Vendor relations are important in every industry. Effective relations lead to competitive pricing, customer loyalty, business growth, sustainability, and profitability. The HVAC industry, or similar home services companies, are no different. Heating and air conditioning equipment requires a major investment, particularly in the case of home owners who need to replace aging furnaces and air conditioners, or who want to upgrade to more energy-efficient technologies like geothermal or heat pumps.
According to the article “Vendor Management Success Tips,” many contractors make the mistake of thinking that vendor relations is all about price. While it goes without saying that you want to get the lowest possible price on the products you need to outsource, it certainly is not the only factor you should consider. Ideally, you should be positioning your vendor relationships so that both parties can establish mutually beneficial partnerships over the long term.
In any business, building relationships is key to success. You must not only build a strong rapport with your vendors, but should employ tactics to get the most out of relationships with your vendors. Business owners should focus on the nuts and bolts of building positive and successful vendor relationships. One way to do this is by communicating in an open way in order to help your vendor partners fully understand what you need from them. If possible, employ staff to build relationships with your vendors, instead of doing it yourself. This will free you up to work on the aspects of your business that others do not have the expertise to do.
There is more you can do to improve vendor relations. Inc.com’s article “Tips on Maintaining Good Vendor Relationships” provides an explanation of the strategies we have mentioned along with some new ones that we believe will help your HVAC business become more successful and profitable:
- Communicate. You should never assume that your vendor partners have an innate understanding of your specific needs or the unique nature of your business. It’s important to communicate this at the outset, and maintain open lines of communication at all times. Encourage frank and open dialogue with your vendors.
- Delegate. You should determine who in your company is the right person for the job. This will relieve a great deal of stress on your part. It is a common error that one person tries to do the job of many which leaves you with too many responsibilities and the lack of time in a day to do it. It would be wise to allow others in your company, like your account executives or a manager, to take on the time consuming, but highly important task of building vendor relationships.
- Formalize agreements. Written contracts are vital to business relationships as they are agreements that outline the expectations of each party, as well as provide the guidelines of how to deal with certain situations if problems arise. Any agreements regarding pricing and deliverables should be put in a written contract. Never assume that a handshake agreement is good enough; when it comes to vendor relations, you want to avoid surprises so that you can provide your customers with cost consistency.
- Track your progress. It’s also a good idea to request detailed progress reports from your vendor partners on a regular basis. This can provide helpful insight into the efficiency of your day-to-day operations. In working with vendor partners, you should periodically evaluate the progress of the work at hand. You should track the past, present and planned work of your partners. Once you begin working with them, you should evaluate their knowledge regarding your business and see if they have the expertise necessary to be effective.
- Be loyal. Above all, be loyal to your vendors. In return, they can provide you with preferential treatment, which allows you to offer value-added service to your customers. It is important in any long term relationship to prove your trust and loyalty to one another. If you stick with a particular vendor, you should always be honest about your needs and how valuable they are to your business. Over time, you will have learned how to work with them and how they assist in bringing in revenue for your company. By sticking with them, they will be grateful and in turn, trust and loyalty will be built.
Have you followed these guidelines and best practices? Do you think your relationships with your vendors are as good as they could be? If there’s room for improvement, now is the time to start thinking about what to do when the time comes to negotiate a new contract with a new or existing vendor partner.