How Vendor Relationships Can Help Your IT Deal

When it comes to vendor-customer partnerships, a strong relationship is the key to getting the best agreement for both parties.  While it may seem obvious, there are many deals where the customer does not feel there is a strong relationship in place with their vendor.  In worst case scenarios, the customer is only in touch with the account executive during the renewal cycle or when additional products need to be purchased.  This is by far the most detrimental way to approach a deal, and generally results in a worse outcome for the customer.

The following are the general guidelines an organization should follow that will lead to a smoother contractual negotiation process and an overall better end state, while also strengthening the vendor relationship in order to be considered a strategic partner.

Contacts in Your Organization

There are too many instances where organizations have little-to-no touch points with the vendor except at renewal or when there is a need for additional products.  Setting up a regular cadence between your vendor account executive and a single point of contact within the organization can dramatically improve the relationship. These touch points can be used to discuss goals that each parties have relative to any upcoming initiatives.

This gives the vendor a chance to show the customer improvements to products coming down the pipeline, as well as giving the customer a chance to elaborate on upcoming needs, whether that be new functionality, security updates, etc.  This single point of contact also eliminates the ability for a vendor to put an organization into different siloes, whereby the vendor may be able to connect with other sides of the business, unbeknownst to the point of contact, and sell additional products without their knowledge.

While this requires internal alignment on the customer’s side, not having it can be especially detrimental if not properly managed prior to renewal.  Many organizations are left with significantly more products than their previous renewal with not much negotiation leverage going into the new renewal.  The greatest successes we see from organizations are those with strong internal alignment, as well as a healthy cadence and amount of information-sharing with the vendor throughout the term of the contract, not just at the renewal.

The Importance of Executive Relationships

Another sign of a healthy vendor-customer relationship is the existence of executive relationships with the vendor, again, prior to the renewal.  A healthy amount of information-sharing between the vendor and customer is not detrimental to the deal, in fact it is quite the opposite.

While we would not recommend that an executive relationship meet nearly as often as the account rep and point of contact, we would recommend a quarterly to bi-quarterly check-in to discuss the high-level goals and potential initiatives of each party.  This can ensure that when it comes time to renew, the account executive knows that the single point of contact has buy-in from management.  It also helps the account executive when they have to go back and get approval for any concessions on the new initiatives.

Really investing in the relationships and making sure that there’s ongoing continuous feedback in terms of how they are performing is important.  Are they aligned to your outcomes versus their profits?  Making sure that you are driving two consistent outcomes is critical.

Proactively Learn About New Products

In line with information-sharing, should the need for new products arise, organizations should engage in workshops for those products well in advance of needing to purchase.  This allows for your organization to actively refine how well the product will work in your environment.  It also allows for the vendor account executives to have greater ability to get approval for concessions that may be needed.  The representatives can show internally that your organization has been proactive and knowledgeable with regard to the products, thus allowing for additional approvals, such as better pricing.

The key is to get the vendors to stop talking about sales dollars and start talking about value that they are creating for you.  Oftentimes, products are also bundled and although you may only need a small piece of a suite, they tell you that you must buy the whole suite, so those are some challenges to try to work through.

Execution

Finally, it is the job of the customer to bring all of the above to light when the time comes to renew or the need for new products or initiatives arise.  Many vendors do not like to play hardball anymore.  And when you come up against a Microsoft or Salesforce (both of whom have products necessary for basic organizational functions), it can be hard to generate any leverage to achieve concessions.

However, if your vendor account executive can show internally that you are informed, engaged, and genuinely interested in strengthening the partnership in place, they can spend political capital at their organizations to help you, thus leaving the ball in your court to get the best deal possible.

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