7 Tips for Getting Past ‘Preferred Supplier Agreements’

“We have a Preferred Suppliers List.”

If you’re actively canvassing for new business, you probably get this objection every day. And this objection probably causes more frustration among recruiters than almost any other. But let’s get things into perspective. This is just a variation of the classic objection, “we’re happy with our current suppliers.” The truth is that this objection is less of an obstacle than most recruiters realise.

What NOT to say…

Most recruiters fall into the trap of asking, “When is your PSL up for renewal?” or “How would we go about becoming a preferred supplier?” These questions may be useful at some stage, but not as your initial line of enquiry. Why? Because these questions implicitly assume that there is no possibility of winning business from this client in the short term. So usually when you ask these questions, you have already admitted defeat in your own mind. And you may be giving up too easily.

The big lie

If we hear something often enough we’ll usually start to believe it – even if it’s not true. Be aware that just because the client says they have a PSL doesn’t make it true. Many companies have discovered that this is an easy way to get recruiters off the phone fast. And even if it is true, it may not be strictly enforced. Often the PSL is applied selectively. A good CV will almost always be considered no matter where it came from – especially in a candidate-driven marketplace.

So before you resort to arranging a call back or sending literature, try testing the strength of the PSL with one of the following strategies:

1. Remind them that there is no cost to consider your candidate
“It doesn’t cost you anything to consider our candidates. Let me send you my best 1-2 people. You can compare and contrast them against the applicants you’re already considering. If my CVs are no better to the ones you’ve received from other sources, then fine. On the other hand, you could be missing out on a real star that you would not have access to otherwise. And at the very least, you’ll satisfy yourself that you are recruiting from the best shortlist. You do want to recruit the best person, don’t you?”

2. Probe for problems with their current supplier
Now here’s the challenge. If you come straight out and ask, “What problems are you having with your current suppliers” you’re unlikely to get an honest answer. People don’t like admitting problems to themselves, let alone to a stranger. So we need to do some detective work. Remember watching Lieutenant Columbo on TV? He was a master at finding flaws in the suspect’s story. But he did it without them realising what he was doing until it was too late. In fact the secret to his success was that he was so polite and unassuming. He’d always start out with seemingly harmless questions, and these would inevitably lead to more challenging ones. Take a page out of Columbo’s book.

Try questions like: “You’ve got a Preferred Supplier’s List? I’m glad to hear it! It tells me that you take recruitment seriously! Who do you use? What were your reasons for choosing them? If you could change one thing about the service you’re getting right now, what would it be? Is there anything else you’re not 100% satisfied with? Tell me, how well do they handle x,y,z (your area of specialty)?” Before you know it, you’re engaged in a meaningful business conversation with your client.

3. Become a “Second Tier” supplier
Ask them, “What would you do if your usual suppliers were not able to provide suitable candidates? What’s your back-up plan?” Many clients will not have an answer for this. They’ll be forced to admit that IF their current suppliers could not deliver, THEN they would need to consider other alternatives. Then you can say, “Our intention at this time is not to replace your existing suppliers, but to complement them. Let us be your second tier suppliers.”

4. The “Spare Tire” analogy
If the client is adamant that their current suppliers have never let them down before, try the spare tire analogy. “Do you carry a spare tire in your car?” Of course. “Why? You have four perfectly good tires. Have they ever failed you?” No, but what if I get a flat? “Exactly, and it’s guaranteed to happen at the most inconvenient moment when you’re under pressure and you don’t have time to waste. What’s why it’s prudent to carry a spare tire. So let us be your spare supplier. No matter how good your current suppliers are, one of these days they will let you down. And we’ll be waiting in the wings to come to your rescue.” Yes it’s cheesy, but it does get the idea across. For best results, try to adapt this metaphor to your client’s industry. For example, if your client is in IT, talk in terms of colocation and redundant servers.

5. “We try harder because we’re number two”
This was the famous strap line that helped Avis rent-a-car win market share from the market leader Hertz. And you can use a similar idea to win new business too. If the incumbent is becoming even slightly complacent, then you might be able to get in simply by working harder.

Tell the client, “I understand you’re happy with your current suppliers. That’s why my intention is not to replace them, but to complement them. Let me prove to you what we can do. What vacancies are you struggling with right now?”

If you succeed in filling the job, you’ll be a hero. And if you don’t fill the job, then they can’t fault you because none of their usual suppliers was able to either! You’re no worse off for having tried. And at least now you’ve started a dialog that you can expand on. This approach is great for positioning you as the recruiter who will go the extra mile. However, beware of the client who says “Sure – send me some CVs.” This line is very often a brush off. The outcome of this conversation should ideally be a face to face meeting. As a minimum, insist on taking a proper job order. There’s no point in putting a lot of effort into a vacancy which is not fill-able, or which the client was never really motivated to fill in the first place.

6. Sell to the MAN (Money, Authority, Need)
In other words, you need to be selling to the real decision maker. Obviously the MAN is often a woman. The point is that unless you happen to recruit HR people, you should be targeting the line manager instead of Human Resources.

Avoid going through HR if at all possible. The line manager is usually more receptive to your approaches for two reasons. Firstly, she is the one with the staffing problem, and presumably is more motivated to find a solution. Secondly, she doesn’t usually care about the PSL and will often let you in the back-door. If you build a good relationship with the line manager, and come up with the right candidates, she can insist on interviewing your people and get the offer pushed through. Once you’ve got a proven track record, you can re-approach HR to look at their broader recruitment needs. Remember, it’s easier to beg forgiveness than to ask permission!

7. The Trojan Horse
Even if you’re getting knocked back, try specking in a star candidate. A top-calibre candidate can be a powerful door-opener. And it’s much easier to win the battle once you’re already inside the fortress. Let me give you a real example from my own experience. I used to recruit software salespeople, and I was determined to break into Oracle. Their Recruitment Manager in London told me they had a strict Preferred Suppliers List and they would not consider CVs from any company that was not on the list. I refused to give up and went directly to the Regional Sales Director in Edinburgh where I am based. He admitted that he was always looking for good salespeople, and agreed to meet me. However, he warned me that he already had a good relationship with two of my competitors and was happy with their service. Undeterred I met him in order to start building the relationship. Then I simply kept contacting him with good candidates. Eventually I struck gold with a candidate I was representing exclusively.

He was an eCRM sales specialist within the Insurance and Banking sector, which was a niche that Oracle was keen to develop. I made a £13,000 fee (20% of £65,000) and the recruitment department was forced to put me on the PSL, which opened up new opportunities for my colleagues in our IT recruitment division.

So the next time a client tells you they have a PSL, don’t give up – get excited. If they have a PSL it probably means they spend a lot of money on recruitment. And with a bit of persistence, you could get a slice of the action!

For more information about training and coaching, please call Mark’s personal assistant Julie today on 0800 019 8899. International enquires dial +44 131 664 8064.

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  1. Interesting article, however, I work in Procurement and these types of articles really damage the good work that Procurement have done with the business to get their PSL into order.

    A few points:
    “Remind them that there is no cost to consider your candidate”. This isn’t entirely true. You could be in breach of contract terms with other agencies. Before the business consider your client, terms need to be agreed upfront (even for a one-off agreement), these can take time to negotiate and therefore the role could have been filled by the time terms have been agreed. If you are successful in getting your candidate in the door, there’s the cost of setting up the supplier on vendor databases, procurement systems, supplier vetting checks, and not to mention the time taken by all parties to bring the agency up to speed on business requirements / team dynamics etc

    “Probe for problems with their current supplier”. A valid question to ask, but any good PSL will be reviewed constantly (ours is reviewed every 6 months), those who aren’t performing are dropped and those who perform well remain on the list. In all the companies, I’ve worked in the PSL has been created with the business and they should be directing this question back to those who manage it operationally (in our case Procurement and HR)

    “Become a “Second Tier” supplier”. A good point and an excellent way to get on the PSL, however, the second tier suppliers would have been selected at the same time as the first tier. You will get your opportunity if you follow protocols and if other suppliers haven’t performed.

    “The “Spare Tire” analogy” – In our firm the PSL for the business area is given the opportunity to find candidates, if they’ve not succeeded (not happened yet), then it is open to other agencies on other PSLs across the business who do have the capability to recruit for this area. If they are unsuccessful, then we would of course open it up to parties outside the wider PSL. However, if you’ve breached protocol, you won’t be considered. By all means stay in touch with those who make the decisions, but do not try to bypass the process. In our firm, the company and the consultant are blacklisted from being on the PSL if the process has been obviously breached.

    “We try harder because we’re number two”. Not in my experience. A number of firms I’ve worked in have moved away from the 2nd tier approach. However, if you stick to the process you may be given your opportunity to shine.

    “Sell to the MAN” – DO NOT BYPASS THE SYSTEM / PROCESS – it makes you look unfavourable. If you can’t follow simple instructions regarding the process, how are you going to manage our recruitment needs?

    Please don’t underestimate the huge amount of work that goes into to finalising a PSL.

    I understand business is difficult for recruiters (although it is picking up) and yes of course we want the best candidate, but to disregard the work undertaken by the business makes agencies look unprofessional. The business has a job to do, yes they may be looking for staff, but they do have a day to day job. They do not have time to take unsolicited calls.

    By all means keep in contact with the decision makers, persistance does pay, but be persisitant and follow the process. I would urge all suppliers to follow the process if you want to be considered for the PSL – you’ll be surprised how sucessful that tactic is!!!

    1. Hi Victoria, thank you for your comments. By the length of your response I can see you feel strongly about this issue. I respect your opinion, but we’ll need to agree to disagree on this subject. Given that you work in Procurement it’s hardly surprizing that you don’t like my suggestions for bypassing the PSL! The bottom line is that we have competing interests. Your job is to get recruiters to REDUCE their fees, my job is to help recruiters to INCREASE their fees!

      I can assure you that the strategies in this article are proven to get results. Not necessarily in every case, but then nothing works every time. The fact is that companies do hire candidates from outside their PSL every day. That might not be the case at your company, but I can give you countless counter-examples and case studies. For example, I have two clients who both recruit for one of the biggest banks in the UK. One of them is on the PSL and they get 15% per placement. The other is NOT on the PSL and they get 25% per placement – from the same bank! The Law of “Supply and Demand” applies here, and if the demand for talent outstrips the delivery capabilities of the Preferred Suppliers, then clients can and will go outside the PSL. And in my experience, having a “star” candidate that the client is deperate to hire trumps PSL’s in many cases.

      One final comment. Although I sometimes provide recruitment training for the big national / international agencies who tend to dominate PSLs, I have a special place in my heart for the “little guys” – the small independent recruiting firms who are usually not invited to pitch for the PSL. If they follow your advice (“follow the process”) I fear they will lose out to their bigger competitors. If they follow my advice they have a better chance to getting on the PSL, and they will probably make a few extra placements along the way!

      1. well said, Mark. Victoria’s comment is a wonderful example of why Procurement Professional is an oxymoron. In my 43 years in recruitment, I have not seen anyone with greater tunnel vision and if I listened to her, I would be many millions less well off.

        1. Of course some people might say that “Recruitment Professional” is an oxymoran too! :0) Anyway thanks for backing me up with your 43 years experience!

    2. Hi Victoria,

      As Mark as already stated, you obviously have great respect for the funtion that a PSL provides. I read with interest your response to determine if I could find even a glimmer of information that would help us work within the guidelines your department routenely sets. Being a smaller player (yet, more than capable of providing very similar breadth of experience, knowledge and reach of larger organizations) we find it extrememly difficult to breach the walls your group sets up in order to have even an opportunity to be evaluated. You mention in one statement that you do not appreciate unsolicited phone calls, yet in another state that we should follow the process. Just entering our information into your systems whether directly to your database or through the Supplier Diversity site only results with wasted manhours to enter data and false hope that we would be considered during a review of vendors. If we simply rely on this part of the process, we will “die on the vine”. As pointed out below, we are no different than those in your own company’s Sales department working to create new opportunity for our organization and should be treated with the respect you would show your own group. How do you suggest we build a relationship within your group?

  2. Mark, your advice is superb! Being one of the smaller fish in a very large pond, I whole heartedly agree with you. What procurement and HR do not understand is that, their business has “Sales” people just like recruiters, cold calling all day long, using similar tactics to your advice, adjusted to their market and of course product, which then brings in the revenue which pays for “Procurement” and “HR” to actually have positions in their business. Without “Sales” people there would be no need for their functions.

    Perhaps this is something they should consider when telling “recruiters” to go away, as they have “Sales” people doing exactly the same thing – trying to win new business” Doing their jobs.

    Don’t get me wrong, do your job professionally and with the utmost integrity – however remember that “Sales” people make the money for functions like “Procurement” to even exist.

  3. Intriguing piece, but sometimes bypassing HR (especially in legal, where I specialise) is a good way to get blacklisted. When I was a recruiter I did have to go straight to partners (my sector’s decision-makers) very occasionally when HR people were being obdurate or did not have the experience to properly assess the candidate, but actually found it more productive in the vast majority of cases to follow the rules, as Victoria suggests. Developing a good relationship with HR professionals can be very helpful in a variety of ways, whereas if you hack someone off, they are not going to forget it; HR people change jobs fairly frequently, and you don’t want a bad experience travelling to another client… I think your final point – the plum candidate – can be a very good illustration of what you have to offer. If you can even get HR to look at a no-names cv, that can be a good foot in the door.

    I think the sensible PSL will have a couple of tiers and a discretionary back-door for high quality niche providers who usually (in my experience) provide a much better service but who sometimes can’t come up with the volume to get on PSLs for large companies, and that’s certainly the way I’d advise my clients to think.

    1. Hi Mark, I agree that we don’t want to make enemies with HR. Ideally we want to build relationships with both HR and the hiring authority. The purpose of my article is to really just to encourage recruiters to be creative in terms of how they handle objections, and most importantly not to give up too easily!

  4. Very interesting article. I have recently started performing a ‘business development’ type role within a recruitment company and have to admit that the “We operate a strict PSL” is by far the most frustrating objection I have come across. I have to agree with everything you say including the back door route if needs be. Obviously no one wants to be blacklisted but if it’s a last resort then I guess it’s a ‘do or die’ scenario. I do like the open probing questions that you suggest… I will certainly be using them from now on!

  5. I have worked extensively as both an internal and external HR/Recruiting professional. The attitudes of the internal/process/PSL people often significantly damages companies. Usually they are building their own empires and/or careers. PSLs give them power and control. PSLs also take away free and open markets. I’ve seen many companies fail to recruit the people they really need because of PSLs and closed markets. It’s all about their careers and importance, not achieving good outcomes for their companies. PSLs are a leftover from Communist/Socialist/Corrupt era thinking. Open up the markets to fair competition!

  6. Hi Mark, I run a small agency (5 heads). We’re 18 months old, so always looking for business. Some great points here. We’re a bit light on work this month, and it’s great to read about different approaches. I always chuckle to myself when businesses are ‘closed shops’. I bet the client’s business has sales / BD people doing the same thing. Without them winning business as we would, PSLs would not be needed, and there would be no business!!

    Victoria sounds like she works for a very big company, but to other readers here, the money isn’t always with the larger companies…

    Would be great to hear some advice on getting past the gatekeeper.

  7. Hi Mark,

    It’s a good article filled with info which we already knew but you have explained in an entire useful manner where and when to use which makes easy to understand and implement.I myself working as an Operations and Business Manager in a small startup firm (US Staffing) and this way of approaching surely helps my way to get good deals soon I believe.

    I am having around 8yrs in this core IT Recruitment field and we are trying all the ways to connect to Implmenting Partners, Prefer Vendors, Tier 1 Vendors (ofcourse all might sound similar) to start good relation going forward.

    Some more encouraging articles ignites people like me truly.

    1. Thanks Jag! Sometimes we “know” something but don’t always remember to DO it (at least not in the pressure situations). Glad you found it helpful to have a reminder so you can implement the techniques consistently in your business development activities.