SI Review: January 2012

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With This Ring, I Thee …

An inside look into building strong, committed relationships with your clients

By Bryan Peña

In my career as a procurement manager and as an individual contributor, I have negotiated more than 1,500 deals for goods and services — to the tune of more than $15 billion in spend. Additionally, I have been involved in more than 200 request for proposal initiatives. What this tells you is that for most of my professional career I’ve been buying stuff. And when I say “stuff,” I’m not just talking about contingent labor services, but physical items like chemicals, computers and office supplies in addition to services — marketing services, travel services and freight services. Through it all, I’ve seen both good and bad sales personnel. Good account managers and bad account managers — unfortunately more of the latter than the former! Companies that conducted business ethically and those that didn’t. Some deals turned out well and others badly.

Across all those commodities, all of those deals and all of that spend there were some common components that define what makes a relationship successful. Here, I outline just a few things that you want to do, and a few that you don’t, in order to ensure your relationships with your clients are successful. At the supplier’s end, the key to winning in this business is to clearly understand your company’s abilities and making sure your staff can deliver on what has been promised.

Show Financials

One of the core concepts that seems to escape many suppliers is that for every buying decision I make, I put my job on the line. That’s a pretty heavy-duty thought, but it’s true. As a contingent workforce manager, if I select the wrong temporary staffing provider and it doesn’t deliver, I’m responsible for the consequences of that failure. While it won’t necessarily mean that I’ll get fired on the spot, though I’ve seen that happen, at the very least, it is a significant set-back in my ability to get other projects off the ground.

So first and foremost, as a buyer, I would need to know that the providers I select are in it for the long haul. That means I need to know their financials. Financial stability and the ability to demonstrate that stability are critical in any provider relationship. For many publicly held firms this is a relatively easy request to comply with, but some privately held firms aren’t comfortable with sharing deep financial information. This is a nonstarter. As a provider, to set yourself apart, you need to be transparent and proactive. Prepare a one-page overview of your financial information and make it part of your sales collateral. You don’t need to divulge anything confidential, just high-end revenue numbers and other data that demonstrates that you are stable and solvent.

Know When to Say No

It is easy to lose sight of the long-term picture. Many times during the bidding process, I have seen promises that come fast and furious — “Of course we can commit to holding statutory increases flat;” “Yes, we can deliver that technology in two weeks;” “A $200 million MSP for less than 1 percent? Sure!” — anything to get the deal, because in the heat of battle winning is what matters, never mind the long term. So many account executives shoot for the quarterly close and not the long term. This may be obvious to many of you, but it never ceases to amaze me how often I see this in deals of all sizes.

There is nothing wrong with saying no if the deal doesn’t match your capabilities. In fact, it can be a very powerful negotiating tactic. We hope you say yes more than no, but a yes that leads to a service failure is worse for you and me as a buyer. Even turning down a deal altogether will reflect better on your organization than making promises you can’t deliver. [For an example of a company that succeeded by saying no, see “Happy Clients = $$$.”]

Let’s Get Hitched!

One of the things that separates the good from the bad is the commitment from the sales force. I would liken it to getting married, rather than dating. And I don’t consider a deal to be done until the second year of implementation, and the sales process isn’t complete until the contract has been renewed at least once.

Incent your sales force to think the same. At your company, how are contract renewals rewarded internally? To whom? For how long? Maybe there is an opportunity to provide sales incentives to your operations folks. I had a travel management partner at one company that actually had a graded scale that increased bonuses to its call center personnel as contracts were renewed.

The Front Line

Account executives should have some account P&L responsibilities and be versed on how to build a profitable business — to a point. The reason I say this is that often they are closest to the needs of the client and can react quickly as opposed to working through layers of management. I can think of one $40 million deal in particular where this made the difference between success and failure for the winning provider. The account executive of the successful firm had a deeper understanding of the nuances of our business and this translated to a better deal for them and an even better deal for them as a global provider.

Be More than a Bill Rate

There are some constants in life: Water makes things wet, the sun rises in the east and buyers expect successful providers to over-deliver as opposed to simply meeting contractual expectations. But with ever-shrinking margins and limited resources, what does “over-delivery” mean and how can you consistently over-deliver across hundreds of clients?

It really doesn’t mean what you think it means, and it doesn’t even need to cost you anything to be more impactful. For example, one way you can bring additional value is to help me maintain my program. In many instances contingent labor is not the sole focus of the procurement manager’s role. Often they are also in charge of other categories of spend, such as travel, freight or marketing. Even if they are focused on contingent labor, that may also include statement of work (SOW) projects, outsourced services or independent contractors.

Regardless, this translates to an inability for many buyers to keep track of all potential issues that may affect their program and spot the smoke before it becomes a roaring fire. That’s where you can over-deliver by helping your clients solve just such a problem and be their eyes and ears. When I was in the buyer seat, I often looked to my provider partners to keep me informed about what was happening within my company.

Call Me Often

While we had a VMS/MSP, which could track measurable activity, it was difficult, if not impossible, to manage across a global enterprise all of the issues that are so critical to a project’s success. Intangibles such as internal sentiment, upcoming projects and interdepartmental intelligence are more difficult to come by when running projects of scale. I would solve this problem by scheduling regular, informal calls with providers to discuss what was going on in my company. The key point was that these calls were on the calendar and short — no more than 15 minutes. When I didn’t have time for a phone call, I would communicate via email updates. By leveraging dozens of providers in this manner I was able to “force multiply” my ability to run my program.

Help My Goals

Another way you can over-deliver is by helping your clients solve other problems.

Do you as a provider know their other departmental and personal goals? Yes, savings is part of the equation and if you can deliver savings opportunities that would be great, but what else? What about help them bring revenue? For example, maybe you provide services to a marketing firm, can you leverage that opportunity to help them build sales with other client companies? Maybe a “know your client” collateral or communication, which highlights the service of product of a particular client in such a way that helps them build their business — think of American Express’ “open” program.

We had one provider relationship where we were able to leverage its client base to buy computer supplies from a new supplier. This was a smaller company we had never dealt with before, and would have never had heard of without the staffing partner giving us the name. Everybody wins in this situation — we were able to bring on a new, competent supply partner, the supply partner was able to book millions in new revenue and the staffing supplier was able to bring value to both clients! This may not be helpful for larger, publicly traded companies but can really bring value to smaller to midsize businesses. Imagine the client loyalty if you can help them increase their topline sales in addition to providing excellent service!

My experience in procurement has consistently shown that the traits of successful providers across all categories are not always price-related. By thinking creatively and understanding the vast number of resources at your disposal — both internal and external — you can ensure you will have a leg up on the competition.

Bryan Peña is vice president of contingent workforce strategies and research at Staffing Industry Analysts. He can be reached at bpena@staffingindustry.com.

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