Put your vendors on a PIP
Looking to cut software this year? It’s time to start treating your vendors like struggling employees
Hey, Toni from Growblocks here! Welcome to another Revenue Letter!
This weekly email is my way to share knowledge and build a community of people who love to learn more about growing revenue in a data-driven and scientific way.
Anything in particular you want to hear my thoughts on? Drop me an email, and I might use it in my next article.
Chances are you’re already looking at your bottom 20% of software licenses and thinking of moving on.
I mean, it just makes sense right?
I just recently talked to a 100m business that cut away their sales cadence tools, their call recording tool, and the scheduling tool. Yes.
What is clear is, we’re not buying software anymore like it’s 2021. So the next step is that we’re starting to question if what’s in our tech stack is actually worth it.
Especially with CFOs pressuring to cut software between 10-30%
And chances are, even without your list, you probably have a vendor or two in mind that you’ve already said goodbye to in your head.
But before you break up with them, why not treat your vendor like a struggling employee?
Put them on a PIP
You wouldn’t just drop a struggling employee, right?
No, your first instinct should be to work with them.
Help them figure out where they’re struggling, and what you need from them, and eventually, you would create a Performance Improvement Plan (PIP) for them to improve.
You should treat vendors the same way.
Let them know that they're in the bottom 20% of your tech stack.
Tell them why they’re in that position.
And explain that you need them to improve X, Y and Z.
Otherwise, it’s just not going to work out.
And importantly, don’t just let them know close to the cancellation date.
There’s only so much a CSM can do with only a month left on your contract.
Give them enough time actually to improve things that need to be improved.
And I want to stress, this is not just a discount play (though depending on the situation it may not hurt).
This is an opportunity for your vendor to step up and get them back to the level of when you first signed.
Back to better times
The reason I like to approach vendor relationships like this is because there was a time when you thought you couldn’t live without them.
They understood your problem and had an ideal solution to fix it.
But something changed along the way.
Maybe there was a change in your organization and the problem they solved isn’t a priority anymore.
Or after the onboarding honeymoon period, the team had little incentive to use it regularly.
But by giving them a PIP, you’re giving them the opportunity to improve things that need to be improved.
And just like an underperforming employee.
If they hit those 3 asks, you’re not going to fire them.
So you give your vendor a fighting chance to get out of the bottom 20%.