Vendor Neutrality: Why Is It important?
While at the 2019 California Staffing Professionals conference, I had the great pleasure of speaking with David Searns, CEO at Haley Marketing. Haley Marketing serves a number of our mutual clients and is a frequent contributor to our blog. David and his organization partner with many other ATS providers and take a “vendor-neutral” approach to recommend recruitment business solutions. We talked about why vendor neutrality is important for staffing agencies when vetting a service provider or contemplating an important purchase.
Sylvia: David, some people may not be familiar with the term “vendor neutrality.” Can you briefly define it?
David: Absolutely! As the name implies, vendor neutrality means that an organization or an individual that is making a referral is not predisposed to referring a specific organization.
For example, in the staffing industry, some large staffing companies offer MSP services, so as an MSP, they are likely to recommend their own organization first to fill the client’s staffing requirements… or maybe give their own company an extra day or a few hours lead time on the job orders.
Ideally, a neutral referring organization is not receiving any form of compensation from the firms they refer. And they should have no inherent reason to prefer one company over another.
But this doesn’t mean that the referring company doesn’t have organizations they prefer to refer. For example, if I know someone is looking for a luxury car, I might suggest Mercedes or BMW because I have a brand preference, but I, probably, am not going to endorse Chevy because it’s not a fit for the requirement.
In the ATS world, a vendor-neutral partner should be open to referring any ATS, as long as the ATS can meet the functional and service requirements of the person requesting the referral.
Sylvia: I agree. When someone recommends or refers a product or service, knowing the intentions behind that referral can have an impact on a buyer’s expectations.
What happens when there’s no vendor neutrality? How can that impact the brand reputation of service providers?
David: Non-neutrality is not necessarily a bad thing. For example, company X might be a partner of company Y, and as a result, Company X can offer a better solution when paired with a solution from company Y.
However, the problem exists when Company X is getting a referral fee from company Y, and that fee is the primary reason for the referral being given.
If a vendor is receiving a fee or any other form of compensation from companies they refer, that should be transparent to the person receiving the referral. When referral incentives are not disclosed, the door is open to poor or unfairly biased recommendations.
Ultimately (unjustly) biased recommendations tend to hurt both the organization giving the referral AND the organization that was referred.
Sylvia: Yes, I think it’s all about transparency. At SmartSeach, we have no revenue-sharing agreements, and we do not pay nor accept referral fees. Two of the biggest benefits of this vendor neutrality is it gives our clients buying options at various price points and unbiased recommendations to compare varying functionality that is best suited for their unique business. What other benefits can customers reap from vendor neutrality?
David: Honesty! A vendor like SmartSearch, when offering unbiased referrals, can state what they know are the pros and cons of each organization they refer. SmartSearch has no incentive in making a referral other than to offer the best possible advice, so that is what the recipient of the referral receives.
Another benefit of a vendor-neutral approach is that it allows SmartSearch to develop relationships with more providers in various service categories, which offers the end client more choice in selecting vendors for their business.
Of course, if you are going to recommend marketing providers, we hope we’re at the top of your list!
Sylvia: Let’s look at vendor neutrality from a different lens. I’ve seen companies leave a service provider to go with a competitor because of things like having a friend who works at the competitor. How can buyers successfully incorporate vender neutrality into their purchasing habits?
David: Ask questions! I know Haley Marketing gets asked questions about ATS companies ALL the time! While we partner with SmartSearch and many other ATS providers for our career portal software, we don’t use any ATS software in our business.
When someone asks us about which ATS provider to use, we tell them which ones we work with, what our relationship is like with these companies, and then the questions they should ask to determine which company is the best fit for their specific needs…it may not be just about technology!
So, whenever you receive a referral, be sure to ask about the relationship with the company being referred!
Sylvia: I enjoyed spending time with you, David. Thank you for this great insight!
About David Searns: When it comes to marketing a staffing firm, few people know the industry like David. He literally grew up in the business (his Mom and Dad ran a very successful staffing and executive recruiting firm in Upstate New York). Mix in a degree in information systems from Clarkson University, an MBA from The Wharton School, and more than 20 years of marketing and consulting in the staffing industry, and you have someone with the rare ability to combine high-level strategic thinking with real entrepreneurial ingenuity.
Photo courtesy of Anton Belashov