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The Wrong Vendor Strategy Can Be Fatal to MSPs, Part 2

Nov 15, 2016, 23:33 PM by Trenton Baker

What's the Best Way to Approach Your Vendor Relationships?

In part 1 of this blog series, I discussed the first of two highly effective vendor strategies my team and I used when running our successful MSP business. I'll cover the second vendor strategy in this post. But first, let me briefly recap the first.

The background: In 2004, I started an IT services company delivering business continuity solutions that helped organizations navigate through any threat to their business. Over a nine-year period, we built a successful and profitable organization, which we eventually sold to j2 Global's KeepItSafe cloud backup division.

One key to our success was the way we optimized vendor management - choosing vendor partners carefully, then leveraging those relationships properly. The first vendor strategy we used was to select the very best vendor in each product/service segment, and partner with that vendor exclusively. Here was our second vendor strategy.

Vendor Strategy #2: Embrace your partners, fully engage with them, and treat them like trusted members of your team.

Many IT resellers are very guarded with their business, and some I would even describe as over-protective and secretive. These resellers operate in a closed environment, insisting on doing things themselves, using only their own people and processes. This sense of distrust and secrecy also extends to their vendor partners - with whom they maintain an adversarial relationship at all times.

These resellers treat their partners as fly-by-night suppliers - businesses to be called in for favors when needed, to be used as punching bags for price discounts whenever possible, and to be kept in the dark on deals for fear that corporate secrets or customer identities would get leaked.

My company had a different philosophy. We were very open with our vendors, and we accepted all the help we could get from any of them who were willing to invest their time, energy and trust in us. We took the approach best summed up in the quote by Sir Isaac Newton: "If I have seen further than others, it is by standing upon the shoulders of giants." Why would we ever refuse help from our vendor partners?

Don't get me wrong. My company was protective of our methodologies and the exceptional team we had built. But we also knew that we didn't have all the answers, and we were a small team.

So if a vendor partner was prepared to share resources with us to propel our business, we always accepted the help. This help came in many different forms: sales assistance, technical knowledge, marketing support, access to high-level executives within the partners' organizations, and sometimes even financial support for various customer initiatives.

Although all of this help greatly benefited our organization (and our vendor partners as well), I believe that the last type of support I mentioned - financial - might be the best way to explain how valuable this strategy was for our business. After all, why would a vendor partner be so generous with us, to the point of contributing their own money to help us jointly pursue a customer or launch a business initiative?

This is where our second vendor strategy proved so valuable: We treated every vendor partner with complete respect. We ensured that our lines of communication were always open; we constantly provided proactive updates on sales deals and other company initiatives; and we never lied to them or hid any information from them. In fact, we made sure most of our vendor partners had direct access to our customers if they deemed it necessary.

Some people might criticize this philosophy as "too trusting." But in nine full years of operation, I can proudly say that we never had a single breach of trust. We always knew that if a vendor were to abuse our trust even once, we would terminate our relationship immediately. But we never had to.

And remember, this second strategy, respecting and trusting our vendor partners, worked so well because we used it in conjunction with our first strategy - which was to select only the best vendors for each category. By the time we began any new vendor relationship, we had already vetted that partner so well that we knew we could trust them.

To summarize our vendor partner approach: 1) we carefully chose the vendors we worked with, and then 2) we dove into the deep end with them, treating them as a fully trusted, fully invested partner - sink or swim.

If you can't completely trust your vendor partners with sensitive information, you have the wrong partners. It's as simple as that.


Greg Onoprijenko

Regional Sales Manager, for KeepItSafe

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