Vendor relationship management:
Discounts, trust… and inside jokes

Your SaaS stack is a rainbow of apps on your dashboard. But are your vendor relationships glowingly healthy, or have you missed the gold at the end of the rainbow? 

It’s easy to think of software as static behind a company logo. But, each SaaS tool that your company uses is maintained by a team of real people. There are humans behind the SaaS. And humans thrive on nurtured relationships. 

When vendor relationships are cultivated, the rewards for your business are reliable and long-term. Customization options, right-sizing of features, negotiations and cost-savings all rely on your organization developing a relationship with your vendors. 

If you’re dealing with significant cost increases upon renewal, lengthy customer service timelines and a lack of flexibility in additional features, you might have settled into a standard, transactional vendor agreement. 

But doesn’t simplicity save time? Not in the long run, no. If you’re used to this approach, it may be hard to see the opportunities for business growth and cost optimization that you are sacrificing. 

To get a clearer idea, let’s explore what SaaS vendor relationship management is. 

What is vendor relationship management?

Vendor relationship management (VRM)  is a critical part of your business strategy. Companies depend on around a hundred SaaS apps to manage timelines, reach targets and develop ideas.

Some define vendor relationship management as “overseeing processes with third-party vendors”. But, just overseeing a process isn’t enough to maximize return on your vendor management. 

Gartner states that vendor relationship management is a “discipline that enables organizations to control costs, drive service excellence, and mitigate risks to gain increased value from their vendors throughout the deal lifecycle.” While these are three integral facets of VRM, excelling in this area requires even more. 

Vendor relationship management is the building and continuous nurture of mutually beneficial partnerships that empower, support and protect your company’s success. 

Success is not an overstatement. You can look forward to several significant benefits when you optimize your vendor relationship strategy. 

Why is it important to nurture healthy vendor relationships?

You’re striving for reliable, positive company growth year-on-year. Remember, your vendors are along for the journey, too. Strong partnerships make for profitable progress. But there’s much more to be gained than just cost reduction.

Trust

Picture a vendor who responds efficiently to your support requests and uses your feedback to improve their service. Now imagine a business that makes timely payments and is proactive in its communication. That’s a reliable, valuable relationship. 

Building trust on both sides opens up possibilities for growth, exclusive perks, beneficial contract renewal terms and favorable pricing. A trusting vendor relationship is the gift that keeps on giving to your business. 

Cost savings

If you’ve established a trusting relationship with your vendor, negotiations will be smoother, and deals and discounts will be more accessible. Optimizing your approach to encompass complete procurement visibility is a quick way to cut out waste and achieve a lower total cost of ownership. 

Risk management 

Having clear knowledge about your vendor’s compliance throughout their lifespan with your company is essential to maintain high security standards. If you’ve established honest communication, you can tackle any problems early and collaboratively. 

Efficient performance

Streamlined vendor relationships mean workflows are more efficient. For example, if onboarding is carried out effectively with good communication between you and your vendor, company adoption of the software will be high and productivity profits. 

Quality, flexibility and adaptability

With regularly maintained contact, vendors are motivated to provide a high-quality service. You won’t have to worry about hitting a ‘wall’ when you need to adapt app features, and they’ll be more willing to flex to meet your needs. 

Enhanced reputation

Positive reviews from vendors increase your reputation within the industry and attract more opportunities for collaboration. Your marketing team will be grateful for your healthy vendor relationship as it opens opportunities to coordinate promotional material, boosting your PR.

Innovation

Staying ahead of the competition is easier with insight into new technologies and features. Vendors prioritize their most trusted partners with new feature trials, and healthy relationship management is the key to achieving these bonuses. 

There’s much to gain, but what about the practicalities? How do you optimize your vendor relationship management?

Best Practices for successful vendor management

Maintaining positive vendor relationships doesn’t depend on just one action, like sending your vendor a bottle on their birthday (although that may help). Investing in the following six areas will improve your vendor management and earn you holistic business gains. 

1. Select the right vendor

A good partnership begins with a great vendor-consumer match. Your vendor management is doomed from the start if your supplier doesn’t align with your company’s goals. 

Take, for example, a luxury home styling company. Their designers need an app that has customizable templates to create beautiful displays of their products. They ask each shortlisted vendor what customization options they provide, and the feedback allows them to make an informed choice that best suits their requirements. Employees are satisfied, productivity improves and customer sales increase. 

Other elements to consider are the vendor’s reputation, compliance and security protocol and customer service reviews.

Don’t hesitate to ask your current vendors for referrals as they will already understand your compatibility needs. They may even reveal their own solutions to your problems, meaning that you can stick with a known vendor and develop your long-term relationship even further. 

2. Define clear SLAs

How would you feel if your manager raised a dispute about your performance in an area that isn’t part of your job description? 

Now, how would you feel if an area of your work did underperform, but you know that if you’d had a specific tool, it would have succeeded? 

Both are frustrating scenarios.  

Healthy vendor relationships avoid this confusion with a foundation of clear, formal clauses that are agreed upon by both parties. These service-level agreements are discussed and signed with the contract. Then, everyone involved knows their responsibilities and expectations. 

SLAs could include the scope of services, payments, exit procedures, and performance standards. The terms should be specific and unambiguous. For example, a guarantee of swift customer service response is less reassuring than a 12-24 hour customer service response promise.

Clearly defined SLAs give you leverage not only in potential disputes with vendors but also when you come to analyze the performance of your app and consider its future in your company. 

3. Utilize a procurement tool

If you had a few vendors to manage, certainly manual processes could work. However, a large quantity of SaaS in your company requires a helping hand with vendor management. 

• Centralization. A cloud-based platform is an organized and efficient way to centralize your vendor list. It puts your spreadsheets to shame with its easy access, complete visibility and swift information retrieval. The top procurement tools for SMBs offer a single touchpoint for procurement, a watchful eye on risk, and streamlined processes to increase productivity further.
• Automation. If you’re wondering where you will get more time to nurture your vendor relationships, automation is your answer. Imagine reducing your vendor onboarding procedure from two weeks to just three days. Procurement tools use automated data entry, documentation management and workflows for approvals, onboarding and renewals. 
• Tracking metrics. In your next renewal negotiation, if you were asked the question – ‘Do you need more seats?’ or ‘Is the drop and drag feature working out for you?’ Would you know the answer? Knowing these small details is the difference between good and excellent vendor management. Vendor management tools provide regular, in-depth reports on your SaaS usage. 

4. Communicate regularly 

When you think of software, the first word that comes to mind probably isn’t ‘empathy’. However, a great partnership relies on careful thought by both sides. Vendors are affected by your business, and you are affected by theirs. It is in both of your interests to maintain open, honest communication throughout the software’s lifecycle. 

Plan regular touchpoints with your vendor to reflect on KPIs. For example, each quarter, you could discuss ROI, usage and specific features and any adaptations to your subscription. You may even find that these frequent check-ins open the door to discount opportunities and feature trials. 

When you’re a dependable communicator, vendors will be more inclined to swiftly resolve any disputes that do arise. Your healthy relationship means that disputes are kept professional and smooth.

5. Negotiate assertively and fairly

If a customer approached you asking for a 70% discount, 24/7 on-call customer service and a free product every week, the most polite thing you’d say is ‘No.’

A successful vendor relationship goes beyond just securing the best price. It focuses on value and long-term partnerships. 

For example, you may be able to gain a significant discount but receive a downgraded version of a profitable software feature, meaning you have to explain to your team why their job will take twice as long, and the output will be half as impactful.

Ensure that your business gets the best value by utilizing your SaaS analysis and aim for a win-win scenario. A vendor that feels respected is a vendor that will invest more time into your business. 

6. Building bonds with humor

A little humor goes a long way in vendor relationships. When you’ve established a rapport, inside jokes and light-hearted banter can transform routine interactions into something far more enjoyable. Sharing a laugh with your vendor contact—maybe it’s about a quirky feature in their app, or an “emergency” request that ended up being surprisingly simple—breaks the ice and builds camaraderie.

These shared moments create a sense of familiarity and trust. When vendors feel comfortable with you, they’re more likely to go the extra mile, offer candid insights, and prioritize your requests. Humor doesn’t just lighten the mood; it strengthens your professional relationship, turning your vendors from mere contacts into genuine allies.

Like any aspect of a strong business, vendor relationship management requires ongoing effort. If you want to excel, you’ll need to take note of some common pitfalls to avoid. 

Common vendor relationship management mistakes

Businesses that struggle with vendor relationship management are usually guilty of at least one of the following mistakes.

• Cost avoidance. Thinking in the present without a view of the bigger picture can result in too much emphasis on cost. Open your mind instead to the long-term benefits and value that vendors can provide. 

• Rushed agreements. Hidden costs, low-quality service, and high data breach risks are some of the dangers of rushed contract agreements. Take the time to reflect on each term -is it specific, aligned to your goals and measurable? 

• Poor communication. If you’re not approachable or open, this may be mirrored by your vendor, and it’ll become harder to get in touch when needed. Maintain regular, strategic check-ins to keep relationships positive and constructive.  

• Inadequate risk assessment. There will always be some small acceptable risks in business. The key is knowing these exist and monitoring them regularly. 

• Neglect. Even the best vendors need managing. Your strategically important suppliers should be the highest priority for regular monitoring because issues with these vendors could result in significant losses.

You can gain back time and reduce the probability of these errors with a vendor management system that automates workflows, centralizes your vendor data. 

Now, you can begin to picture what this looks like in practice in your organization. So, what does VRM look like when it’s done excellently?

Model vendor relationship management

The optimal vendor relationship management is a win-win partnership between you and your vendor. It’s a healthy balance of give and take. Profitable SaaS features and cost-saving measures for you; targets and sales achieved for vendors. 

Your automated procurement software does much of the hard work for you—centralizing vendors on a single dashboard view, streamlining key workflows with automation and providing detailed insights on vendor and SaaS performance. The best procurement tools can even provide expert negotiators to support you in strategic price negotiation. 

From start to finish of your software’s lifespan at your company, you benefit from an alignment of goals and challenges with open and honest communication at the core. 

Because you’re reliable and communicative, vendors offer insights and opportunities for collaboration and growth to boost your business further. 

The icing on the cake? Access to significant discounts such as 60% off your cloud bills and 80% off your favorite apps. 

With effective vendor relationship management, your improved forecasting, cost-saving and budgeting, will empower your business to develop into the future.