Client References… 👍 Useful or Useless 👎 ?
I saw a post recently saying that there's growing trend that clients are no longer largely / solely selecting solutions on price. Now...
I've been helping large and small clients, probably on "hundreds of occasions", with defining Business IT solutions Requirements, undertaking RFP's, selecting suppliers, negotiating contracts / SLA's and delivering these sorts of solutions for c30 years and in all that time I can honestly say that I have never "seen" a client largely / solely buy a solution based on price. Maybe I've just been lucky or maybe just had "sensible" clients to deal with or maybe they just say they aren't buying on price! 😁.
Honestly though, "Price" (and certainly on more formalised processes such as "selected supplier proposal invitations or RFP processes) is usually anywhere between 20% and 60% and often 30 - 40%.
Generalising a bit…the other main factors are "functional / non functional requirements fit" (often 40%-60%) and "supplier references / fit" (often 10% - 20%).
Suppliers can "evidence" (i.e. demonstrate) their requirements fit…so that's fine (providing you know what you're doing) . It did however make me think (again) about the "value of client references" and hence how any client actually can score that 10-20% with some degree of confidence?
I'm not saying that prospective clients can't get some insight or comfort from an hour's call from an existing client but...
Do suppliers ever knowingly put forward anything other than "good clients" to talk with?
Are there better ways for Clients to gain evidence of a suppliers long term effectiveness?
How would you go about gaining "evidence" of how that supplier is going to perform…for YOU!
One way would be to knowingly procure something smaller to begin with and see how well they deliver, not just for the project but also to experience the on-going service once it's live. OK so time may not be your friend here but for some it's an option.
Another way is to incentivise your supplier over the longer term with SLA's that actually have "teeth". i.e. failure is not just a token £ amount), or as a "left field" suggestion, I wonder whether any client has "insisted" that they perform a reference lists for a prospective client say once every year?
Another way is to join / form a "club" of your industry peers and ensure you regularly attend and help to proactively drive the groups value add agenda's. Word gets around, lets be honest!
I've experienced all of these and they all work.
This is perhaps because they all share a common success factor… BUILDING RELATIONSHIPS.
But that of course requires effort...
So are client references useful or useless?
Our answer is…"They are part of the mix" and "there are other related ways of getting evidence and comfort"… but the thing that really matters is "YOUR RELATIONSHIP with your supplier.
And frankly…that requires you the client to work at it…not just the supplier.