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How Well Do You Know Your Vendor?

Since 2003, Maple Street has saved our clients more than $330 million dollars in vendor costs. Much of those savings come from our knowledge of choosing the right vendors for our clients’ needs, now and in future.

Your vendors are more essential for your success today than ever before. Vetting and onboarding the right vendor can be a complicated and daunting task. Here are some tips that can help you better understand the vendor’s business model so you can focus on what the vendor actually does, how the vendor makes its money and if what the vendor delivers is what you really need.

Service vs. add-ons
Many vendors present a price for the service or technology that often doesn’t reflect the real price. To get the results you’re after – the reason you bought the service or product – you end up spending substantially more than the initial price you expected.

For example, there are software companies that offer services as an “add on.” The cost to license the software is relatively low, but to take advantage of the service, you have to pay more than the software costs, and that cost wouldn’t be included in your budget. So how does the vendor make its money? They add on services. That’s their business model, so when you plan your budget make sure you understand the total cost, not just the initial investment.

Tools vs. solutions
What the vendor does (and doesn’t do) is important to understand. We see clients buy “solutions” that aren’t really solutions. They buy tools, and, like any tool, you have to know how to use it, know what you’re using it to do, then have the time to actually use the tool. If you thought you were getting a solution, you’re bound to be disappointed because you can’t get the results you wanted until you invest your time and resources to make use of the tool.

More than 50 percent of the time clients complain about vendors, the problem is that clients didn’t do what they’re supposed to do to use the tool. So how does the vendor make its money? They sell you tools, not solutions. That’s their business model.

Are your eyes bigger than your stomach?
How much do you really need? Did you need to buy all of the services available up front? Many systems have to be implemented over time, especially systems that are modular in nature or that offer “add on” products to complement the systems. It takes time to implement and learn to use many vendor products and services and it can’t be done all at once.

So why would you then buy services you won’t implement or use until you’re ready to use them? How does the vendor make its money? They front load their products and services. That’s their business model.

Bright shiny object: The Next Big Thing
What is the vendor actually offering? A product or service that’ll actually help your team or your members/customers – OR a unique, magic feature that you have to have, the thing that’s “cool.” Yes, there’s an exciting appeal to technology that’s being touted as new, trendy and better. When a vendor shouts “squirrel!” that’s when you need to look beyond the bright, shiny object and focus on outcomes.

If the outcome is no different than what you’re getting now, you could be paying the vendor a bundle for a fancy alternative to what you already have. How does the vendor make its money? They sell you technology for technology’s sake. That’s their business model.

At Maple Street, our business model is different. We’re a fully-outsourced vendor management solution that reduces expenses, improves vendor performance and manages risk. How do we make money? By saving you money. We guarantee you will save more than you spend.

Our Vendor Advantage System® will deliver a positive return on investment; no one else can make that promise. Maple Street professionals are experts in helping you choose, vet and onboard the right vendors for your culture to reach your goals. Plus, we’ll run the table in negotiating the best prices in contracts that put you in control of your vendors, not the other way around.

If you’d like to learn more about Maple Street’s next-level vendor management services and contract negotiation, call 800-513-6839, email mssales@maplestreetinc.com or visit www.maplestreetinc.com/learn to get started.

Article by Maple Street, a proud business partner of the California and Nevada Credit Union Leagues.

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