I would like to continue my post from last week on the topic of Vendor Management and how vital vendors are to the success of every organization. If you missed last week’s article, you can find it in my previous Posts: “Vendor Management is Key to Staying in Business—Any Business!” Through the years I have worked with many vendors of all kinds and I’ve had the opportunity to form long-lasting relationships with many of them. As a best practice and one of the strategies I used when starting the DeNovo bank back in 2005 was to obtain bids from at least two to three vendors who offered the same services so we could choose the right one for the bank. This strategy served us well and we were able to choose, almost 100% of the time, the right vendor for the product or service the bank needed.
In addition to doing due diligence with each vendor to ensure they are the right fit for the bank, to know they will exist long-term, and that they will keep the bank’s data safe, it is also important to form a good relationship with your vendors. As the CFO and COO of the bank, I dealt with all the vendors, which included reading and signing every contract, learning about their services, and protecting the bank at every level. I took that responsibility seriously and considered getting to know the vendors at the personal level of great importance. I dealt with the sales person initially but I also got to know other key people in the company. This proved to be a great strategy when sales reps left the company or my lead relationship manager was promoted to other positions. For example, with the financial auditors, I formed a long-term relationship with the relationship manager/partner, the lead auditor, and some of the staff auditors who came to the bank each year to do the work. I did the same with the compliance auditors at a different firm, the IT auditors, and even with the regulators for the State chartered bank.
It is also very important and a great vendor management strategy to diversify your vendor base. For example, even though I made relationships with various local accounting firms who provide similar services to banks, I chose separate firms to conduct the compliance audits, IT external audits, financial audits, loan reviews, and tax return preparation. This strategy works great when it’s time to rotate firms so they don’t get too familiar with your bank. It is also a best practice for checks and balances within the bank.
As a business owner it is extremely important that you establish professional relationships but also getting to know your vendors at the personal level. Remember they are people too. By having these relationships, you gain favor with them and grace during the hard times. You can also form partnerships when a vendor wants to roll out a new product, for example. You can be a beta test site and get their product for free or at a reduced cost for a while. They may also give you free PR when marketing their new product.
Now as a consultant myself I have reaped the rewards of having all those relationships and, in some cases, friendships. My goal is to provide my bank clients with several options of vendors who provide bank services (with no commissions or hidden agenda from my part). I simply want to be a resource to my clients so they can then choose (like I did when I started the bank) the right vendor to meet their needs. In order for me to recommend vendors to my clients, however, I need to know them and trust them that they will take good care of my clients.
So if you are a banker or business owner, get to know your vendors at the personal level and form long-term relationships because it will pay off. You will benefit from referrals from your own vendors and your clients will benefit as well when you refer vendors to them by having the opportunity to choose the right vendor to meet their specific needs.