services, you can certainly negotiate these terms if what is laid out to you isn’t satisfactory.
If you are purchasing physical items, you can also ask if you get pricing breaks at different order quantity levels. Another point for negotiation might be how often you order. Whatever the terms are, be sure that both you and your vendor are agreed. Everything should be clearly spelled out in writing before signing your contract. Having a clear understanding of the value of what you are receiving is mandatory before you make your first payment.
Step #6 – Set Expectations Around Your Working Relationship
The last point to have clarity around before you sign your chosen vendor’s contract is to know what your working relationship will be like ahead of time. Every company has different communication norms. You’ll want to see what you should expect in advance. How often will you meet throughout the engagement to ensure the project is on track? Will those meetings occur in-person, via video conference, or by phone?
What will support and communications look like in-between meetings: is there a customer portal on your vendor’s website where you can get help? Can you call or text your project manager on their private cell phone during or after business hours? Once the project is completed, are there any ongoing support or aftercare options available?
Selecting the right vendors for your projects can be a daunting task, especially for smaller businesses that don’t necessarily have enough staff to create an internal task force for vetting vendors. Similarly, the available team may not have additional time to commit to such a task force because they may already wear several hats within the company.
To that end, Blackwood Impact Group can help as your consulting resource. Through our Agency Relationship Management service, we can be your external vendor selection task force, and even help you manage the relationship once you’ve signed your agreement. To learn more about how we can help, CLICK HERE to set up a no-obligation consultation.