March 05, 2015

Vendor Leadership Management - Relegating Vendors

Vendor Leadership Management is going to be an alien concept to most of your vendor partners. Since beginning this series, you've told me about your challenges ... lying and/or cheating vendors, and amazing vendors who work with honesty and integrity.

The process I've outlined is reasonably straightforward.

First, you run a Diagnostics analysis on your housefile. This is not altogether different than getting your annual physical. Your in-house staff (or me) analyze your business from top-to-bottom, illustrating where you have health, pointing out the cases where your customer file is weak.

Second, you either set your own department objectives, or your boss sets objectives for you. These are the criteria that the eight of you in your department are going to be evaluated on at the end of the year.

Now, it's time to deal with the +/- 20 vendors you work with, a group of individuals far larger than the in-house staff you manage on a daily basis. Think about that for a moment. You've put the future of your company, and the future of your career, in the hands of +/- 20 vendors who are trying to get you to spend as much with them as they can so that they can be as profitable as possible - a group of individuals you are lucky to speak with once or twice a month, if that. Your future has historically been in the hands of folks you don't even interact with. #Omnichannel!

Third, you host a Vendor Accountability Summit. All of your vendor partners are invited. Here, you share your objectives for the year, you set the tone (accountability), and you explain how you will hold folks accountable. Be firm. No lying. No deception. No selling. These folks are there to take care of you - if they don't take care of you, they don't get paid.

Fourth, you measure vendor success via the Partner / Vendor Dashboard. The dashboard is shared on a monthly basis. Enthusiastically praise the vendors at the top of the dashboard. Share their successes with your Executive Team, with your own in-house Marketing Staff, and with each Vendor. Again, do this monthly. And call the vendors at the bottom of the table - these folks are in your "relegation zone". If their performance does not improve, you need to make decisions.

The Relegation Zone: Eventually, it's October or November, and it becomes obvious that the vendors at the bottom of the table are not going to improve their performance. Maybe you employ a co-op that simply does not care, and is not going to try to improve performance or customer service - they're going to do what they do, you need to like it, end of story.

You need to make a decision.

Is this a business partner you want to move forward with?

Is your relationships with the business partner profitable? We've all strung along vendors we really don't work well with, for the simple reason that the vendor brings in a lot of profit. But if the vendor does not deliver profit, and does not deliver outstanding customer service, well, why exactly are we working with them? It's time to find a new vendor.

Does the vendor have a competitive advantage? For instance, there are probably 5,000 social media agencies you could work with - so your tolerance with bad performance is probably zero. Find a new agency. Is a co-op at the bottom of the list? You probably have to maintain your relationship with the organization. So make a different decision ... instead of inhaling 1,000,000 names a year, take 75,000 names, and reallocate the remaining names across the remaining co-ops. There has to be a consequence for poor performance.

That's the problem we're dealing with, folks ... there simply isn't a consequence for poor performance. When is the last time a cataloger annihilated circulation within one of the co-ops, reallocating the circ across the remaining co-ops as a form of civil disobedience (or as a form of accountability that is sorely missing in our industry)?

I'm not a fan of yelling at vendors, followed by the brutal sacking of a vendor. What's the point? I'd much rather put a vendor to a test ... too often, vendors rise to the occasion ... under proper leadership, they outperform their historical average, generating sales and profit for your company. Why not see if that's possible?

Yes, of course, you're going to have to do extra work, I get it. You're going to have to do a lot of extra work. But it is so worth it! Half of your vendors are going to dazzle you, and when you are fired in a year or two, you'll be able to go somewhere else and find partners who you can trust.

The vendors at the bottom of the table are probably going to be relegated, if they're not generating profit or providing the greatest customer service of all time. Be honest, wish them well, and make sure you have a new vendor waiting in the wings. Do your research. Partner with non-competitive companies that go through the same Vendor Leadership Management process you employ. Who do they work with? Who is at the top of their table?

It's time to make a change. Create a Vendor Leadership Management framework, and work hard to get your vendor partners on your side, instead of the current arrangement of having clients hire vendors to perform the work vendors want performed, work that makes vendors money.