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I want to be my technology vendor’s best customer. I want to get more value out of the software, hardware, or services than their other customers. I want to be a reference client; serve on their planning committees, and have quick access to their senior management team when I need special attention.
CIOs are making the business case that banks compete and win by being better at leveraging technology to win customers and operate efficiently. Vendors play a large role in the success of a company’s IT strategy and execution. The first challenge for CIOs is selecting the right solution providers, creating clear and purposeful contracts, and managing the deliverables to specification. However, an even more ambitious goal is to create situations in which the vendor and the organization exceed expectations and create powerful results beyond the initial contracted deliverables. Granted this higher state is not often achieved, and it takes a purposeful approach on both sides to realize this goal.
Not all situations are worthy of attempting to achieve these higher levels of accomplishment. For some organizations, acquiring computer servers, installing wireless services, or perhaps outsourcing check processing may not offer the opportunity to create a meaningfully differential result. However, these purchases need to be performed carefully using the well-known best practices to guide CIOs in these circumstances.
There are however, situations where a bank can create exceptional value by excelling in a particular set of technology oriented vendor relationships. For most banks, their core processing vendor provides several products and services, some are rather routine, but perhaps others are more important to the bank. ACH transaction processing might be important to one institution, but just an ordinary service to another. Alternatively, we often use specialty vendors that focus on a particular niche to help us achieve competitive advantages.
What does achieving beyond routine expectations with a vendor look like? Perhaps it is being an early-adopter of a technology solution where the bank is helping to design a product’s functionality. A variation on this theme would involve using an established technology in a new and creative way. Another case might be the development of a unique customization that may be driven by a bank’s customer who has created a unique service in their line of business.
To get to this higher level of partnership, CIOs should approach the relationship with their vendors very deliberately. This approach starts with the vendor selection process, continues through contracting, and most importantly, extends through the life of the partnership. Throughout the period, there will, of course, be ups and downs. Situations that call for celebration and others that require intense and stressful negotiations. Ultimately the overall success depends on the two organizations and the individuals assigned to make this all work.
When I think about working with vendors to achieve higher results, I think about how the bank works with our own best customers. We identify our premier customers by looking at profitability, but our truly great customers are more important than that. They provide us references and are well regarded by their peers. Really great customers demand us to perform at our highest levels, and we strive to do so. They ask us to provide special customer service or create custom products that meet their needs. Getting back to profitability, great customers appreciate the value we provide and are willing to pay for the products and services we deliver… as long as we continue to meet their expectations in return.
Starting with the vendor selection process, I determine if a particular vendor has the ability and desire to create an extraordinary relationship. Are the parties willing to share information, or does the sales cycle process seem to be driven by a standard sales methodology. Does the vendor really want to learn about my unique business requirements, or are they looking for a quick contract turn-around? Are they driven primarily by price or by helping us create tangible value? Turning back to the model of working with the bank’s customers, our relationship managers can usually spot a potentially great customer by the way the initial sales process is proceeding. When a prospective client is willing to share information and contribute ideas during the initial meetings, there is a better chance of them becoming a great customer.
Great customers of the bank provide references and are sometimes willing to work with us on product launches. Of course they demand higher levels of service which we are happy to provide to strengthen the relationship. They also provide thoughtful feedback and ask that we stretch our capabilities.
Given that mindset, let’s re-examine the bank’s role in becoming their vendor’s top customer. Negotiating for the absolute lowest pricing on a contract may seem to be in the bank’s best interest. While some vendors and their sales staff may be willing to win contracts on price alone, that strategy can make the bank a non-profitable customer from the vendor’s perspective. Think about how the bank prioritizes its efforts with its non-profitable customers. I’d rather look for fair and competitive pricing that makes the bank a valuable customer for the vendor.
Inevitably, vendors will make a processing mistake. Some system will fail, an operation will be performed incorrectly, or a service level will not be met. The steps taken, along with the tone of the communication, between you and your provider can vary from highly collaborative to highly antagonistic. During these encounters, think about how you prefer banking customers work with us when the bank has an issue.
Granted, sometimes a vendor is not a good fit and the relationship should be terminated. But for the vendors that are key partners to your success, striving to become their most highly appreciated customer creates a mutually beneficial environment helping you to achieve your goals.