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A Five-Step Vendor Selection Process


  • A Five-Step Vendor Selection Process

You’ve gotten approval to outsource customer service.

You’ve gotten buy-in from all key stakeholders.

You’ve developed a budget for the project.

You’ve selected a manager to oversee the effort.

The only thing left is choosing a service provider.

Make no mistake. This is a critical decision.

Selecting the right provider minimizes costs, increases customer satisfaction, and improves competitiveness.  It also boosts business growth and puts a feather in your cap career-wise if all goes well.

And it will—but only if you find the right provider.

Selecting A Provider

Selecting a service provider for your project can be complicated, emotional, and time-consuming. It can also be a challenge.

But it doesn’t have to be.

Following a well-established methodology, like the one we’ve outlined below, streamlines and simplifies the selection process.

Step 1: Evaluate Needs

Start by defining your needs from both a technical and business standpoint. You should also define service provider requirements and compatibility requirements, as well as the project’s goals and objectives.  Write everything down.

Next, share this document with your team. Have it analyze and comment on the document and be open to feedback. Then revise and finalize it.

Action Point: Create a scorecard with your requirements on it that can help you evaluate providers. Send it to other members of your team for comments. Be open to feedback.

Step 2: Conduct A Vendor Search

Use the Internet to compile a list of possible providers with experience in your industry.  You can also ask friends and colleagues for recommendations. Then create a preliminary list of providers the team wants to approach for more information.

Next, create a request for information (RFI) proposal. Make sure it spells out your business requirements and project duration. And ask about one time and recurring costs and the provider’s differentiator. Evaluate the providers’ responses and compile a short list of five or six companies.

Step 3: Develop An RFP

Create a request for proposal (RFP) and send it to your short-listed providers. Your RPF needs to outline the engagement requirements and have enough information so that the provider can prepare a bid.

A good RFP includes one section that states what you’re seeking and asks the provider for its profile, methodology, and typical strategies. It should also ask for employee information, project costs, the provider’s quality certifications, and references.

Step 4: Create A Short List

Review the RFPs and follow up. Good follow-up will support or negate the information supplied in the RFP. Make sure you follow up on the references provided.

Pay attention also to things like project management competency, level of success achieved, the quality and standards of work delivered, adherence to contract terms, and the communications process. Review the cost structure as well.

Step 5: Select The Provider

Narrow the short list down to three providers and interview them. Use the scorecard you developed above during the interviews and the checklist below to pinpoint your selection:

  • Review all proposals
  • Record business/vendor requirements
  • Assign an importance value to each requirement
  • Assign a performance value for each requirement
  • Assign importance/performance values for compatibility factors
  • Determine the total score
  • Select your provider

Having chosen your provider, you now need to negotiate the contract. Keep in mind that the smallest mistake can ruin an otherwise productive contract negotiation session.

Selecting the right provider for your project is imperative. So don’t rush the process. Sometimes this means months of work. But that’s okay as long as you get it right.

Following the methodology we describe above will keep you organized throughout the process and help you choose the right provider.

Remember, it’s not just customer service that we’re talking about here.

It’s your business.

Let us put our proven experience in providing tech support for small and medium size companies to work for you. Request a quote from our sales team