Make sure your vendors live up to their promises
Whether you operate a small, medium or large insurance business, you must rely on vendors to some degree. From accounting to marketing to technology and staffing, vendors provide products and services that are essential to operations. For every need your organization has, there are likely five to ten vendors that are vying for your business. Each touts how unique it is and how well it can meet your needs like no other competitor. With all of the claims and promises, partnering with vendors that can and will actually deliver can be challenging.
So how do you get the products and services you need and the expected return on your investments? Diligent research is key to minimizing risk and maximizing time and money when it comes to choosing reputable vendor partners, whether large or small in scale. Here are some guidelines to help you choose the right ones.
Finding credible vendors that will take a genuine interest in the success of your business takes time and effort. Often the best way to start is by asking colleagues for their suggestions based on their contracts and relationships. Referrals speak volumes about a company’s reputation and competency. If you don’t directly have contacts that can make referrals, try posting a question to message boards or online professional groups. You can also meet vendors face-to-face and get insight from others at industry events and trade show booths. Lastly, you can conduct an online search.
Don’t succumb to the temptation to select the first vendor you encounter or the one who appears to offer the lowest price. The “you get what you pay for” adage offers some truth. It often pays to shop around and compare pricing before zeroing on one company. However, don’t let low price overshadow quality and service.
Do your homework
Once you have a list of potential vendors, take the time to fully research each company’s background. Call any provided references and ask detailed questions about their experiences with the company. If the vendor doesn’t provide references, don’t be shy about asking for a few. A vendor who doesn’t have any references to offer, or who hesitates about providing some, should immediately send up a red flag.
The Internet is your friend when it comes to gathering data. Although it’s not good to rely solely on what you read on the web; these days, it is the most logical and convenient starting point for finding information. Read any customer reviews you can find about the company, and certainly, touch base with resources like the Better Business Bureau and the Attorney General’s office to assure there are no outstanding claims or complaints. Pay attention to what customers are saying and posting on company web sites, Facebook pages and other company-related sites. A general Google search of the company’s name can also reveal valuable information; for instance, newspaper and trade journal articles about lawsuits, customer complaints or shady business dealings.
Cover your bases
Like the insurance industry itself, narrowing down a short list of prospective vendors is all about assessing risk. According to the Third Party/Vendor Risk Management Survey released by MetricStream in 2014, more than 50 percent of respondents said their institutions send questionnaires to vendors for risk-management purposes. More than 75 percent require vendors to acknowledge and agree to a supplier code of conduct. If potential issues regarding goods or services can result in significant financial repercussions for your agency, request proof of insurance coverage and/or licensing.
Remove emotion from the decision-making process. No matter how nice the rep seems, handshake deals are shaky at best, and won’t hold up in court if it comes to that. Be clear about what you’re agreeing to and what the vendor will provide, and most importantly, get it in writing.
Managing expectations up front is the best way to avoid problems and miscommunications down the road. You want to be assured that you know what you’re getting for your investment without any unpleasant surprises. The last thing anyone wants is to sign on the dotted line only to find out weeks or months later that the company misrepresented itself or didn’t disclose important information, and now you’re left with a costly mess to clean up. Know from the outset what you’re getting for your investment, including payment terms, reports and feedback. Results should be measurable and quantifiable.
Use clear, concise language to communicate, and expect the vendor to do the same. In today’s fast-paced electronically driven world, it’s easy to get confused by tech-savvy terms and acronyms. Read every word of the fine print, and if a contract uses language you’re not familiar with, ask for clarification or further explanation.
Establish a main point of contact with the vendor. If a problem should arise, you need to know who to call and how it will be handled. After all, who wants to be shuffled through a number of different people and departments when you’re already frustrated and just want an answer?
Watch out for red flags
If it sounds too good to be true, it probably is. Be immediately wary of vendors who offer you a deal or discount that seems unreasonably good, or who pressure you to sign a contract more quickly than you’re comfortable with.
Pay attention to the way the company communicates with you. Are emails answered and phone calls returned promptly? If not, why not? If it’s feasible, pay a visit to the company’s showroom or office to see first-hand how it operates. Transparency is important. If a vendor behaves as if they have something to hide, they probably do.
Lastly, and perhaps most importantly, go with your gut instinct. If something seems fishy, off or just doesn’t feel right — even if you can’t specifically put your finger on what it is — leave the deal alone and find someone else to work with. It’s always better to be safe than sorry, and it’s not worth taking a chance to learn a lesson the hard way.