February 24, 2015

The Vendor Accountability Summit

So your vendors are not listening to you? Your co-op tells you to trust the models. Your pay-per-click vendor tells you that it's going to cost more and more and more on Google until Google is the only profitable company on the planet. Your boutique agency is forcing a product upon you that you don't need. Your research brand wants you to engage in consulting because their core business model is failing and they told Wall Street this is their future growth area - not that you need their consulting in the first place?

Sound familiar?

What are you going to do about it? Yell at 'em? That doesn't work.

I would hold a Vendor Accountability Summit. Invite every single vendor who supports your marketing department ... yes, every single one. Demand that a Vice President and your rep be in attendance from every vendor, where applicable.
  • Invite each Co-Op.
  • Invite your Printer(s).
  • Invite your Paper Rep.
  • Invite your Merge/Purge Vendor.
  • Invite your Database Vendor.
  • Invite your Paid Search / PPC Vendor.
  • Invite your Affiliate Vendor.
  • Invite your Email Service Provider.
  • Invite your Website Optimization Vendor.
  • Invite your Website Analytics Vendor.
  • Invite your Retargeting Vendor.
  • Invite Google.
  • Invite Facebook.
  • Invite your CRM Vendor.
  • Invite your Circulation Consultant.
  • Invite your E-Commerce Consultant.
  • Invite your Boutique Agency.
  • Invite your Attribution Vendor.
  • Invite any other Vendor / Consultant / Research Sales Person etc.
If your vendor won't attend, well, that tells you something about that vendor, doesn't it?

The framework I will describe is directionally similar to what I used at Nordstrom, though I am going to expand on the concept given the explosion in vendor-to-employee ratios in modern marketing. We need more detail today than used back in 2001 to achieve greater accountability.

This is a day-long event. Here's the agenda.
  • 9:00am - 9:15am = Introductions.
  • 9:15am - 10:00am = Overview of Business Performance, and Goals For The Coming Year (you perform this presentation ... sharing everything ... the good ... the bad ... the ugly ... profit ... loss ... your feelings of desperation).
  • 10:00am - 10:15am = Break.
  • 10:15am - 10:30am = Meet With Your CEO. Your CEO will explain why marketing partners need to significantly improve performance. I always did this early in the day.
  • 10:30am - 11:00am = The Partner Dashboard. Here, on a dashboard, you show a rank-ordering of grading of each of your partners, evaluating their annual performance from best to worst. If your affiliate is performing best, and provides the best customer service, put them at the top of the list. If your paper rep hiked prices and is simply ignoring you unless JCP decides to mail a catalog and then sends you an email telling you that JCP is the future, rank them at the bottom. Share the rank-ordering on the list with every person in the room, regardless whether feelings will be hurt or not. Feelings will be hurt. You are simply holding folks accountable. Make it clear how the rankings are created. More on this in later, and in upcoming posts.
  • 11:00am - 11:15am = Meet With Your Merchandising Leadership Team. This team will explain the merchandising strategy for the upcoming year, and hopefully, the folks in the room can interpret the process and help you sell better as a result.
  • 11:15am - 12:00pm = Open Question and Answer. Folks in the room get to ask questions, given the information shared in the morning session.
  • 12:00pm - 1:15pm = Lunch. Feed these folks well ... something better than wrapped sandwiches, moist pickles, and chocolate chip cookies. But that doesn't sound too bad, either, so go with that, why not?
  • 1:15pm - 3:30pm = Partner Presentations. Each partner/vendor is given 15 minutes to publicly share how they are going to improve performance in the upcoming year. Your partners may need assistance from other partners to obtain improved performance, your partners may need you to spend more to increase sales, it doesn't matter ... this is their opportunity to make a difference, and to impress the competition. All folks, employees and partners can ask questions.
  • 3:30pm - 3:45pm = Break.
  • 3:45pm - 4:45pm = Follow-Up Plan. Host this meeting once per year. However, you will provide reporting to the entire team on a monthly basis, illustrating to the entire team how well everybody is performing. Clearly communicate that, based on your evaluation formula, you will rank-order the entire team monthly, from best to worst. Make it clear that they don't want to be at the bottom of the list (the relegation zone, to use an English Premier League soccer comparison). Hammer home the criteria you will evaluate folks on.
  • 4:45pm - 5:00pm = Tell everybody that you do like them, you do respect them, but you'll be out of business soon without better support. If you feel like the day went well, praise everybody, and send them home. If you feel like the day went poorly and your partners didn't care, let everybody know that you will be talking to NEMOA leadership about illustrating the results of your year-long evaluation at the 2016 Spring Event as part of a keynote presentation.
Given that we're in late February, I'd hold your first-annual summit in April, so that your vendor partners have plenty of time to impact fourth-quarter results.

Notice that I mentioned something called the "Partner Dashboard".

The "Partner Dashboard" is critical. This is a dashboard that evaluates each vendor based on the criteria that is most important to you. Vendors are rank-ordered, from best to worst, for all to see, based on performance. This is the dashboard that you use to hold folks accountable. Your vendors will know if they are exceeding, meeting, or missing your objectives, in comparison to their competition. Yes - if you work with two boutique agencies, each will get to see how each other is evaluated.

Yes - you need to do this.

There's nothing that inspires competition more than a dashboard that rank-orders vendors from best to worst, based on the criteria important to you.

I have found that it is best to be very firm in this first meeting. Honest, open, and firm.

  • Share the five year profit and loss statement for your company. Your vendors are under non-disclosure, so this should not be a problem. If your CFO objects, invite your CFO to the meeting and have her present the information sans tables/charts.
  • Share every single customer metric you have. Annual Repurchase Rates ... Orders per Buyer per Year ... Items per Order ... Price per Item Purchased ... Average Order Value ... Annual Demand per Buyer ... 12 Month Buyer Counts ... Annual First-Time Buyers ... Annual Reactivated Buyers ... Website Traffic ... Conversion Rates by Segment ... Twitter Followers.
  • Share your marketing budget - broken down by advertising channel ... ad-to-sales ratios, cost per new customer - then compare it with lifetime value.
  • Share your five year customer file forecast ... you have one of these ... right ... right? Show your vendor partners why you need new customers.
  • Share the lifetime value of your customer.
  • Share inter-channel metrics ... all these omnichannel customers that are not increasing your profit by a single penny.
Your vendor partners are going to be a lot more helpful when you treat them like an actual employee, and grant them access to actual customer data.

Then, be firm. You need results, or your job is at risk. In so many ways, your vendors determine if you get to keep your job or not. You cannot lose your job because co-op performance is at -22% and they simply tell you to have faith in the models.

This is a new way of working with your vendors ... who, quite honestly, are your employees.

Rest assured, some of your vendor partners are going to freak out ... freak ... out. They will hate this. They will hate the accountability, they will hate being compared to others, they will make excuses, they will refuse to attend, they will stonewall you in the months after this day-long summit, they will lie, they will badmouth you publicly, telling others that you are a "bad client". This means that you that you should not be working with this vendor. Other vendors will give you lip service, then, they'll go home and nothing will change. Unless productivity is well above average, this means that you should not be working with this vendor.

In the catalog world, I'm exhausted by all the complaining about the co-ops - complaining that is not associated with action on behalf of the co-ops. Your business is dying ... and nobody seems to care. It is time to hold folks accountable. It is your job to hold folks accountable. Let's get started.

Tomorrow, I will share a mini-dashboard, as an example of what you need to be doing to start to hold your vendor partners accountable.

1 comment:

  1. Thanks Kevin -- this is proving to be an extremely helpful series of posts for *anyone* who manages vendors.


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