- Start with an overview of key players in their field: Who owns them? How long have they been in business? Where do they seem to rank vs. other players in terms of market share?
- For smaller players, be sure to pull a D&B report, which may surprise you big-time – and quickly shorten your list.
- For large and important assignments – and especially those that involve big financial and/or reputational risk (see our list below) run a five-year search of legal actions involving them - and the outcomes: Often another major shocker.
- Where financial and reputational risks are high, ask to see the audit reports. Expect some big surprises here too – where (big red flag) sometimes you’re told there are none.
- Where potential losses due to errors, omissions and/or fraudulent conveyance of corporate and security-holder funds are big ones, be sure to check the financial condition of potential suppliers and their ability to make good – whether by absorbing losses due to their own errors or via insurance coverage that will be sufficient to cover them.
- Check client references with care: Do not rely solely on the contacts presented by the supplier. Concentrate on companies that are like your own - in terms of size, product usage - and with reputations as ‘high-quality companies.’
- Reach out to your counterparts at those companies and be sure to ask for the name of the person who is most likely to know the real answers. We are often surprised by sharp differences between references from the sources provided and what we ourselves know about actual performance - perhaps because no one likes to admit they don’t really know, or because they simply assume that “no news is good news.” And we are constantly amazed at the number of companies that provide references that turn out to be lukewarm - or bad ones!
- Do not be overly influenced by outside surveys: Most of them are based on client perceptions – which smooth sales-folks and client reps are usually good at managing - but which are often very different than the reality where actual performance is concerned. At best, they have “directional validity” but little statistical validity, and they are often overweighted with companies that are not at all like yours.
- For assignments that are truly important in terms of size and relative riskiness, be sure to tour the main offices of all the finalists: Meet the top management team – and all the key people who will be assigned to your account – and be sure to ‘walk the floor’ while carefully observing the culture and the chemistry. (Another major shocker in the course of our own long careers has been the number of occasions where the “chemistry” between managers and workers was visibly bad! This too seems to be getting worse of late, rather than better.)
- Be sure to inquire about services that your supplier may be outsourcing to third-party providers. Be sure that they are good ones - AND that there are written agreements covering data-security and data privacy wherever YOUR provider shares your data with third-parties.
- For large and important assignments consider engaging an expert consultant to help you draft and review the RFP, check all the numbers, attend the tour with you, summarize the key findings, review the contract with care (especially the indemnification clauses) and contribute to the final negotiations. As George Bernard Shaw famously observed, “all professions are conspiracies against the laity” – which seems truer than ever in this day and age. A truly expert consultant will typically earn their fee twice over in the final round – and often by much more.
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