Last week Andrew shared access to the LSP Health Meter. And since then, we have received consistent feedback from those who used it:
Having access to the right vendors is the #1 challenge to grow and run their business profitably.
These are familiar sentiments from LSPs that tried our Health meter:
“We get beaten by lower cost competitors. How can we stay competitive? We have not increased rates in years.”
“Our profit margins are dwindling. We need to find more cost-effective vendor solutions.”
“Clients are pressuring us for better quality and service. But how can we do that without jeopardizing our net income?”
“We cannot really pay our vendors on time, because clients pay us late.”
Having managed vendors for over 16 years, I know that facing these challenges can be overwhelming, frustrating and disheartening. They can drag you right into the mental abyss from loving what you do to questioning everything.
But the good news is that there are solutions. As Marie Forleo says “everything is figuroutable”. So, here are 5 proven strategies that produce results.
Reverse engineer your buy-rates
Many companies determine their billing rates to clients based on how much vendors charge them for their services. Successful vendor management reverses the process. It begins with the market conditions and what pricing to your clients will keep you competitive and attractive. From there you can determine the price for services that you want to buy based on your business model. Most localization companies are striving for a 50% direct margin. You may be in good shape with less, you may need more. Every business model is somewhat unique. Find out here how your business model is working out for you and then determine which changes you will need to make to your vendor pricing: https://lawless.guide/check-your-financial-health
Scope the market
In business as in life: The world is full of great people, but only a few are a match for you. Many outstanding vendors are busy with other projects the very moment you need them. Others are available, but you may not fit their profile of an ideal client. The art is to find the ones that are a good match and are available. It’s a matter of pro-active outreach, messaging and looking in the right places. You will also need to have a way for potential vendors to learn more about your company and your vendor management practice. Have a web page that shows them how they will work with you. It’s a process. Some vendors may not be available the very moment you are reaching out to them, but they may come back to your website when they are.
Define your vetting process
Many evaluation processes rely too much on test translations and formal requirements. To be sure, education and professional backgrounds are important. So is a verification that a vendor understands the basics of their profession. Equally important, though, is to determine the potential of a vendor relationship. How well will you work together, especially under time pressure and in times of crisis. How consistently will the vendor deliver? How compatible are they with your culture and your clients’ culture? Build a vetting process that gives you answers before you onboard a new vendor. You do not want to find out the hard way – and upset your clients.
Pay on time
The best resources for localization and translation services are in high demand, so they naturally gravitate to those buyers that are most reliable and rewarding to work with. It’s just as much about transparency and the quality of the business relationship as it is about negotiated rates. Measuring the quality of a relationship is not as straight forward as negotiating pricing, but some aspects can be clearly assessed: Are you paying on time? Are you paying fast enough? How much do you delay vendor payments to manage cashflow? If you do not have the answers to those questions, here is a useful tool that gives you clarity: https://lawless.guide/check-your-financial-health
Work hard, be nice!
As we like to say here in Team Lawless, “Work hard, be nice!” People of all backgrounds and cultures appreciate hard work and great attitude. Vendors will go out of their way to help a Project Manager who always treats them with courtesy and respect, and who gets into the trenches with them in difficult times. They are also more likely to invest in relationships with LSPs that collaborate with them on tools, training, process improvements, and who openly share their own success stories.
I would love to learn more about your vendor management practice and in which areas you may need help. Leave me comment below.