How to Select a Vendor for Your Catalog Business
by Stephen Lett
Selecting a marketing vendor such as a printer, list broker or consultant does not sound like a difficult task. But, how do you know you are selecting the “right” vendor for your business. The relationship you have with vendors, particularly with your printer is important. (Your printer is probably your largest unsecured vendor.) Over the years, we have developed criteria for selecting a vendor which we want to share with you in our column this month.
First, I would like to comment on two basic points that always come up when selecting a vendor; price and attitude. By all means, negotiate the best price you can with your vendor then move on into the relationship. Price is not everything and it should not be the number one criteria when selecting a vendor. If the decision is based solely on price, the relationship will be doomed from day one. It is important to start with a solid foundation that can grow stronger over time with other criteria in addition to the price you pay for their services. The second basic point has to do with attitude. Your attitude towards your vendor and their attitude towards you are important. They should be viewed as a business partner to your company and treated as such. Treat them as you would treat an employee.
Personal relationships have a great deal to do with vendor selection which is all well and good. However, there really needs to be more behind the selection. You might want to consider the following criteria when selecting a marketing vendor:
- Are Company Cultures a Good Match? - Match your company’s culture with that of your vendor. You must be comfortable with the people and company you are dealing with frequently. Companies generally prefer doing business with companies they can identify with culturally. The size of the company should be taken into consideration too. Very large companies have tremendous capabilities and resources but whether they are structured to provide the level of service your company needs is the question. Sometimes bigger is not always better. Are you going to be a little fish in a big pond, for example?
- What Is Their Work Experience? - Make certain they have experience in your particular market niche. And, are they a leader in their particular service segment. There is no substitute for experience and you are paying for what they know. You don’t want to be the one training them.
- How Do You View the Supplier? - Can you work with a particular company, almost daily at times, and how will you feel about them as a large creditor (your printer, for example)? Is this a company you can count on five years from now? If the answer is yes, perhaps you should develop an even closer working relationship with them.
- How Are They at Meeting Deadlines? - Understand their schedule and get them to commit to what they promise. Will they meet your timeline expectations? How do they backup the team that is assigned to your account when one of your main contacts is out of the office?
- How Does the Vendor Feel About Your Company? - Your vendor needs to know that your company is one they too can grow with. If the vendor is someone you would like to do business with, you should make every effort to enhance your working relationship. Show the vendor that you care and that you are committed to them long-term.
- How Much Client Turnover Do They Have? - Customer turnover should be considered. Ask the vendor to discuss customer turnover with you. Find out how long their top 10 customers have been working with them. It is important to know what percentage of customer turnover the prospective vendor experiences annually. It is even more important to find out why customers take their business to another supplier.
- Are You Serious About Changing Suppliers? - Don’t go out for bids unless you are willing to change suppliers. If the supplier feels you are simply shopping the market in order to obtain a better price from your current printer, they will not quote their “best” price to you. This can become a credibility issue. A supplier needs to know that you are serious about switching companies for all the right reasons. Most suppliers would understand if you stay with your current printer for a price difference of up to 5%. But, if the differential is more than that, you need to be willing to make the difficult decision to take your business somewhere else. It is generally best not to change suppliers unless there have been issues other than price. If you like your current supplier, most likely their price will be competitive. If all else in equal or close, it is usually better to stay with your current provider because transitions are difficult, time consuming and there could be errors caused by learning curves, etc. There is always a risk associated with any change.
- How Long is Your Commitment? - Contract not more than one year at a time. Unless you are a very large catalog company, contracting for more than one year is not necessary. Too many things can change and going out for bids once a year is a good sound business. It is a very competitive business and you want to remain current. Make sure you can opt-out of the contract if you do not feel the relationship is working.
- What’s Not Included in the Price Bid? - Is their pricing competitive and inclusive? Make sure their philosophy to pricing is not set up to nickel and dime you! Keep in mind that it is very easy for a vendor to offer a cataloger a low price. But, a low price alone will not retain the cataloger long term. Price cannot be the glue that binds the relationship.
- What do Their Clients Say about Them? - Talk with three or four of their other clients. Obtain several references and check them out carefully. In addition to checking out the company, do reference checks on the actual team that will be assigned to your account. Learn as much as you can about how they operate.
You might want to use a simple form like the one shown below to rate or score your evaluation of a vendor. In our example, a vendor under consideration is evaluated on 10 different points. They are given a score from 1 to 5. Total the number of points and divide by 10 to determine their score. If you are in the 4 to 5 range (no one is perfect) you should probably consider using the vendor. However, if you have scores of 1, 2 or 3, be wary. They are probably not the right vendor for you. Or, you might want to rank the criteria based on what is most important to you. What’s more, you might want to say that a vendor has to be a “5” for at least 4 of the top 5 priority evaluation items in order to be considered. By doing this, you are weighing what is important to your particular needs. It is also a good idea to create this very same evaluation form for your current vendor to be sure there is a real gain by switching to another vendor.
|LETT Direct, Inc.
|VENDOR EVALUATION FORM|
|1). Company Culture||4|
|2). Work Experience||5|
|3). Your View of Supplier||4|
|4). Schedules & Deadlines||5|
|5). Vendor's View of You||3|
|6). Client Turnover||3|
|7). Your Willingness to Change Suppliers||5|
|8). Contract Period||4|
|10). Actual Client Feedback||4|
|SCORE (Total Points divided by 10)||4.1|
Selecting a vendor, a marketing partner, is always somewhat subjective. What’s more, you never really know if you made the right decision until you have worked together for awhile. Base your evaluation of the vendor on these key points, trust in your decision and give the relationship time to mature and develop. Trust your relationship with your vendor too and help it grow over time.