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The Wrong Vendor Strategy Can Be Fatal to MSPs, Part 1

Nov 15, 2016, 15:32 PM by Peter Ely

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

In 2004 I started an IT Services company. We delivered business continuity solutions that helped organizations navigate through any threat — power outage, fire, flood, network security attack, IT system outage, etc. Over a nine-year period, we built a very successful and profitable organization, which we eventually sold to j2 Global’s KeepItSafe cloud backup division.

There were many reasons my company was successful, but one key area we optimized was vendor management. We not only chose our vendor partners very carefully, but we leveraged them properly as well. There are two main strategies we used to maximize our vendor partnerships.

Vendor Strategy #1: Choose the very best vendor in each product/service segment, and partner only with that vendor.

Many IT resellers pride themselves in the “vendor agnostic approach.” Their premise: “We are unbiased consultants. We will provide three different quotes and we’ll leave it up to the customer to decide what brand or vendor they prefer. Then we’ll implement that.”

I personally never understood this philosophy. The reason businesses were enlisting our help was that they truly valued our opinions. If they asked us, “What’s the best server brand to buy?” or “What’s the best data backup software to use?” we would give them our recommendation. One single recommendation, not a list of three that the customer had to choose from.

The same philosophy applied with our managed services. When we signed customers to our cloud backup service, we didn’t give them the choice of technology platforms. We did the research upfront.  We chose what we believed to be the best technology for that particular purpose. If they insisted that we use a different technology, we walked. They weren’t a good fit as a customer.

And you know what? Our customers loved our approach. They appreciated our experience and expertise, and they trusted our recommendation because it made their lives easier. They understood that we knew what we were talking about. They appreciated that we had deep expertise with those particular technologies — that we weren’t merely a jack of all trades but master of none.

You know who else appreciated our approach? The vendors. Knowing that we were loyal to them made a world of difference in our relationships. Each vendor understood where they fit in with our overall portfolio, and they accepted their place because they trusted us. When they understood they didn’t have to worry about us swapping their quote out in front of our customer for their competitor’s quote, it strengthened our trust and encouraged them to provide us with even better support. 

Choosing a single vendor for each segment also simplified our vendor management process. I like things simple. Instead of managing three vendors for each product or service, we needed only one. Less is more in this case. I’m not saying that we didn’t make mistakes and choose the wrong vendors. Sometimes we did. But when we realized that a certain vendor or technology was not working out, we switched. What we didn’t do was juggle multiple vendors in the same space simultaneously. When we made a strategic decision to switch, we implemented a transition plan.

Our business flourished as a result.

If you’d like to know what our 2nd vendor strategy was, tune in to my next blog article.

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Greg Onoprijenko

Regional Sales Manager, Canada for KeepItSafe

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