5 Tips on Winning Vendor Battles

As children, we may have been enthralled hearing stories of David and Goliath. Not so much as small businesses waging war with powerful vendors. In a crisis, it can feel like someone took the word “service” out of service provider at the blink of an eye. As a result, start-up’s, early stage companies and small businesses are particularly vulnerable. Lacking economic clout, they can find themselves at the back of the line when problems arise.

A case in point from Metro DC as a less than festive lead-in to the Thanksgiving holiday:

A small business had put in a work order to combine its two telephone accounts and Internet service.

A less than vigilant provider staff member read this simple request as a cancellation of all service.

Imagine the business owner’s stunned reaction on a Monday morning when the phones and Internet were completely dead. This saga raged on through 12-15 increasingly ardent requests for service. Like perfect bookends, the crisis that began with an account error came to a close by Nov 25 with a tech error yet again by the same vendor.

Where connectivity is key, a small business that is incommunicado even briefly may lose not only revenues and customers, but its reputation for reliability.

Here are our five tips to avoid, or address, crises that can arise by the disparity between the power of a small business enterprise and the largest domestic or global vendors.

1. When you launch your new venture, create a business contingency plan. It doesn’t have to be a formal document but at a minimum, a checklist of “must-have’s” for the business to stay afloat on a daily basis.

Many promising early stage companies launch exciting, disruptive products that get orders right away but are unable to make timely deliveries. You may recognize these ”as seen on TV”, captivating items unlikely to make it to your doorstep in the short run. Since manufacturers can be delayed or trucking strikes arise, it is vital to have an alternate source for production or completing fulfillment.

2. Avoid bundling critical functions. Although a provider may have 99% reliability, if they leave you stranded, it is 100% as to your business. While bundled rates can be enticing, consider holding back 25%-30% of your service contracts for back-up suppliers. A good example? Use one carrier for cell phone and mobile devices and another for office landlines.

3. In contacting the vendor, get and record as much information as you can each time. Attempt to get time estimates for repairs needed while expecting those to be pushed out further. Ask for: (i) case number, (ii) name, title and coordinates of contacts, (iii) point of contact for supervisors and (iv) next steps in the process. The more detailed your conversation the greater likelihood adequate notes will be passed on to the next team member and be acted upon.

4. Immediately identify and contact your vendor’s top competitors. Fierce competition can result in favorable buyouts of your existing poorly performing provider. If you choose to make a change in the midst of a crisis, be sure to get guaranteed delivery and installation completion dates for any new service.

5. When faced with a gargantuan provider, you may find that personal “customer service” exists only in distant memories. What remains is likely provided in large, impersonal call centers after mind-numbing “conversations” with automated response systems via endless voice prompts. This virtually guarantees that you will never speak to the same person twice. You will get accustomed to narrating your company’s crisis repeatedly.

After reasonable attempts to make that work, calling the corporate headquarters may be the only avenue if your small business is really facing a major customer or revenue loss. Although it takes a little research, Internet resources from LinkedIn to Bloomberg provide avenues to find the vendor’s corporate telephone number. For a very easy search for public companies’ contacts, go to www.sec.gov. The management roster often includes a beguiling array of potential contacts. My personal favorite is the Business Development team. They can be potential troubleshooters to stop their own company from declining as dissatisfied business customers exit.

Although separately small businesses may lack the clout to prevail in battles with giants, collective efforts can be powerful. A good place to start? Pressuring corporations that capitalize on small business customers to create an in-house representative or “ombudsman” as a contact to assist them when serious crises arise.

See other of our posts on entrepreneurship or capital raises here at www.KaloramaCapital.com or on LinkedIn at http://bit.ly/2gl9u5M. For more information, send us an email, or give us a call via the Contacts page.