Managing a property often requires working with a variety of local vendors – from commercial plumbers and electricians, to pest control services, to cleaning services.
There are two common mistakes in vendor selection, however:
- Going with the cheapest options.
- Not sticking with vendors long term.
“Let’s go with the lowest bidder.”
Contrary to what many people might think, the lowest-priced option isn’t always the lowest-cost option. We all know the “you get what you pay for” adage, and there is ample truth to it.
Sure, we all want the biggest bang for our buck. However, the goal really should be to get the biggest value for our buck, and this doesn’t necessarily mean the lowest price.
Lowest price can mean the company pays their people a lower-than-market rate. Often, that means that they are only hiring people with less-than-adequate skills. Or maybe the company owners don’t invest in efficient equipment. For example, upright vacuums are typically lower priced than backpack vacuums, but they are far less efficient and effective.
More often than not, vendors who lead with low pricing are looking at your business “transactionally” – meaning you’re merely a price tag to them. But can you blame them? Many of their prospects are only looking for low price (although wishfully hoping for high value). Therefore, one could say those vendors are only giving those customers what they want.
Often, lowest bidders come in with ultra-low pricing to get their foot in the door. They figure they’ll improve their profit margin with added project services once they’re in – or worse, they’ll gradually creep up their pricing. Or worst, they’ll cut corners: speeding through their tasks, disregarding quality, or even “no showing” on their visits.
Of course, if you have work that needs to be re-done and you need to hire another company to pick up the slack, then your costs have doubled!
“It’s a headache finding new vendors.”
Constantly switching vendors prevents you from reaping some key benefits of having a loyal, longstanding partnership with one vendor.
By far, one of the best advantages of working with the same vendors is that they will learn your property, its needs, and your priorities.
The effort it takes to bring a new team up to speed on your property could end up costing you more money, time, and resources that might’ve been saved by working with your existing partner.
When you find a vendor that you like, it’s to your great benefit to build a relationship with them. Your vendor will be able to establish routines and handle their services much more efficiently. There is a symbiotic nature to working with vendors where it is both beneficial for the vendor and the property manager when the vendor has familiarity and experience in your building.
This frees up time for you and your team to focus on responding to tenants and higher level priorities, while the vendors can simply get their work done. Additionally, vendors will learn your priorities and can use that information to tailor their approach.
Electricians, plumbers, cleaners, and other service providers love having customers who they know are in the relationship for the long-haul. It’s expensive to acquire customers, so there is a high value in sensing that a client will likely stay a client for a while. Where a single, one-time job can generate revenue, long-term clients are worth their weight in gold to property vendors. It means residual income, and that’s something worth protecting! Therefore, some vendors will have a sincere interest in looking out for their long-term clients. They’ll want to protect their client’s reputation.
Finding new solutions, working harder, and helping with special projects are all different things vested service providers will do to keep their long-term clients happy. On the flip-side, cheap, transactional vendors will likely not be nearly as committed and creative, and this might be reflected in their work.
True vendor partners are there for you when you need them, and they will provide consistent quality for years. If you suddenly need a service, you are much more likely to get a quick response from a vendor you have a relationship with than with a company who you only call for “short money” opportunities. Or maybe they have insufficient infrastructure, and the owner/operator is being pulled in too many directions to respond to messages promptly. This can be invaluable for sudden issues with plumbing, electrical wiring, roofing, or needing to quickly clean and disinfect spaces in your building. When you need them, you need them, right?
When to Cut Ties with a Vendor
Although the benefits of a long-term relationship with your vendors can be significant, that certainly doesn’t mean you should never terminate a contract. If your tenants are complaining about services, or you hear the same complaints over and over, or your vendors are just not showing up when you need them, then maybe it’s time to look for a new vendor for your property.
Sure, every company makes mistakes, however, many people seem to agree that it’s how the mistakes get resolved (and corrected from reoccurring) that sets a service provider apart. If they respond and resolve the problem quickly, then that’s probably a vendor worth sticking with. On the other hand, if you can’t get them to return your calls, texts, and emails – or they just don’t correct their mistakes – then it might truly be time to cut the cord. Consistent problems should not be overlooked at the risk of your property’s reputation – and your own!
