360° Vendor Management

Managing Client and Vendor Satisfaction in Outsourcing Relationships

Outsourcing relationships sour for a wide variety of reasons, but satisfaction, if properly measured, is probably a key leading indicator that executives everywhere should track as a signal of problems to come. Satisfaction is a concept that has been discussed by academics for decades and there are no shortage of publicly available studies. The most importance concept for everyone to know is that satisfaction is created when reality exceeds expectations. If reality equals expectations, satisfaction can be maintained - particularly if this occurs over a long period of time. However, meeting expectations simply isn’t anyone’s goal any more. Think about your own annual review. Does meeting expectations make you an all-star? We doubt it.Today’s blog entry attempts to explain its role in governing outsourcing relationships.Every outsourcing executive should rigorously track satisfaction. If you’re a vendor manager, you should measure your company’s satisfaction with the vendor’s performance - even if that includes departments to which you don’t belong. If you’re a vendor account manager, you should measure your client’s satisfaction with your company. We’d argue that effective vendor managers track BOTH aspects.Measures of satisfaction with vendors should include:

1. Overall Satisfaction with Vendor
2. Satisfaction with Vendor Account Management Team’s Performance of Day-to-Day Activities
3. Satisfaction with Vendor’s Operations Unit’s Performance of Day-to-Day Activities
4. Satisfaction with Vendor’s Hiring Program
5. Satisfaction with Vendor’s Training Program
6. Satisfaction with Vendor’s Reporting
7. Satisfaction with Vendor’s Quality Management Program
8. Satisfaction with Vendor’s Reporting Process
9. Satisfaction with Vendor’s Value Add Contributions (e.g., strategic insight, process improvement, proactive improvements)
10. Satisfaction with Vendor’s Invoices
11. Satisfaction with Vendor Technology

Measures of satisfaction with clients should include:

1. Overall Satisfaction with Client
2. Satisfaction with Client’s Vendor Management Team’s Performance of Day-to-Day Responsibilities
3. Satisfaction with Client’s Operations Unit’s Performance of Day-to-Day Responsibilities
4. Satisfaction with Client’s Communication of Changes and New Training Requirements
5. Satisfaction with Client’s Quality Management Team Performance
6. Satisfaction with Client’s Reporting Process
7. Satisfaction with Client’s Value Add Contributions
8. Satisfaction with Client’s Invoice Payment Process
9. Satisfaction with Client’s Technology

We’d suggest quarterly surveys that use the Likert style questions on a five point scale (1 = very dissatisfied, 3 = neither dissatisfied or satisfied, and 5 = very satisfied). Allow respondents to use a “N/A” category if they have insufficient ability to score the survey question, but also give them a “comments” area under each question to gather insight. Ask as few questions as possible - maybe one question per category, sometimes two. Keeping it simple and short encourages people to respond. With the availability of so many online survey tools, you can quickly generate surveys and collect reports.We believe that surveys should be anonymous, but feel free to collect sufficient demographic data (department, title, role) to understand the audience. Resist the desire to tinker with the survey each quarter. Instead, use the same survey in order for you to detect shifts in opinions. Review the results with both the clients and vendors in your quarterly review meetings. In a high performing relationship, 80% of respondents will score overall satisfaction as either a 4 or 5. Anything less is a sign of potential problems.Should satisfaction be a contractual service level? We’d say no because the measure is too flimsy. Instead, satisfaction should be a key measure the great executives track rigorously.

This entry was posted on Wednesday, March 21st, 2007 at 8:10 am and is filed under Outsourcing Vendor Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.