Are You Responsible for Vendor Problems?

No matter how well you run your business, a vendor mess-up can destroy your relationship with a client.  Whether it’s a product or service, you’re often on the hook. With a little planning for this eventually, you can still keep the client and even the vendor.

What Can Go Wrong?

Vendors Changing the Rules

When you recommended or sold the product it was the perfect fit for the client.  Then, all of a sudden, they moved the ball on you.  They might have reduced features, increased the price, or entirely discontinued the product.  Sometimes it’s all three at once.  Take for example Crashplan leaving the consumer market or Evernote’s price increase.

The Product Fails

Whether it’s hardware or software, products have glitches.  It could be an isolated problem like a premature failure of a hard drive.  Other times it’s a systemwide recall of a product.  The worst ones are software glitches that happen productwide, like when an antivirus bug takes over a system or deletes data.

The Vendor Goes Out of Business Entirely

Instead of raising rates, or changing the product, they just abandon their clients.  Typically we see that with software.  All the time you spent configuring it, only to find out it won’t work with the latest Windows update.  Although uncommon, this abandonment happens with hardware too.  New operating system or updates and a lack of drivers.  I have a box full of scanners that fall into this category.

What Was Your Involvement?

The more you were involved, the more the client can and should look to you for guidance.  If you made money off the recommendation, you might have some legal or at least professional obligation to resolve it.

Client (or Potential Client) Buys Based On Your Recommendation

People ask computer repair business owners for advice.  To be fair, people ask professionals for free advice all the time!  It’s a conversation starter.  If they’re a client, they might have asked for a recommendation over email or in person.  It wasn’t part of your consulting or a proposal, just a question.  For example “Which brand of computer do you like?”  I often speak to community groups and get asked questions on the spot.  Even if I’m compensated for speaking, I haven’t evaluated this client’s needs or anything.

You or Your Company Make Money Off the Sale

This money could be a commission or an affiliate sale.  From the customer’s perspective, you haven’t made money unless you tell them about the kickback.  They paid the vendor for the product. The vendor or platform gave you something in return.  Many business owners use Amazon and other affiliate programs. If you’re part of a partner program, you might direct a client to an online gateway. The relationship stays between the client and the vendor. You collected no money.

The Client Paid for Your Advice as Part of a Proposal

For large projects, clients might pay a fee for a detailed proposal of what to buy.  They’re paying for your expert advice.  In other situations, in particular MSPs, purchasing advice or vendor management might be part of your agreement with them.  The client contacts you rather than just buying stuff. You got paid for that skill set.

The Client Paid You, Not the Vendor, For the Product

In this situation, you resold the product or the products as part of a stack you offer the client.  The client has no direct relationship with the vendor. If you’re an MSP, the client may not even know the name of the product if you white-label it.  The vendor and your relationship with the vendor isn’t always known.  They pay you. That’s all the client knows.

What Is Your Responsibility?

Given those two questions, the answer is on a spectrum.  The more involved you were with the recommendation and transaction, the more the client will look to you to take care of the problem. Some problems, though, are so significant, it’s impossible for you as a business owner to take on that risk.  Meltdown and Spectre impacted every computing device and most clients shouldn’t hold us responsible for that.

No Money? No Involvement? Not my Problem!

The phrase “Not my monkey, not my circus” applies here.  You can’t be responsible for every passing recommendation, especially if you haven’t done a proper assessment.  You’re taking on the liability with none of the benefits and probably very little information. These vendors don’t work for us and we can’t control their behavior.

This category would be the same as leaving a product review on Amazon or Yelp.  We encourage clients to leave us reviews; I can’t imagine holding people responsible for that.  Have I complained to my friends about a bad recommendation? Sure!  Do I expect them to take on personal or financial liability for that?  No.  The best I can ask for is that they don’t give that recommendation.

Clients may push us to take on their problems, but that is more of a client management issue. I’d put this same category as the “blame game.”  If you touched anything related to the computer, you’re responsible for every problem all the time.

You Benefited, But The Client Didn’t Pay You

When you’re an affiliate, you make money on the products you recommend.  You might have a bias towards one vendor over another due to the money you’ll make.  The relationship though is between the client and the vendor. Usually, if you resell, you’d make more money.

The more money you make off the deal, the more likely you’ll want or need to get involved.  If it’s a hefty commission on an expensive product such as data recovery, it might make sense to get involved when a problem occurs.  If it’s a small reward through an affiliate link, you can’t always afford to take on that responsibility.

The Client Paid You For Your Time or Expertise

Now you might have to take on some of the burden when a product has a problem. Part of your advice is related to the quality of a product or service.  When the client paid you for the advice, they expected you to stand behind that.

Most computer repair business owners would quickly repair or remediate problems with their workmanship in a heartbeat.  Humans make mistakes.  When you’re not making the product or service though, it’s hard to take on that risk.  You’re not in control.

In this situation, you might have to suggest another product or service when the old one fails.  If a client paid for the recommendation, and the suggestion didn’t work out, you might have to find another solution.  The client might not want to pay for that additional time.

The Client Paid You, Not the Vendor, For the Product

In these situations, I think about my behavior as a consumer in other areas of my life.  If I buy a toaster at a department store and it fails, I have a limited time I can return it there. After that, I have to go to the manufacturer for a warranty repair.  The retailer’s out of the loop.

With our clients, we want to keep the relationship going.  We can’t simply wash our hands of the situation.  Depending on the product or the problem, this could be facilitating a warranty return, replacing the product, or providing free support.

Keeping the Client Even When It Isn’t Your Fault

Ultimately, you can’t take on the responsibility of a failed product if you didn’t make it.  Your terms of service should specify that.  If you sell an expensive system, even with a big profit margin, you can’t take on that risk.

Now that is all said, even if you legally don’t have a responsibility (always consult a lawyer and your insurance agent) you might have a professional responsibility. Again, you want to keep the client happy.

Profit Margin Versus Cost to Resolve

If you’ve made a healthy profit off a product sale, even if it’s an affiliate, and it’s cheap to resolve, you might consider doing that as a gift to a client.  For example, if you sell a computer system and it’s bad out of the box, you might facilitate a return at no charge if you made a commission off of it. It might eat into your profits a bit, but it doesn’t take much time to resolve.  Many business owners will facilitate warranty repairs as a gesture of goodwill even if they didn’t sell the product.

Software issues are trickier because you can’t just return a product.  Take for example a faulty Microsoft or Apple update.  The client’s computer doesn’t work through no fault of your own, but the client looks to you for guidance.  If you sold them the computer, in their mind it’s a problem with what you sold them, not the manufacturer.  In my experience, Apple and Microsoft are big enough (and unavoidable) companies that clients know you can’t control them.

With a backup or an anti-malware vendor, it’s much harder to explain to the client.  Things were working … then they weren’t because of a product you sold.  A client shouldn’t hold you responsible, but they too often do.  Sometimes they’ll drop you as a vendor because you recommended, in their mind, an inferior product.

You Win Some, You Lose Some

To keep the client, you might have to give away some of your services.  As long as the time you’re giving away doesn’t exceed your profits, then it’s “shrinkage”.  If you were selling vases and you broke one in transit, it sucks, but it’s a cost of doing business.  Recently an anti-malware program caused problems with my clients.  I gave away a few hours of service, but I make enough off the product that I could continue to make a healthy profit off of it and still take care of my clients at no charge.  That same day Dell shipped a client the wrong computer and she felt she shouldn’t pay for the service call to set it up.  I refused to budge on that one.

If the cost to repair the problem exceeds your profits on either the product or with the client, that’s where the tough call comes in.  In that case, it might be better to acknowledge the client’s frustration, but remind them you aren’t the manufacturer.  You might have to fire the client rather than take on the costs or hassles of a product defect.  In other words, if you don’t often bill the client much and the cost to repair the problem is expensive, you might have to drop the client.

Sell More Products or Services While Resolving

If you’re going to have to eat some costs in parts and/or labor, then turn the opportunity to your advantage.  This is a touch point with the client.  Technibble has great newsletters to educate clients about what you offer.  If you’re out there solving a manufacturer’s problem, cross-sell other things you do.  Think of it as a modified sales call with the client.  Of course, if the client is frustrated, that’s not always the time to talk about problems. Follow up with them a few weeks later with a suggestive sell.  When I checked on clients after the anti-virus problem, I asked them about other security issues like two-factor authentication and password management.

Accepting Defeat and Moving On

Ideally, clients understand that even if we sold the product, it’s outside of our control.  We had their best interests in mind but a third party messed up.  If your relationship with a client isn’t the best, they might fire you for this.  You’re unlikely to get anything more than an apology from your vendors. Even in the best of circumstances, a client might fire you because blame has to be placed somewhere.  If downtime or data loss was significant enough, you might face some legal liability.  When a client sues you, you’re probably not going to service them again. That’s one reason you need a solid contract to begin with and insurance.

We hope most clients are reasonable and will understand the scope and give a second chance to both you and your vendors.  That’s more about personality than any legal or financial ramifications. Some people refuse to fly after a plane crash or won’t buy a brand of car in which they got into a car accident.  It may not be rational, but not all people are rational in decision making.

When Should You Fire the Vendor?

Just like your client, you’ll have to evaluate whether to continue to do business with a vendor.  This decision may not be up to you.  If enough clients threaten to quit over the incident, you might have to switch vendors to save your client relationship. Hopefully you won’t be put in that position.

If it’s just up to you, look at how often this problem occurs, how the company notified you, and what they did to fix it.  Mistakes and disappointments always happen in business and computers. If the products been good overall and you’ve made money off of it, then look at the relationship long term and continue on with it.  If they notified you way in advance (if a product change) or immediately (if a glitch), then you should approach this with fairness.  In particular, if they offered compensation or a discount after the problem occurred, consider those factors as well.

Do What’s Right for the Client and Your Business

Each situation is different.  It’s a mixture of profits and costs along with client satisfaction.  Even if you think you’re under no obligation to resolve, you might do it just to be nice. Sometimes giving away your services makes you money.  You want your clients and vendors to be loyal to you.  Problems hurt those relationships but need not end them.

If this problem hasn’t happened to you yet, it will.  Think through your responses and how to handle it in advance of a crisis.

Written by Dave Greenbaum