When evaluating vendors , are you comparing VALUE or PRICE ? by Moquey Marquross
Boards evaluating bids for projects and ongoing services have the very difficult challenge of deciding which vendor will provide the best value for their community . As many people have learned in recent years , the best value is not necessarily the lowest price . This can be illustrated by the sub-standard workmanship and materials that have plagued so many HOAs built in the mid-2000 ’ s which have been through , or are currently in construction defect litigation to correct these issues .
The toughest part is evaluating multiple proposals , which is often like comparing an avocado to a pear ; both fruits are green and have a similar shape , but other than that they have little in common .
As a business owner / manager , we face these same challenges when we select products , vendors and services . It is fairly easy when purchasing a car , or a piece of office equipment ; you decide on the one you want and then go ‘ price shopping ’. It gets much more difficult , however ; when there is a service component included in the offering . After all , how do you compare ‘ service ’ when all you have to compare is the marketing propaganda and a proposal written by the company themselves ? Here are a few measures that can help you select the best vendor for your needs :
1 ) Evaluate your entire experience with the prospective vendor from the very first interaction through to the proposal submission phase , along with the materials , reply times , answers to your questions , etcetera . This is the ‘ courtship ’ phase of your business relationship and can predict how the ongoing relationship will be . We have found that having to ‘ chase ’ vendors through multiple requests , calls and e-mails , just to get a response or proposal - does not get better after the contract is signed .
2 ) Create a short-list . If you have more than three proposals , do yourself a favor and get rid of all but the best three before you start the next phase of evaluation . This will save you time , allowing you to focus on comparing the top three and selecting the best one .
3 ) Ask each company for references , but pick something to ask for that will get you a random sample of clients , not just their best and happiest ones . Some examples are the two newest and oldest clients , the nearest clients , the biggest clients , or whatever is most similar to you . As an HOA , I would also recommend asking for both a Board Member and a Manager reference for each client .
4 ) Before calling the references , make a list and ask each reference the same exact questions . This will help eliminate the ‘ personality factor ’, where the facts might be positive or negative , but you do or don ’ t get along with the reference , which skews your ability to properly assess the prospective vendor . Remember , it is the prospective vendor you are evaluating , not the reference . It is also important to remember that these people are speaking to you on their own time , so be respectful of them and keep the discussion short and to the point . Some great questions are things like :
A ) Why did you select this company ?
B ) Who were you with before and why did you leave them ?
C ) What has your experience been with _________ ( customer service , timeliness , billing , quality , and etcetera )?
D ) What are the best and worst aspects of the vendor ? E ) Will you continue to use them again ?
5 ) Just like with the references , you should compile a list of questions for the vendors to answer . The best questions we have found are ones that relate to metrics , because they cannot be easily sugar coated . These are things like :
A ) What portion of your business is in the HOA sector ?
B ) How much of your business is local ( city , county , state ) to us ?
C ) What is your client retention rate ( ongoing services ) or repeat customer rate ( one-time contracts )? This tells you a lot about the quality of the company .
D ) Can I have the owner ’ s ( or top level manager ’ s ) cell phone number ? If you can get this , you are pretty well assured of getting good service , even without ever calling them . Owners of companies who do not offer great service will never give out their number . They do not want those calls .
E ) What is your pricing structure ? The answer should be : ‘ itemized , based on costs plus a margin ’. Anything else should be viewed with skepticism , since there is essentially no other way to accurately price a service .
F ) How often have you raised rates within the past five years , and by how much ? This is an especially important question for repeat or ongoing services .
Happy Shopping !
Contributed by Moquey Marquross , Managing Member MeterNet Sub-Metering & Billing Solutions 800-985-1179 • sales @ meternetusa . com
Summer 2017 | Issue # 18 | The HOA Board Quarterly | 9