How to Plan for a Vendor Change

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Your Best Customer Just Said Goodbye – Now What?

You just received that dreaded phone call. That one key customer you built your business on just confirmed what you feared…they no longer are going to buy from your company. They are being purchased, and the new owner has a long-term relationship with your competitor; or they are now performing your service internally – the reason why doesn’t really matter – now what?

Don’t Panic – Take A Breath

Change is inevitable. That is why you plan, have a sales strategy, and execute. A vendor change seldom happens overnight, and now is not the time to pay less attention to this key customer. In fact, the opposite is true. It is time to double down. I recommend you do the following:

Increase Personal Communication. It is time to increase communication at every level of your organization, not just Sales. (Yes, this seems like a waste of resources and time, but if you follow these tactics you will be able to “make some lemonade out of this lemon.”) Let your client know that you understand the situation and want to make sure the transition goes smoothly for them, the new organization, and for your company. Ask for introductions to people in the new organization so they can be included in future discussions.

Deepen Relationships. Remember that the relationships you have are important. Like you, your client is also in flux, and they also have to deal with this change. Put your feet into their shoes, show empathy, and realize that it is not just about you or your company. The stronger you can make these relationships the better you will be able to deal with the current situation, as well as the future.

Provide Excellent Customer Service. Now is the time to do everything possible, perfectly! It is sad, but many companies don’t commit as much time to supporting a departing client since they think it is inevitable that they will lose the business. This may be true, but remember – the situation that caused your client to leave you might not happen, or it will run its course and they will be shopping for a replacement again. Your client will remember how you handled the transition.

Develop a Transition Plan

The more involved you become with the new and old contacts, the better chance you have to continue the relationship or at least have control of how the transition will progress.

  • Merger & Acquisitions (M&As) always take longer than expected, and some even fizzle out before they are ever completed. You will be the supplier until the deal is done, so be prepared to make it easy on them and your company.
  • Vendor change even after M&A, (especially to an internal resource), can take a long time and is often a bumpy road. So even after the deal is done, you can be a supplier for quite a while if you communicate well and work out a plan with all parties involved.
  • Production forecasts now become critical and they are probably more in flux than ever before. Rather than forecasting a year or quarter in advance, you may need to have a more gradual month-by-month forecast conversation.
  • Monitor your inventory and try to formalize a contract for any excess if the switchover happens sooner then expected. If you are open and honest, they will understand that you now have to watch this closely. Remember, they want a smooth transition even more than you do.

Moving Forward

If you have done well with communication, internal planning, customer service, and transition planning, you have favorably positioned your company. Now it is time to look for new opportunities:

2nd Source Option – Many companies forget to even discuss this option during and after a Yes, it can be heartbreaking to go from 100% of the business to just 20%, but 20% is better than 0%. Someday, their internal capability may be out of capacity or your competitor may fail, and if you have handled the transition well, you will be in position to move from a 20% position to 100% almost overnight. The key to this possible opportunity is maintaining communication and strong customer service.

Relationship Movers – Not everyone is going to survive this merger. Some of your contacts may be let go or will decide to move to greener pastures. Hopefully you have strengthened these relationships and have put yourself in a position to be able to help them by providing LinkedIn references, referrals, or forwarding their resumes to potential employers. When they land at a new company, they will definitely think of you and your company’s willingness to help them.

Other Products/Services – This is a great time to ask what other products or services your company can offer to the “new” company. It may require development or thinking “outside the box,” but it can open fantastic opportunities never before considered. (Note: I know of one company that did this and ended up growing a new product line greater than their original product that was lost to a merger).

Filling That Hole

Chances are, even if you do everything discussed above; you will still need to fill a pretty big hole in your forecast and budget. To understand how to do this effectively, look for my future post on this issue.

The Bottom Line:

Sometimes change happens no matter how well you have performed. It is best to be prepared and have a plan ready to call to action. You may not be able to save all the business, but you can minimize the loss, smooth the transition, and capitalize on potential opportunities if you don’t panic and implement some of the strategies listed above.