Ways credit unions and community banks are wasting money
Credit unions and community banks unintentionally waste millions of dollars every year. The easiest, fastest way to stop wasting your money is your vendor management program.
As a part of this series, Maple Street’s pros explore ways your institution could be wasting money and what you can do to fix the problem.
Wasting money mistake #101: Do It Yourself negotiations
Would you pull your own teeth? Then why negotiate your own contracts?
Vendors love DIY contract negotiations. Some vendors told us they have two price lists, one for DIY negotiators and one for consultants. Just as other professions require highly-skilled experts, professional negotiators have the necessary skills to get you the results you want. Vendors know you don’t. They know…
- You’re flying blind without having up-to-date information on the best competitive prices
- You don’t have the time to use persistence and competitive pressure to work vendors to get the best deal
- You probably won’t actually change vendors if they don’t get you the best price
- You’re only guessing you got a good deal and can’t tell when you didn’t
At Maple Street, we’ve seen example after example of credit unions and community banks that thought they were very successful in negotiating a contract, only to learn they left millions of dollars on the table.
In fact, we recently saw a multibillion-dollar institution sign an agreement for a branding contract with a card-branding vendor. They were very proud of themselves for getting a total compensation package of $600,000 and free passes to the vendor’s annual conference. However, when compared what they were paid to our price information, they should have received a minimum of $5,000,000. Yep, they left $4,400,000 on the table. And these were “seasoned” negotiators.
How to fix this money-wasting mistake
If you bought a car in the 1960s, you would go to the dealership and start negotiations from the manufacturer’s suggested retail price. You would pick a starting number then haggle, getting to a price and declaring success. You never knew if you really got the best deal or not – and you probably didn’t.
When you negotiate with a vendor, there are three ways to try to get the best price:
- Start from the price the vendor provides (the msrp) and be persistent
- Do RFPs and work the vendors and be persistent
- Hire someone who knows exactly what is the best price possible and how to get it
The solution to this money-wasting mistake is simple – leave negotiations to the pros! When you chose Maple Street’s professional negotiators, you’ll avoid DIY disasters. Our team does negotiations every day, all day and are armed with the latest price information and stats in the industry. We have the experience and knowledge to ensure you’ll never leave money on the table.
Plus, once the deal is over, our job isn’t done. We continue to track vendor performance and ensure they uphold their end of the contract.
Maple Street’s Vendor Advantage System®
Another tool in our negotiators’ box is the revolutionary Vendor Advantage System®. This system is a
proven advantage in vendor negotiations that ensures you get the contract you need at a price that’s fair. Not only does it reduce expenses manage risks, it improves vendor performance, so you’ll get exactly what you paid for.
To date, we have saved our clients over $132 million. If you’d like to stop wasting money by saving big in negotiations, give us a call at 800-513-6839 or email mssales@maplestreetinc.com. Visit www.maplestreet.com/learn to learn more.