Just like Baskin Robbins’ 31 flavors, businesses today have many choices when they consider which vendors to work with. And just like ice cream, it’s a lot about taste and preference. Decisions on which technology vendors, services partners, and parts suppliers to use have far-reaching consequences. As such, the process for making these decisions has become more deliberate and quantitative in their assessment, which is why people like me get paid to understand how customers arrived at their decision.
From a competing vendor’s standpoint, it feels increasingly difficult to win business. Strategies are sometimes used like that of Harvard professor Michael Porter, who argued that cost advantages (hence lower price), unique product features (hence better solution), and market focus on a specific niche (hence better understanding and track record) offer a competitive edge to win the deal.
My interviews with customers suggest an angle either overlooked by vendors or not sufficiently developed into a credible asset: the ability to act as a trusted long-term partner.
The importance assigned to long-term partnerships has shown itself in many ways. When respondents are asked to rate the importance of select factors applied to a vendor evaluation, “Vendor as a good partner” (my term), almost always rates nine-plus (on a scale of one to 10, low to high). It typically shares top billing with such factors as integration and industry reputation.
When asked how customers arrive at their final decision when the race is close, I frequently hear, “Who will be a better partner? Who will be easier to work with?” Similarly, when asked for one piece of advice they would give to companies competing for their business, respondents often cite being a trusted ally, willing to work “shoulder to shoulder.”
It turns out that the critical areas we competed on in the past — price, feature set, and track record to name a few — are still important but are considered table stakes, earning a vendor the right to compete. Winning and keeping one’s customers requires a collaborative business model where the relationship gets stronger year after year.
This valued quality of “vendor as a good partner” raises two obvious questions: Why is being a trusted partner particularly important today, and why haven’t more companies embraced the opportunity as a means of differentiation?
Probing its importance, I heard many reasons. In the area of technology, there is more parity today between technology companies and in-house IT personnel, which means that top-down is out and joint problem solving is in. A technology company’s tech-savants are just not treated with the same deference.
Also contributing to the trend are the scars left behind when companies pick wrong. Managers seldom forget the undoing, redoing, training, revised workflow, and depleted morale when a vendor needs ousting. To label the experience “switching costs” does not do justice to the pain.
Harder to grasp is why more companies have not internalized the premium placed on strong partnerships. Maybe quality partnering lacks sizzle and sounds too humdrum. Maybe the case for investing in a methodology and training has not been sufficiently proven from a quant angle, leaving the skeptics feeling well … skeptical. Maybe too many have adopted the creed, “If we build it, they will come.”
However, if a company wants to jump on the partnering bandwagon but isn’t quite sure where to start, here are three practical steps:
Step 1: Believe Quality Partnering Matters
Start with some personal research to customize your view. Interview some “raving fans” and revisit some painful losses, and see how often the word relationship is mentioned. Do a word cloud. Speak with your average sales rep (not the ones who blow out quota every year), and identify marginal differences that could affect tight outcomes. Then prepare to champion the cause with stories, data, and a call to action.
Step 2: Define Quality Partnering
To make being a quality partner real, the idea needs definition. Some useful dimensions include:
—Include “Quality Partnering” as part of a company’s annual plan. Establish goals, build metrics, reinforce use of a relationship-ladder mapping peers to their customers up and down the organization. Send the message of accountability.
—Prove how the relationship improves every year through knowledge transfer that works both ways. The process results in new efficiencies, and everyone shares in the benefits.
—Sharing project risk: Whether it’s overruns or a surplus, design a way to share the risks and rewards so that everyone has skin in the game.
Step 3: Incent the Right Behaviors
Most important, reward individuals and teams who act on the “partnering matters” message. If they’ve gone the extra mile, demonstrated concrete value, or led by example, they need to be recognized.
In our highly virtual world, partners have become extensions of their customers, filling critical gaps, and helping to meet time-sensitive goals. Proactive and consistent support and successfully being part of a customer’s team is anything but soft.