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Can Credit Unions and Vendors be BFFs?

Hands linked together

In my early days of working with credit union clients, I attended my first credit union trade show in my capacity as a board member. As I mingled with other attendees and went to sessions, I was struck by how frequently the word “vendor” came up. It seemed like everyone we spoke with talked about “vendors.” Their current “vendors.” New “vendors” they were interested in learning more about. How they chose “vendors.” What “vendor category” a company fell into.

I realized that my company, a digital marketing agency, was also perceived as a vendor — a word that to me seemed to describe a company that offered an interchangeable commodity, preferably at the lowest price possible.

At PixelSpoke, we design websites for credit unions. I’m well aware that websites can be considered commodities, and that there are other agencies out there that also design great websites for credit unions — some at a cheaper price point.

But the transactional mindset that a vendor relationship implies still didn’t sit right with me.

To me, transactional is short for being an order taker: The client tells you what to do and you do it. You don’t necessarily need to understand the client. You don’t have to make life easier or better for the client, or learn how this particular transaction fits into the broader landscape of a client’s needs. While you might do a great job on your assigned task, in a transactional relationship, you seldom stop to ask if that task was really what the client needed in the first place.

It led me to wonder — does the typical “vendor” selection process set credit unions up for transactional relationships? Toss “credit union vendor due diligence” into your search engine and you’ll come up with loads of helpful checklists.

Here are a few examples:

  • This list discusses the importance of reviewing the potential vendor’s finances, reputation, insurance coverage, information security and company policies.
  • Another list does mention trusted partnerships up front, but focuses mostly on risk, compliance, legal considerations, innovation, automation, and remote technologies.
  • And this list from NAFCU suggests asking potential vendors how they protect member information, what documented industry certifications they have, how long they’ve been in the industry, what ongoing reporting they can provide and for information to prove their financial stability.

These are all sound and important recommendations—we’re certainly not suggesting credit unions skimp on their risk management when choosing which outside companies they work with.

But what’s conspicuous by its absence is anything that digs deeper into how a credit union can build a relationship with its vendors—and why it matters. I believe that great partnerships are built, not something that comes naturally. (And yes, some folks are just really difficult to work with, but I find that this is the exception, not the rule.)


What does a partnership mentality look like?

True partnerships have several critical features. When I think of the clients who are our closest partners, here are a few that stand out for me:

  • They share our core value of “Everybody Wins.” True partners don’t see business relationships as zero sum games — they see them as exciting win-win opportunities. It just flat out feels good to take this approach — try it! — and it also saves tremendous amounts of time and money in the long run. If you run into a problem, true partners will look for ways to make things work. You avoid the huge costs associated with searching for and selecting another company, not to mention the expenses of training and onboarding them. If you’ve gone through this yourself, you know it’s a time- and resource-intensive process to replace a current vendor. I try to bring an “everybody wins” mindset to every relationship in my life, and I am most proud of some of the partner relationships that we have built over many, many years. In many of these cases, we have truly helped a client to evolve their business as they helped us to grow ours.
  • They’re honest with us when we disappoint them. Honesty is hard. Not many of us enjoy getting critiqued or being told we’ve disappointed someone who’s counting on us. That said, unless we’re honest it’s pretty much impossible to do good work and achieve our goals. That’s why another of our core values here at PixelSpoke is “Solutions Not Blame.” When we share the problem, we can involve others in creating the solution.
  • They put in the time, especially up front. Relationships take time, especially on the front end. And that time is absolutely critical if you want to build a thriving, mutually beneficial partnership. One of our clients contacted 10 different website agencies and called their references before each agency made its pitch. That gave the company critical insights into the culture and long-term experiences of the agencies’ current clients. Another client asked me to have lunch with their entire executive team before they finalized our relationship together. And yet another client regularly calls me on the phone one or two times a year just to catch up on each of our lives. My favorite thing to do with new clients (or new client contacts) is to ask ice breaker questions like, what’s your favorite thing about your hometown? What’s something you’re passionate about? And, what’s in the trunk of your car right now?


How do you find a partner?

Intrigued by the idea of taking a more proactive partnership approach going forward? Let’s expand the typical “vendor checklist” to take into account these important considerations:

  • Is their primary goal to sell a product—or build a relationship? The other questions in this list will help to answer this, but a company’s marketing materials might also give you some insight here.
  • Are they taking the time to understand your unique challenges/pain points? Are they only talking about themselves, or are they expressing a genuine interest in learning about your company and the reasons you’ve reached out to them?
  • Did they offer you a generic product demo or a customized presentation? At Pixelspoke, we’ve sometimes found that when we’ve built relationships with other vendors, we had to take the initiative to show the vendor we wanted to go beyond their default offering. That entailed extra effort on our part to explain why we valued something beyond the basic option and how we thought we could get there together. Sometimes that has meant paying more money for far better results.
  • Is there high turnover at the company? Check out key staff’s tenure (Glassdoor or LinkedIn can be helpful for this). If there’s evidence this company has a revolving door when it comes to staff, watch out. At minimum, it could mean the hassle of having to bring a new contact up to speed. It could also mean the company is poorly run or struggling financially.
  • Are they shoe-horning you into a multi-year contract you can’t get out of? This is a huge red flag. Don’t get locked into a long-term solution that might not be a good fit—even the best due diligence and relationship-building isn’t infallible, and you never know when your needs might change.


How do you transform an existing relationship into a partnership?

We all have vendors we struggle with. It can be easy to think you have no choice but to end the relationship—and sometimes that’s true. But ask yourself this question, “Is there any chance our struggling relationship might work better if we approached it with a partnership mentality?”

To find out, try using the “Getting to Yes” framework from the Harvard Negotiation Project, as outlined in the bestselling book of the same name:

  • Separate the people from the problem. Take the emotion and personalities out of the process as much as possible. When no one’s on the defensive, no one has to feel the situation is “personal.” This makes it easier to look at an issue objectively.
  • Focus on interests, not positions. Try to find your deeper interests beyond the position each party is taking right now. For example, you might be angry that a vendor isn’t making a change that you thought was included, and they might be frustrated that they think you’re asking for something out of scope. But your deeper interest is to have a reliable, long-term partner you like working with, and your vendor’s interest is to have a long-term relationship that results in referrals. Once you understand that there are things you do agree on—and understand the underlying reasons for each party’s initial position—you’re more likely to come up with a solution both parties can live with.
  • Invent options for mutual gain. Don’t settle for the first thing you agree on—brainstorm a big range of options, the more the better, and then choose the one that works best for both parties. I often find that I struggle to come up with the first one or two options, and then the floodgates open and half a dozen more come to my mind once I am unblocked.
  • Insist on using objective criteria. It’s easy to cherry pick facts that illustrate your side of an argument or to view critical details in a subjective way. Before your discussion begins, agree on a fair, neutral standard—like an industry protocol or an expert opinion—to judge your situation, and that you’ll both abide by that standard. I find that this lowers everyone’s blood pressure because they now know that we are aiming for a fair situation for all parties.

I typically spend up to an hour trying to brainstorm each of these elements before I meet with a vendor who’s not meeting our expectations. I almost always learn that there’s a mismatch in one or more of these areas and that we have a system design that’s setting us up to be accidental adversaries. A frank conversation can go a long way to solving problems and building a long-term relationship where “everybody wins.”

Of course, you might not need a partnership for every relationship you have outside your credit union. Sometimes you just need to be able to complete a transaction and be done with it. But in my experience, most partnerships tend to be worth the time and effort you put into them, even if the upfront costs are greater. Plus, you’ll build fulfilling and long-term relationships that can help you enjoy the journey just that much more.


This post was originally published on CUInsight.com.

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