Three Signs Vendor Loyalty is Hurting Your Business
What type of person are you?
You hear all the time “there are two types of people in this world..” which is then usually follow by a statement describing polar opposites that are funny or witty. While not quite as humorous, I’ve found the mortgage industry is comprised of people who want to innovate and others who are happy with the status quo. The latter who are content have a few reasons for being so, but one that I’ve seen over the years that can be damaging is vendor loyalty.
Now, in business vendor loyalty is very important, however, it is also a two-way street. If you are putting your faith (and money) into a vendor, they should be doing the same for you. This one-sided relationship may not be something you can notice right away, but is a gradual change that you only notice when jobs have suddenly become harder to complete and your ability to grow is almost painful. Once you do notice these signs, though, you should fix it as soon as possible.
Are you Loyal or Comfortable?
Before we get into the loyalty, ask yourself this: are you loyal or just comfortable? Sometimes we can confuse comfort for vendor loyalty because we just don’t want to change. When talking about your accounting software, it may be the upfront cost, any potential dangers and issues, or the general unknown that keeps you from changing. The idea of something new is more troubling than dealing with what you already know works, even if it works poorly. This is especially true when it can impact the very core of your business. More times than not, this “comfort-zone” syndrome can cause us to stay with a vendor or partner that may not be the best, but is enough and we often convince ourselves that it’s out of loyalty and not fear.
The Smartphone Paradigm
The first sign of loyalty harm is vendor complacency, which begins when a vendor believes they own their market. Why upgrade and innovate when current customers don’t move and new customers continue to come in? As a result of this ownership, the vendor puts upgrades on the back burner, deciding not to innovate and upgrade because there is no other competition. When a vendor has this attitude, they lose sight of what is most important - the customer. Take Blackberry for instance. There was little competition for so long that when the smartphone came out, they made no move to counter it. And why would they? They owned the market. In addition, many users were so dedicated to the Blackberry brand that those who refused to switch until the bitter end found that they couldn’t keep up with their peers. The smartphone was faster, easier to use, and all around, a better device. So, take a look at your peers, your employees, and your systems and ask yourself, “is my vendor still innovating to meet my needs or have I been stuck with the same old thing I used to call technology?”
The next sign that you’re loyalty is hurting you comes from one of, if not the most, important aspect of your business: your employees. Listen to the feedback you are getting from your employees about your software. Is it good? Bad? Or are you not getting any at all? If it’s good, great! If it’s not, you should already be taking the steps to fix it. Whether that’s finding where the problem lies (with the users or the system) or beginning the search for a new solution, you’ve at least started the process. If you haven’t, that’s a different story. Not listening to your employees shows them that you are more concerned with your relationship with your vendor than you are with their job being efficient. For example, if you want the month end process finished within 10 days and you’re accounting department is getting it done at the last minute every time, it’s probably not your team that’s the problem. And if you’re not getting any feedback at all, you need to find out why. Maybe things are good and they don’t feel the need to tell you. However, there’s also a good possibility that things are not and they are just tired of telling you, only to have you not listen.
Is that work necessary or a necessary evil?
The third sign, also from your employees, relies less on what they say and more on what they do. Do you know how many processes your employees do manually? It should be as few as possible. It’s 2019 and many processes can be automated to a large extent, so chances are if yours are not, you’re paying for salaries that are not needed or could be used more effectively. Usually these manual task are completed in in tools which require significant human interaction such as Excel, which not only slows down the work, but also creates significant risk of human error. Inefficient processes that lead to superfluous staff and require extra tools are just some of the many things that are costing your business for your loyalty to the vendor.
Coming to terms with the fact that your vendor is no longer keeping your best interests in mind is difficult, but necessary to continue to grow. If you are beginning to question this, look for these signs and ask yourself if it’s worth it to your business to continue to support a company that doesn’t support you.
About the Author
Martin Kerr is co-founder and President of Bestborn Business Solutions, creators of the mortgage accounting solution Loan Vision. Kerr has overseen the rapid growth of the organization into the fastest growing accounting software vendor to the independent mortgage industry. He can be reached at firstname.lastname@example.org.
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