Buying Decisions & upcoming Service Contract Manifesto

Service Contractors' ManifestoLast week’s post, The 5 Service Dimensions All Customers Care About , referred to research showing how customers assess the quality of a service.

That post prompted a contractor to point out a leading question.

How does Service Quality figure in Buying Decisions?

My contractor friend pointed out when customers buy a service, pricing far outweighs service quality and other factors.

“…SERVQUAL has not yet matured into RFP evaluation matrices – they are there, but are dwarfed by pricing evaluations in weighting. So…SERVQUAL is important, but customers need a definitive RFP process and evaluation technique built…that joins SERVQUAL and governance (mandatory bids) into a true test of contractor service delivery.”

Pricing in Bid Evaluations

Pricing’s importance in bid evaluations varies by customer, service and RFP. There are no absolutes.

I’ve seen survey results where customers were asked to rank factors used selecting security contractors. Pricing came in 4th, after management, supervision and training.

I’ve also seen public airport evaluations for janitorial services. Pricing was weighted 1st by a large margin over the next factor.

But Where’s Value in Bid Evaluations?

Value is what customers receive after services have been delivered. The net impact at the end of the contract.

It seems the most difficult task in buying services is to identify the value offered. And then determine the likelihood that value will be delivered during the contract’s life.

And that’s rarely done in RFPs.

It’s more common to choose a contractor on its qualifications listed in the proposal. Which is like the investment disclaimer “Past performance is no guarantee of future results”. But it seems that’s what most customers work from when selecting contractors.

Wow. Customers must identify value before services are delivered. Then calculate the odds it’ll actually be delivered. And they have to do this all in the bid process. It’s like asking customers to be fortune tellers.

And What About…?

The “where’s the value” question leads to other questions, such as:

  • Is contract compliance the same as value delivered? (Contractors going through the motions?)
  • After contract award, how diligent are customers in determining they’ve received what they’ve been promised?
  • How likely are customers to admit selection errors & change contractors when they’ve published new budgets based on lower costs?

If Customers Only Knew This About Buying Services…

I’ve consulted with service contractors for the last 12 years.

During that time almost every contractor has voiced a desire for customers to better understand what they’re buying. Translated that means if customers really knew better they’d buy that particular contractor.

And having participated in 100s of bids as a consultant and former contractor salesperson I see the truth in that. Some RFP processes are so balled up they’re an embarrassment to RFPs in general.

But there it is.

There will always be an educational need to help customers make better contract decisions.

The Service Contractors’ Manifesto

What if contractors could publish a document telling customers everything they need to know about contracting services?

That might help fill the gulf between what contractors want and customers do.

Next week I’m starting work on a Service Contractors’ Manifesto.

When finished it’ll be a public declaration of service contractor thoughts on better contract relationships. From buying services in the RFP process to ongoing management to inevitable rebids.

The manifesto isn’t about one contractor. But general principles all service contractors would want customers to believe and buy in to.

I’ll ask contractors for their ideas by posting additions or comments online to the blog.

Who knows, maybe the Service Contractors’ Manifesto will be sent to those customers who want to learn more. Those who want to create more valuable contractor relationships. We can only hope and try.

What are you doing to help your customers make better contract decisions?

Questions or Ideas?

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