Why We Need a Service Contract Manifesto

by Chris Arlen on April 15, 2008

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GeorgeWashingtonThe customer-supplier relationship has fossilized. It needs a re-examination to acknowledge the truth of customer-supplier interdependence.

It needs a Service Contract Manifesto.

Both customer and supplier recognize the need for better business results. Both sides want more.

However, customers and suppliers are more likely to engage as mortal enemies. One has to lose for the other to win. As if their work could be done separately from the other.

Supplier: “What’s your budget?”

Customer: “What’s your profit?”

Supplier: “I asked first!”

The inherent flaw in adversarial relationships is not enough trust.

If there were sufficient trust, both parties would fully cooperate for greater mutual benefit. They’d no longer be adversaries, but powerful collaborators.

This manifesto is an attempt to improve service contracting. It spotlights the interdependence between customer and supplier, which presents opportunities for more valuable relationships.

This article is not the manifesto. But a rationale for its existence – and a request for your input.

The Service Contract Manifesto is located here.

Go on, suspend doubt for a moment and contemplate higher ideals.


What can the Manifesto do for me?

This manifesto is a guide. Like a trail guide, it helps customers and suppliers go towards where they want to be.

Customer Destinations:

Higher service quality

Deficiencies occur in labor-based services.

However, service quality improves as suppliers feel greater confidence working on high-importance areas. Rather than worrying if customers will crucify them over minor, infrequent deficiencies.

Increased customer satisfaction

In collaborative relationships customers and suppliers quickly make the 1,000s of service tweaks needed to satisfy end-users.

Specifications and scope evolve to best serve end-users. Instead of both sides locking down on granular details that freeze flexibility.

More innovations

Experimentation is an integral part of innovation. It leads to new solutions, and the faster its done, the sooner success occurs.

In a trustworthy relationship, fear of failure is lessened. Suppliers experiment knowing if expected results aren’t achieved they won’t be fired.

More service for the same price

When customers and suppliers trust each other, they’re more likely to give what’s wanted. Trusted customers are valuable. Suppliers willingly provide more service within existing pricing to keep those customers’ respect and trust.

Increased reliability & responsiveness

As customers and suppliers work through issues and exchange value over time, their personal commitment increases. Serving others is self-serving.

With trust, suppliers do whatever it takes to deliver on their promises. Because they know those customers reciprocate, helping them get what they want.

Supplier Destinations:

Improved profitability

Collaborative customers want suppliers to make profits. When information is shared openly, and in both directions, decisions are made that deliver what each side wants.

Improved performance and lower costs for customers – higher profits and stable revenues for suppliers. None are mutually exclusive, they can all be had. But only through collaboration.

More sales from referrals

Customers value trusted suppliers as if they are their own employees. And customers will go out of their way to refer those suppliers to others. It’s pride of ownership, a way of shouting “Look at my great team”.

These customers are worth far more than references in a proposal. They’re evangelists, actively selling the supplier to more customers.

Longer contract terms

Customers want to keep suppliers they’ve come to rely on. It makes their jobs easier and more successful.

Customers who trust their suppliers facilitate long term contracts. Where possible they’ll assist their trusted service partners in the rebid processes.

More non-contract work

Suppliers benefit from additional work outside the base contract. They receive more revenue and profit without additional selling. Customers know this, and reward their trusted suppliers with extra work.

Process & system advancements

Demanding situations with trusted customers are advancement opportunities. They can challenge suppliers’ abilities and allow them to experiment and learn new skills.

Once successful, suppliers have added skills for use with other customers, generating more sales and profit.

When do I use the Service Contract Manifesto?

The manifesto can be used when contract relationships are:

  • Ready for improvement – results are no longer good enough
  • Wildly successful – for continual, incremental improvements
  • Planning to start – principles baked into contract language
  • Failing & feel like ending it all – what is there to lose?

8 ways to use the Service Contract Manifesto

1. As a design guide for contracting a service

2. As a conversation starter during a sales call

3. As an agenda for customer-supplier design meetings

4. To jointly identify the vital few principles to follow

5. To point out breaches of agreed upon principle

6. To identify obstacles in front of success

7. To spotlight past success in relationship’s history

8. To incorporate principles into contract language

Summary

The Service Contract Manifesto is aspirational. It’s a work in progress that declares customer-supplier interdependence. At least it may point future customers and suppliers towards working relationships that are more productive, efficient and collaborative than they are currently.

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