Vendors Directly Contacting Clients in 2024

Vendor’s directly contacting clients will be the infuriating topic of today's article. Vendor’s betray us in a number of ways however nothing has quite the sting in its tail as when they make contact directly with our clients in an attempt to cut us out especially when often, we helped the vendor to get where they are today and they would not even know about the client had it not been for us.

This article will be a quick summary of the countermeasures you can take as an MSP to ensure that your clients do not get snaffled up by the likes of Dell or Cisco.

While you are here, Take a look at some of our other Service Provider Consulting related articles below that may interest you:

Vendors Stealing Our Clients

Vendor’s steal our clients in a number of different ways and it depends on the age of and size of the vendor as to how blatant they are with their actions.

While I understand there is not much we can do about this behavior as it is so ingrained, imagine for a moment that as an MSP you undertook a brief partnership with another MSP to complete a network replacement project and completed it successfully.

Because the project was run by the other MSP, you needed access to their internal system including their full client list. Now imagine secretly downloading their client list and having your sales team start contacting every client on that list in an attempt to poach their clients?

Is that a morally wrong practice and not just about the lowest of the low when it comes to betraying someone that trusted you? Well the behavior is exactly the same and is just as reprehensible.

Still it is a bit pointless getting angry over being bent over and rogered without any remedy. I have a few tips I have picked up over the years that should help MSPs struggling to prevent vendors who are directly contacting your customers.

Reactionary Methods - Theft Of Clients

Below are a number of strategies that you can attempt once the situation of client theft occurs. I believe the first step of contacting the vendor is universal. 

Regardless of the situation, the very first step should always be to contact your vendor and ideally your first point of contact before considering any further action or even getting upset about it because there can often be perfectly innocent reasons. 

Something I have learnt in business over many years is not to go off half-cocked and to always give people the benefit of the doubt until it can be proven otherwise. 

Contact Vendor - First Course Of Action

Below are preventative measures however this action to me is the most obvious after an incident of vendors directly trying to pilfer your clients. Before going scorched earth or relying on medieval techniques to address this, the first and best course of action is to contact your vendor and ask them politely to stop.

There is a chance that your vendor may have gotten the details of your client legitimately from a number of legitimate means from trade fairs, your client entering a competition to straight up cold calling. Once they know it is a client of yours then there is a small chance the vendor will back off especially if they are a smaller vendor.

In my experience, the large vendors will just lie to you, they legitimately have zero shame and will continue trying to steal your client regardless and so this strategy is unlikely to work for them. 

Still this is the right strategy to take because we need to establish if the issue is malicious or not.

Cease And Desist Letter

If you are certain that the vendor has obtained the clients details from the details you have given them then you could try sending a cease and desist letter demanding that they cease contact. If you have proof the vendor used information you provided to them to contact the client then include that as well as instances where they have been asked to stop making contact ideally by both you and the client.

I am not a lawyer, in fact I cross the road if I see a courthouse so I would definitely double check this with someone legally qualified. The state you live in is likely to impact how you do this.

I have never actually tried this and I am suspicious as to if the vendor would probably use it as toilet paper but I felt I should mention it anyway.

Take Vendor To Court

Let's face it unless you are a large MSP and there is significant amounts of money involved then this is probably not going to be worth taking it this far.

I have seen organizations I have worked for do this and actually come out on top but in those cases there was clear evidence that the vendor had used the information the MSP had given in confidence to the vendor in the process.

I am unsure if cybersecurity insurance would cover the process of legal action in this scenario and so it could be a significant financial overhead.

Preventative Methods - Stealing MSP Clients

Below are the strategies that I put in place while running my own MSP that discouraged the poaching of clients from vendors. 

My view these days is to accept that all major vendors will do everything in their power to move your clients over to their clients and cut you out of the relationship. They say we should not take offense and that it is just business however it does upset me.

It annoys me that I have to put countermeasures in place to subvert their lack of integrity as I am sure many of you are, especially when most of us have watched these vendors grow from nearly nothing and would not be where they are today without our help over the years.

Train Clients To Ignore Direct Sales Calls

Ignoring direct sales calls is actually a very valid countermeasure in reducing the risks when it comes to targeted phishing also known as spear phishing along with other security weaknesses involving the human element.

Educate your clients during the onboarding process that any and all direct sales communication regardless as to if it is phone based or email based is a serious security risk and that any examples should be passed on to you or ignored.

Clients are happy with this because it is another responsibility they do not want to have to deal with and one they have not asked for.

This can help get around the more sophisticated vendors who force you to pass on correct client details allowing them to contact them directly.

Train Clients To Pass On All IT Related Calls

This relates to the above however if you can educate your clients to pass on any and all IT related phone calls including sales calls without question then this can solve the issue where the interloper has specific information such as account numbers and specific names of decision makers.

You really want to avoid the situation where the vendor of low moral fiber has managed to get in front of a relevant decision maker where they can pitch the usual story of being able to offer the same thing for less money.

This is where the serious risk occurs and I mean if they are offering a like for like on a particular product such as software licensing or server hardware then it is not too damaging because most of the time, it only makes up part of the project.

The problems that tend to cause the most headaches in my experience is when they are so incompetent that they offer a cheaper price only for you to find out that what they are offering is different to what you have quoted.

This causes so many headaches because it forces you to go through both quotes with a fine tooth comb and even then they seem to be pretty proficient at hiding the parts of their offer that are either deficient or completely missing. In this scenario, it matters little if they completely lied about their quote, because if you manage the project, you will bear the responsibility.

Make Features Contingent Upon Total Package

So the revolting vendor with zero morals has managed to get in front of one of your clients primary decision maker and have successfully convinced them that there is a significant discount by going direct and cutting out the friendly middle man (you)

This is where having appropriately drawn up legally binding MSP agreements that clearly list what forms part of the agreement is your first and best line of defense. Part of having a good agreement is educating your client on the correct process and procedure when it comes to anything IT related and that includes all products and services purchased through you that makes up the MSP agreement.

As an example part of your agreement could be the purchase and management of workstations and workstation warranty management. It needs to be made clear at the final sales meeting where they are about to sign up, the components such as this, make up the final monthly agreement price.

I used to have a list of around 10 items that would vary from VOIP licensing, networking equipment to business notebooks and cell phones.

Alternate Price Clearly In MSP Agreement

So you have listed all of the components that make up the price of your monthly MSP agreement which is great but those alone do not really create a situation to prevent clients from bypassing you and going straight to the vendor.

The alternate agreement price however will. Because you have priced the total package based on the individual parts, it stands to reason that like a game of jenga, if someone starts pulling individual components away from the total agreement, well, it could completely destroy the profitability of the total package and let's face it often does.

This is where an alternative cumulatively increasing price needs to be highlighted in any MSP agreement and it needs to be put in front of the client, explained and signed separately to the agreement itself.

At that point in time, the client is not likely going to be armed with the separate prices of each component that makes up your service agreement and so my advice is to make it simple, is ideally, find the component that would have the largest impact on your agreement if the client cuts you out and work out the true cost of losing that part of the agreement and apply it to every single other component.

So for example you figure out that losing the Meraki subscription after Meraki have gone direct to your client and cut you out will be in the order of $280 per month profit. Now add $100 to that amount. The extra $100 is so that the discount offered by the vendor will always be less favorable than the increased service agreement cost.

Being that $280 per month is the worst case scenario, apply the calculated $380 to all components that are at risk of being poached by greedy vendors and ensure the client understands that it is a cumulative amount.

This means if 2 IT vendors successfully convince your client to go direct then the increase in the monthly service agreement will be $760 per month.

Now the idea here is that the increase in the monthly service agreement cost will always eclipse any savings they would have obtained by cutting you out.

Labor Costs Excluded From Changes To The Agreement

The idea with all of these inclusions in the service agreement is to make it as painful as possible for the vendor to steal your clients. 

Say the worst case scenario happens and the vendor has done a real number on your client promising the world and it just so happens you were away for a week when it happened and the client went ahead with the deal. 

First mistake was leaving without having appropriate procedures in place for another staff member to make these decisions in your absence. This is where a documentation platform such as Hudu would allow you to create an effective standard operating procedure on who would be delegated this task in your absence. Ah well, next time perhaps!

So you get back from that conference on emerging trends in rugged notebook technology and find that Dell is now managing your clients hardware warranties for their desktops and you are completely cut out of the arrangement.

You refer the client to the original clause where their service agreement will now have to increase by another $380 per month. This hopefully means the total cost to the client is now higher than when you managed this component.

On top of that, this decision by the client has caused you the most damaging thing that can happen for an MSP profit wise, it has caused an exception. Of your 70 clients, they are the only ones that now have their desktop warranties purchased and managed through Dell.

The reality of this is it is going to require newly written knowledge base articles written for your help desk staff so they are aware of the steps to take when warranties expire or when a new thin client is purchased, it is going to cause ongoing extra labor because everytime an exception like this occurs, it is going to take a toll because it will always cause confusion every time the issue of certain warranties comes up for this client.

You need to bill for this time because it goes outside of the agreement. This also needs to be clearly stated in the MSP agreement and explained to the client in detail and have them signed separately. This is so when these unfortunate events do occur, the client does not feel tricked by the whole situation.

Again, this is not a strategy designed to hurt the client, it is designed to persuade the client not to make decisions that negatively affect profit margins that your agreements bring in. Hopefully an event like this only occurs once and the client learns that the MSP agreement is something everyone needs to respect for it to work.

Alter Flow Of Communications

It is harder to do these days because vendors force us to hand over so much client information and it takes little effort for the sales team of a sneaky vendor to double check the information online, however I have found that giving alternate communications to the vendor is the best course of action.

Always give the primary email address as an email address you control. With the clients permission, have emails that originate from certain domains or have certain keywords within forwarded to an email address that you control.

This ensures that a significant number of attempts by vendors to directly contact your client will fail.

Attempt to have a number advertised as the MSP you control and that is likely the most attractive to shifty vendors looking to contact your clients.

If you can work with the client to put in place an automated incoming answering system that diverts sales calls to a number you control. You could even sell this type of thing as a service that you provide, shielding clients from cold calls.

Couple this with offering free training to the receptionists so that they know the type of questions to answer to prevent even the sneakiest vendor sales people from getting through to anyone but the MSP and you have a near bullet proof system for preventing the situation where you need to fall back on your service agreement.

Preventing Vendors Stealing Clients - Downside

There is one downside that can come from implementing a legally useful service agreement and that is MSP clients could hold it against you when renewal time comes around and you might lose a client. 

My view is it is better to lose an unprofitable client that does not respect the agreement than to hold onto them by catering to their whim. It paves the way for a profitable MSP client that understands the contractual obligations they are under and understands the ramifications of breaking them.

The way to avoid this occurring is to really make a big deal at sign on about the service agreement being a sum of its parts and that modifying any of them during the agreement period will require adjustments so that your profit margin is maintained.

Most clients will never have an issue with this and I certainly never had issues with this even during the few times changes were required. 

Conclusion

Pain is often the best persuader when it comes avoiding actions that cause it. I strongly advise to have additions to your agreement that are legally binding in your state as well as the state the client belongs to that ensure that you are not disadvantaged if a vendor successfully contacts your client and cuts you out of the relationship.

Of course this needs to be backed up by appropriate education regarding the clauses that relate to this as well as investing in some training for clients staff so that they know how to handle any high risk sales calls that originate from your vendor.

We have a number of other IT Management Solutions articles listed below that will provide you with more detailed information on a number of related topics:

https://optimizeddocs.com/blogs/consulting/consulting-index-page-01

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