4 Mistakes Companies Make Working With Vendors
We work with many vendors in the book industry, and we've seen all sorts of personalities, styles, business practices and policies. Sure we've seen our share of bad eggs, but in most cases, we have had great relationships with our vendors. This has given us many advantages over other publishers -- not the least of which are low prices, superior information, and great customer service. Our strong vendor alliances are no coincidence -- we've learned over the years how to cultivate these partnerships for the most mutual benefit. To help you forge the path to strong vendor relationships, here are four critical but common mistakes to avoid when dealing with vendors.
1. Not Working Together
It sounds counterintuitive since you're paying them, but this is very important. Every good business relationship has clearly defined guidelines and structure. When we start working with a new vendor, we begin by explaining to them what we expect. Then we then go over what they want out of the deal, a step often overlooked. We ask questions like: what can we do to be a great customer? How can we work with you to increase your profits? What would we have to do to be your favorite? How would we earn extra discounts? How do you like to receive RFQs? What is your preferred method of communication? This opening gives us great insight into how we can work with them, what they want from us, and how we can get the most of out of the relationship. We earn their respect up front by virtue of asking these questions. You’ll be amazed how quickly you make friends with your vendors when you start with this approach instead of threatening to take your business elsewhere.
2. Not Being Honest
I wrote an earlier blog post on honesty, so I’ll make this point short. Just remember that you can get better terms and pricing from vendors if you're honest and frank with them. Their trust in you as a person will extend to your business practices and forecasts.
3. Not Respecting Margins
Pushing too hard on price can destroy your working relationship with a vendor. You have every right and reason to try to get the best price, but at the same time, you should not think that a vendor should take a loss to work with you. That may work a few times, but if you continue to push a vendor to make too little money on a job, you will eventually lose that vendor. The book industry is relatively small -- there are fewer than 50 high quality book printers in the U.S. As such, if we went around pressing all of them on price, sooner or later we'd lose the ability to work with many of them. After some time playing this game, we would end up paying higher prices overall since the supply (number of printers who would work with us) would drop while our demand would stay high. Win-win pricing will create sustainable, profitable partnerships.
4. Not Tapping the Vendor Wisdom Pool
Keeping a vendor in the dark may sound smart, especially if they sell to your competition, but in most cases it's a horrible idea. Your vendors are in many ways your business partners. They need to make money, and you are a fantastic vehicle for that. They want you to continue to make money and grow because it helps them do the same. If you are struggling with an issue in your business, they might be able to help. If you are concerned about them sharing information with your competition, have them sign a confidentiality agreement. Their experience and guidance is probably free, and usually worth much more than high-priced consultants. Think about it: who knows your industry better than your vendors?
We all strive to hire well and pick the best customers, but too few businesses choose and nourish great vendors. Without your vendors, you don’t have goods to sell. That’s the bottom line. By avoiding these four critical vendor relation mistakes, you will be well on your way to fostering lasting partnerships with immeasurable benefits.