Customer and subcontractor. Two manager mistakes

In this topic, I would like to talk about the relationship between the customer and the subcontractor. I will try to classify and characterize the main types of interaction between them and distinguish two errors of managers, one of which leads to loss of a client, and the second to loss of profit. Well, a little touch on the moral and ethical aspects of these relations. These errors are very simple and understandable, however, managers and company executives still attack this rake, as a result of which there are unnecessary monetary losses and unreasonable claims to each other.

Let's define in terms

Client - a person or company that turns to the customer in order to perform the latter some work.
Customer - the company to which the client has contacted.
Subcontractor - a company or a private person (freelancer) to which the customer wants to transfer work.
Fixed payment and fixed work - a clearly defined amount of work for which a clearly defined fee is set (contract for the provision of services).
Percentage work is a certain, possibly variable, volume of work that is performed by a subcontractor on behalf of the customer (partnership agreement).

Types of relationship between customer and subcontractor

Consider the 2 most common types of interactions. This is a contracted service agreement and a partnership agreement.

A contract for the provision of services is characterized by:

• The customer pays the subcontractor a small percentage of the amount received from the customer. The customer’s goal is maximum profit, he can always transfer the order to another, more “cheap” subcontractor.
• To guarantee the quality of the work of the subcontractor, the customer carries out strict control of his activities, sets him specific tasks, and tests the result of the work.
• Because the customer is always aware of the progress of the work of the subcontractor (due to control) and has sufficient qualifications, then he can competently communicate with the client at all stages of the work.
• The client constantly communicates with the representative of the customer, makes sure of his competence. All competence of the subcontractor is transferred to the customer. As a result of all this, the client becomes attached to the customer and is more likely to turn to him in the future.

The benefits of this type of collaboration:

For the customer: the maximum possible profit from the client; tying the client to himself
For the subcontractor: clear and understandable tasks; no off-line communication with the client

The disadvantages of this type of cooperation:

For the customer: you need to have an intelligent manager who understands in all aspects of the work; control over the subcontractor and communication with the client take a lot of time
For the subcontractor: they pay nevertheless much less than if he spoke directly with the client; in most cases you don’t put work in a portfolio

For the partnership agreement is characterized by:

• The customer pays a subcontractor used on most of the amount received from the client, leaving himself a small partner reward. The goal of the customer is to give the client away, not to mess with him and just get a small income for attracting him without unnecessary work.
• The customer actually submits the customer to the subcontractor. He can exercise cap control over the work of the subcontractor, but in fact all the work, testing and quality control is carried out by the subcontractor.
• Communication with the client in the course of work, payment is also carried out directly with the subcontractor. The customer, if in the know, is probably worse than a subcontractor.
• The client constantly communicates with the subcontractor, verifies its competence. Nobody remembers about the initial customer. As a result of all this, the client is not tied to the customer, but to the subcontractor, and with a greater degree of probability the next time he will turn to the latter.

The benefits of this type of collaboration:

For the customer: gave the client, received the money, but nothing needs
to be done For the subcontractor: the maximum possible profit from the client; tying the client to yourself; if this is not an obviously unequal partnership agreement, then the work can be published under your own name and put in the portfolio

The disadvantages of this type of cooperation:

For the customer: profit from the client is small; we actually give the client to the subcontractor
For the subcontractor: in addition to the main work, you also need to communicate with the customer during the work, which requires a manager; the cost of such a partnership with a customer can be high, and the conditions are disadvantageous

Management errors

Now we pass to the most interesting. Thus, two key features of the types of cooperation between the customer and the subcontractor can be distinguished: the nature of communication between the parties and the amount of payment to each other (here you can also add intangible values ​​like placing work in a portfolio). Let's make a table based on these parameters.

	tight control of the work of the subcontractor, the customer communicates with the client	lack of control over the work of the subcontractor on the part of the customer, the subcontractor communicates with the client
fixed payment	paid service contract	losing a customer
work for a percentage	losing money	partnership agreement

Of course, these are 4 ideal cases. Dozens of intermediate options can exist successfully or vice versa. We have already examined two typical cases of a paid service agreement and a partnership agreement above. Two other cases are errors. Let's see why they nevertheless arise and what they lead to.

How to lose a client

The fixed payment for the work of the subcontractor and the lack of control over it in its pure form is probably quite rare. Usually, on the customer’s side, the manager communicates with the client, and for all technical issues he sends to specialists, i.e. to the subcontractor.

What does the client see?The client turns to the customer, a spectacular blonde manager is talking to him, the client makes an order. Further, he communicates with the blonde only on issues where I can transfer money, and all technical issues are resolved with a certain type who has a mailbox on gmail.com, and not on a corporate domain. Then it turns out that this type is a rather pleasant and competent person who quickly and clearly answers questions, and a spectacular blonde can not always send the right score the first time. Who will the client contact the next time with a customer who is essentially an intermediary, or with a subcontractor who does all the work? If the client was not initially focused on the design made by the Know You Whomever Studio, then I think the answer is obvious.

What to do to a subcontractor?And now the work is completed, and the client has a new project. Who is he talking to? That's right, to the subcontractor to whom the customer brought the customer on a silver platter. In this situation, the customer’s claims to a subcontractor of the type “Ah, you are ####, we are #### and you are ###”. But how substantiated are they? The customer received a profit in excess of the first project, getting used on most of the client's money and used shifting ofmost of the managerial work from their specialist, who should be involved in this, to subcontractor specialists. The subcontractor has completed work under this agreement with the customer and is now free from obligations to him. But next time, the customer can throw you a new big project ... for a minimum percentage of his profit from the client and will further shift communication with the client to the shoulders of the subcontractor. Tell the customer, no, ###.

What to do to the customer? First of all, hire the right PM, who can competently communicate with both the client and the subcontractor. Ideally, PM should be aware of all aspects, including technical, of the services provided by the company in order to be able to speak both simple language for the client and technical language for its specialists and subcontractor specialists.

And, yes, it is not necessary to let technical specialists communicate with customers. Firstly, they are not trained in this, and secondly, you thereby tie the competence of your company to the competence of this technical specialist, which in turn leads to the loss of the client, because the company is eternal (well, let's conditionally consider such a company), and the specialist with you only for a while. I understand that there are situations in which the best PM will not be able to answer the question. In such a situation, it is better to take a break and clarify the answer with a technical specialist. If the question is so specific that the PM cannot correctly explain it, then you can talk to the client directly with the technical specialist, but let it be no more than 10% of all communication with the PM. Then the client will be sure that the PM, and therefore the company, can solve most of the problems, and technicians without PM cannot do anything. Everything, the client will remain with you.

How to lose profits

You transferred the client to the subcontractor and at the same time exercise control over the work? In its pure form, this situation is more likely hypothetical; errors with the loss of a client are usually much more common. They know how to count money, but somehow they forget about customers.

So, if you transfer the client to the subcontractor, leaving yourself a solid partner percentage, then you can control the development, prompt the subcontractor, and ultimately it may be possible to add a link to your portfolio. This is one of the intermediate options when you pay half the profit to a subcontractor, give him all the work and daily reports to the client, and you act as a guru controlling the process. And the client with equal probability can turn to both you and the subcontractor.

But usually the client is handed over “permanently and inexpensively”, i.e. without any control over the work on the part of the customer and for a small percentage. What will happen if for this small percentage, you will do all the managerial work?

What does the client see? All communication takes place with the customer’s manager, the client becomes attached to your company and is more likely to contact you a second time. If you had temporary problems with the employment of staff, then you can work at a loss, but if you simply do not have the technical ability to serve a client, then on this and on the next project you will work at a loss.

What to do to the customer?In this situation, work control can eat all the profits received from the subcontractor. Why did you give the client away? Probably it was a non-core order or all of their specialists were busy ... All that they gave away - forget it. If the client is done well, the second time he will go to the subcontractor, and if it’s bad, he will not return to you either.

In this situation, you can either agree with the subcontractor on a permanent partnership, according to which he will transfer to you a percentage of the profit from the transferred customers, or conclude a normal contract for the provision of services for the whole and continue to control the work of the subcontractor, but without retaining a percentage of order, and paying him a fixed amount.

What to do to a subcontractor?If you see that the customer is not able to serve the client, then invite him to take on all the responsibilities of communicating with the client, in the end he pays you aboutmost of the profit from the client for work. And so the customer decided, handed you the client, got his percentage. The project was successfully completed, and the client has already come to you with a new one. Then claims of a different kind arise: “How is it that we give you such a client ... and you only ### from the first transaction, and now you have ### profit from it”. Is such a claim justified? Yes! The customer gave you the client, along with him the majority of the profit from the first project, did not burden him with excessive communication with the client and bureaucratic red tape ... It is logical to pay him some percentage of profit from subsequent projects, and a satisfied customer will still give you customers on such chocolate conditions.

conclusions

Customers hire a competent PM and do not allow the client to communicate with the subcontractor, bypassing him; Do not be surprised when saving on PM and transferring the authority to communicate with the client to the subcontractor leads to the loss of the client; Do not control the projects given to the subcontractor for a percentage of the work, they are no longer yours.

Subcontractors say goodbye to customers who transfer to you all their responsibilities for communicating with the client and pay a penny; Rejoice at the customers who transfer to you all their duties in communicating with the client - together with them they will give you the client; Encourage interest from customers who transfer customers to you and do not set unprofitable requirements.

UPDAll the above is true for projects in which one subcontractor and carries used on most of the work (thanks messersveet for comment).