Managing relationships with 3rd party vendors
Are you even aware you might be responsible for managing relationships with 3rd party vendors?
Did you know that as a PM, sometimes, a part of your job responsibility includes managing relationships with 3rd party vendors? This is especially true at early and growth stage startups, but it also can apply at established companies. What does this responsibility entail for a PM?
Vendor relationship management
I’m starting off with a clarification. Unless you’re working on an internal team to support a functional business area (e.g., sales, marketing, HR), this isn’t managing relationships with 3rd parties that provide software such as CRM for sales, helpdesk tool for customer support, financial planning for finance, or ATS for HR, or employee productivity tools like Figma/Jira. that’s used during the product development process.
Instead, I’m focused on PM’s who need to incorporate critical features into the core customer experience. As an example, if you’re a PM working for an eCommerce company, you might need:
Identity and access management (Auth0, OneLogin, Okta) for login and account management.
Payment acceptance (Stripe, Adyen, CyberSource) so you can accept credit card
Email automation (Mailchimp, GetResponse, SendinBlue, Twilio) so you can send confirmation emails
The key point I’m making is the software/vendor you’re integrating with directly impacts what your customer’s experience even if your product is a physical t-shirt. This is different from vendors that provide SaaS tools that support internal operations, something the customer doesn’t see. Note: Certain vendors, like helpdesk tools, can blur this line because it has some functionality (e.g., chats) that impacts the custom experience and some that don’t. But that’s a more complicated story.
How to manage vendor relationships as a PM?
If you have vendors that provide software that directly impacts the customer experience, you need to actively manage those relationships. Not sure if the software does impact customer experience? A simple test is to ask yourself, would the customer still be able to purchase or use the product if the vendor went down. If your business immediately grinds to a stop, then those vendors are critical. So, what do you need to do differently to manage those vendor relationships?
Use the vendor. As PM, we tend to focus on vendor relationships during selection, implementation, or when things are going wrong after implementation. This is natural. However, this isn’t the only time to engage with your vendor. Recognize that a vendor is trying just as hard to retain you as you are working to retain your customers.
Thus, as a paying customer, work within this incentive structure. This means, periodically sharing your business objectives with your vendor. You should even go so far as to solicit their input in helping you reach your goals. This isn’t a blank check saying that all vendors can help with every business objective, but even if they can’t help you directly, your vendors might be able to connect you with their other clients who are in the same industry or have also tackled similar problems. It’s a win-win.
Request business reviews. Depending on the amount of spend, your vendor may assign you a dedicated or shared account manager or customer success manager. This person is there to help you succeed. You might already be getting periodic emails and meetings requests where they are trying to conduct reviews with you. Instead of having them drive the agenda and meetings, flip the relationship around. Present specific problems or topics you’d like them to discuss. Use them as free consultants. Again, share your business problems and objectives. Even if you aren’t getting the best possible solutions, you’re getting free input and using those meetings to further your objective.
Set reminders prior to renewal periods. Time flies and contract renewal periods are up before you know it. New projects get in the way and we all forget. Thus, instead of waiting for the vendor to reach out to you regarding renewal, set up an scheduled email that’ll automatically send to yourself X months ahead. For example, if the renewal decision date is 12/31, I’d schedule an email to myself 3 months out. In the email, I’d specify the renewal decision date. I also include a draft email in the body ready for forwarding to the vendor. That way, when I get the email reminder, I can easily copy and paste an email to the vendor, asking them for a business review regarding renewals. By the way, if you don’t know the renewal period or terms of your vendor contract, you should request it from sourcing, legal, or finance. Someone should have contract, even if you have to go ask the vendor themselves. Don’t worry, it happens.
Periodically, research competitors. Why fix it when it’s not broken? The goal here isn’t to replace vendors for the sole reason of replacing, but to understand what features may be able to help you reach your business objectives. For this type of research, you don’t even have to do the work yourself. All you have to do is find a competitor and reach out with some specific questions. Below is an example email I’d write:
Hi <name>,
My name is Shaw and I’m a PM @ <ABC Company>. I’m responsible for <XYZ> product. Currently, we use <vendor A>, which is a core component. I believe your product is a competitor to <vendor A>.
I’m not looking to switch, but I would like to learn more about your product and how you compare to <vendor A> in the area of <something specific>. Would you be able to curate a few pieces of document for me to read through so I can understand?
Thanks,
ShawThe goal here isn’t to lead the sales folks at the competitor on a wild goose chase so I’m candid upfront. Next, I focus upon a specific area/feature that I care about. Then, I ask sales to educate me. A good sales people will know their products and how to highlight their strengths. You can then use this information during your next meeting with your vendor’s CSM to explore the conversation deeper.
Managing relationships with vendors isn’t usually in the scope of most PM job responsibilities, but if you do a bit of prep work and a reminder email, you’ll be ahead of basically everyone else.