Unbiased data is the backbone of informed decision-making in software buying. Because if your third-party buying partner isn’t delivering for you, they’re delivering for suppliers.
While some third-party buyers prioritize their bottom line over their customers’, others deny payment from suppliers and focus instead on investing in building out helpful tools and providing valuable insight into pricing benchmarks and negotiation levers.
Tropic was founded on the simple mission of supporting buyers and arming them with the tools, resources, and data to level the playing field with suppliers. When we launched our Supplier Code of Ethics, we were resolute in rejecting the pay-to-play model to ensure untainted data that would foster the best outcomes for our customers. Unbiased data was also at the root of our recent SaaS Benchmarks Report, which offers a clear picture of the current state of SaaS buying so you can accurately assess your spend.
This guide will help you understand what unbiased data means, how biased data can jeopardize your financial health, and how to determine if a third-party buyer is a bad actor.
What is Unbiased Data and Why Does it Matter?
Unbiased data isn’t a buzzword, it’s a guarantee that the insights gleaned from your buying partner are rooted in integrity, impartiality, and transparency. It empowers you to make decisions based solely on objective data rather than vested interests or skewed perspectives.
Software is a massive opportunity to save money and drive efficiency for most businesses. The average company has 102 SaaS tools in its tech stack, not including inexpensive, no-commitment tools. That’s 102 opportunities to save — but only with reliable price benchmarks to guide you.
Armed with extensive datasets, suppliers use insight disparity to push favorable terms and inflate software prices. As a buyer, that information asymmetry puts you at a deep disadvantage. Your strongest leverage is using unbiased data and proven strategic levers to ensure you’re getting the best possible price and a contract that suits your needs.
Let’s dive into the 4 key questions to ask to ensure a potential third-party buyer has unbiased data and that they work for you, not the suppliers.
1. Do You Accept Supplier Commissions?
Buying partners who accept kickbacks and referral commissions from suppliers put you at major financial risk. Under the reseller marketplace model, third-party buyers are incentivized to promote certain suppliers over other competitive solutions in the market, perpetuating the cycle of keeping suppliers in power.
As Tropic CEO David Campbell said in his Forbes column, “Receiving payment from the suppliers just brings us back to square one, placing buyers at a disadvantage every time they attempt to procure software.”
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Understanding how a partnership between suppliers and third-party buyers is incentivized could spell the difference between tens – or hundreds – of thousands of dollars.
Ask your third-party buyer how they get paid. Are they taking commissions from suppliers? Is there a fee to be included in their “Top 10” or “Best of” lists? Discerning how they make money can shed light on their business model and motivations, mitigating the financial risks of biased data for you.
Ideally, buying partners should ethically advocate on behalf of their customers (you), and their customers only. If suppliers are paying money to a third party buyer in order to sell to you, you are the product and no longer the customer.
Biased data leads to poor decision-making and substantial financial risk. Scrutinize the integrity of a third-party buyer’s data and supplier recommendations to minimize your fiscal risk exposure.
2. How is the ROI of the Savings Guarantee Calculated?
Perhaps you’ve been burned by savings guarantees in the past that were predicated on biased data and obscured ROI metrics.
Proper attribution and accurate financial reporting are critical for gaining the trust of your stakeholders and proving to your leadership how much you saved the business (don’t let a third party take credit for your hard-earned savings).
Ask your third-party buying partner about their savings methodology. How are they measuring and attributing savings? Are they asking you to take their word for it? You should be seeing a specific breakdown of exactly where the savings are coming from based on objective, unbiased data.
Guarantees can be alluring, but savvy procurement and finance practitioners must exercise caution. A guarantee doesn’t reduce risk for you — although it’s meant to seem that way — it protects the third-party buyer.
The only way to report accurate ROI and savings metrics back to the business is with unbiased data and clear attribution.
3. Are Your Price Recommendations Standardized or Personalized?
Most companies already overpay for software by up to 30%. By accepting standardized price recommendations from a third-party buyer, you miss out on even more potential savings.
How do you know if you’re getting a good price on software? You can take a third-party buyer at their word…or you can leverage precise data, like Tropic’s Price Check tool, which puts fully unbiased data right at your fingertips, and dedicated negotiation services that go to bat to get you the best price every single time.
Pushing you to sign a contract upfront assumes a third-party buyer can’t (or won’t) do any better and limits optionality. The unfortunate result? You get locked into suppliers that don’t meet the needs of your stakeholders at higher prices. These tools simply become unwanted shelfware that collects dust and burns cash.
A buying partner’s ethical responsibility is to recommend and advocate for tools that meet your team’s needs, negotiating for things like the lowest cost available, favorable terms, and proper functionality.
4. Do Suppliers Pay to be a Part of Your Marketplace?
The procurement landscape is littered with two-sided, pay-to-play marketplaces that rely on a steady stream of revenue from suppliers, which forces them to prioritize the sellers’ needs over yours.
What does that mean for you? Their customers are now your vendors, making it impossible for these marketplaces to provide you with impartial and unbiased supplier pricing data and negotiation insight. Since “recommended” or pre-approved suppliers are their main source of revenue, the recommendations are inherently biased, placing the onus on you to decipher which tool is right for you and recoup the costs of those referral fees.
Tropic’s unwavering commitment to impartiality, detailed in our Supplier Code of Ethics, ensures buyers remain the victor, getting the best price on the right tools, without ulterior motives or bias.
Because we don’t accept any kickbacks, we pass 100% of referral commissions back to buyers. Working with a third-party buyer that operates on transparency and ethical recommendations helps safeguard your company’s financial health.
Choose a Third-Party Buyer with Unbiased, Transparent Data
To protect your company’s financial health and deliver the right software tools to your stakeholders, you need a trustworthy buying partner who puts your best interests first with unbiased data, refuses cuts from suppliers, and does not allow them to influence recommendations and insights. A partner like this has rooted their product and services around the sole commitment to helping you, the buyer, level the playing field and negotiate real savings.
Future-proof your procurement function and mitigate fiscal risk by asking the tough questions about how they get paid, how they guarantee you’re maximizing savings, how they customize negotiations on your behalf to get you a great deal, and if suppliers pay for inclusion in their marketplace.
If you’d like to see Tropic’s fully unbiased data in action, request a demo.
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