Outsourcing the pros and cons. Why customers are scared to change suppliers?

I want to share a true story.

In March of this year, Digital Print Management met with a £200m+ turnover company based in the Midlands.

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The sales process began in 2008 with an informal meeting with the Finance Director; the key influencer and decision maker.

The company were already engaged in an outsource relationship for the printing of their billing and debt collection letters.

In spite of a very informative discussion we were unable to woo them with our offering.

The incumbent supplier we were advised were doing a satisfactory job but the FD insisted we stay in contact.

Note the word satisfactory. The following three years met with quarterly telephone updates, emails and general newsletters on Digital Print Management’s services and consultancy at the behest of the Company.

Then bingo, we were invited back again for a preliminary discussion.

We met this time with the Credit Manager (we had been referred by the FD) who was very open about the current relationship with their print partner.

Things were not good to say the least.

Co-incidentally, their print partner was a large UK based print management company. Information was forthcoming and we knew what the specifications and  requirements of the applications were and more importantly, what they were looking for in a working partnership.

A proposal was requested and dutifully submitted and received with gasps of ohh and aahhh as we showed savings in excess of £15,000 factoring in postage, paperless billing and processing costs.

The proposal was based on margins in keeping with our philosophy a fair price without de-valuing our service offering, skill and expertise.

A follow up meeting took place which was favourable with all the buying signs evident. We tested their buying signals to ensure they were keen to progress and a formal written request for us to proceed was issued and a live implementation date agreed at the end of the meeting.

There were calls to action and the prospective customer appeared to be content and confident with advancing the project.

And then SILENCE!

The silence was deafening!

Frustration at the short-sightedness of companies limited outlook!

We duly followed up our actions, with their call to actions, no response. We emailed again, no response, we called, guess what, no response.

I know that when a company wants to change vendors this can be fraught with many variables and we had said that if at any stage a well meaning person should question the decision taken that they should take one of our very special DPM sweets.

And if that didn’t work to alleviate any concerns then to telephone directly.

Because we all know what happens after you make that buying decision it’s called buyers remorse. The one that says I know it makes sense and I’ve made the right choice but then someone comes a long and happens to say oohh is it the right time to be changing suppliers now? Or words to that effect.

One seemingly throwaway comment suddenly propels a buyer into panic mode questioning the decision he/she has made.

Irrespective of how well the service provider has absolutely done the best job and closed ‘that sale’.

The success in changing the vendor is determined by the longevity of the current relationship.

How was the supplier relationship founded i.e does the MD happen to be socially connected with the MD of the print company?

Who else in the company does business with the print vendor?

The inertia to change has to be there and in this case was all too evident!

As far as Digital Print Management was concerned it clearly was a bench-marking exercise and was a poor way of the prospective customer fleecing us of information of our services and solutions.

They probably went back to their current vendor and no doubt bartered for more discount.

And then I stumbled upon an article which said that buyers are not interested in developing connections or relationships for the long term they prefer to connect and disconnect as their requirements change or, as needs arise.

I consider this to be a very transient relationship bourne out of a short-term need rather than a long-term productive relationship.

It is a fleeting transaction between that of the buyer and that of the vendor providing the service/commodity.

Depending on the size of the purchase will dictate the duration of the buying process.

To quickly illustrate buying a pair of shoes is not like buying a house, the former taking minutes and the latter being a long drawn out process requiring trust on the part of the estate agent and solicitor!

Surely any business relationship can prosper if both parties are keen to work together to reach a fulfilling and satisfactory result in which both parties benefit but this can only be achieved over a period of time, right?

Was it the fact that it was just too much hassle to move supplier? Is it the fear factor i.e. better the devil we know which far outweighs the need to change? Or is it quite simply that business relationships are formed only when the need arises.

Is customer loyalty outdated?

After all I am sure you’ve experienced speaking with a contact one week only to find the following week they’ve moved jobs!

What do you think? Do you have any similar experiences to share? Do you agree that buyers see suppliers as “loose connections” there only to satisfy an immediate requirement?

Please feel free to leave a comment and share your experiences!

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