Finance News & Insights

5 ways to get the most out of your vendors

The best vendor relationships can be a source of discounts, and better service. But how do you get the most out of the relationship? 

Low prices aren’t the only perks to look for in a good vendor. Service and high-quality products also weigh in, but getting those at a good price is always a bonus.

Vendors in competitive markets– such as cell phone providers, office supplies, computer equipment and hotels — will yield some of the steepest discounts.

Relationships that go both ways get better results. If there’s a product or service of yours that your vendor can use, offering it at a discount will go a long way toward build a strong and fast relationship.

Here’s 5 tips to get the most out of your vendor relationship:

  1. Know what’s most important. Cost aside, what’s the most important factor when deciding whose product to go with? Is it service, quality, speed, ease of use or availability? Once you’ve pinpointed exactly what will make the relationship valuable to you, you’ll be able to gauge whether or not you’re getting a good value for what you’re spending.
  2. Approach the vendor with results. Having documented your company’s spending patterns and volume for its products will help convince them that a relationship will be worthwhile. This is especially handy if you’re a brand new customer or have only been using them a short time.
  3. Benchmarking, even informal, helps. Having a reference point for price, service and quality will provide leverage in negotiations. Not only will you have a feel for what you should be paying and getting in return, the vendor will know you’ve done your homework. Don’t hesitate to ask your peers what they’re spending on the same or similar product or service. They’ll probably appreciate swapping information so you both get the best deals.
  4. You know your competition, know theirs too. The more competitive the market for the vendor, the more they’ll be willing to negotiate. Know what the competition’s up to, and use it in your negotiations. Vendors in a highly competitive arena will be more flexible on prices and payment terms and should offer better service to keep you as a customer.
  5. Just ask. Yes, sometimes it is that simple. Flat out asking a vendor for better terms and discounts can yield results — especially if business is slow and they need to move product. It also puts the relationship on an honest footing, which comes in handy down the road. This is most useful if you’ve been a long-term customer or have given the vendor a discount on your product or services.
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