NetRaising’s Web Services Vendor Selection Guide

NetRaising has seen a lot of vendors come and go in the nonprofit marketplace over the last 22 years. We’ve had time to reflect on what separates a sustainable service vendor from those that are likely to fail.

We’ve come up with a list of tough questions that can help nonprofits and schools distinguish between vendors that mean well and those that do well.

These questions are intended to help anyone quickly and easily identify a startup—or an established company—most likely to go out of business, leaving your organization with unsupported software and unfulfilled promises.

Ask these questions the next time you’re vetting any vendor that provides and/or supports online software.

Read our answers to these questions

Click on any of the questions below to see why we believe question matters, and what insights they may give you about the vendor you are interviewing.

1. What’s your exit strategy? When it’s time to sell or close your company, what’s your plan to ensure that my organization still has access to its data and/or digital files in an accessible format while we transition to another vendor?

In the late 1990s, as the first dot-com bubble collapsed, and countless startups failed, we witnessed dozens of local and national nonprofits lose access to their mission-critical donor and constituent data.

When these organizations did get their data back from these failed or acquired companies, it was frequently in a type of data format that didn’t allow the organization to use it. The software license for some of the database formats was ten thousand dollars, and organizations couldn’t afford it; so they effectively lost all their data.

When a vendor’s sales representative tells you that you may easily download or export your data from its database anytime, ask them to do it for you as part of your software demo. If it’s going to be as easy as they say, ask them to show you a data export and have someone that knows about databases look at the exported file to make sure it’s in a usable format.

If there’s no documented plan in place, then the vendor likely doesn’t care about what happens to your organization after its company has gone out of business, been acquired or merged with another company. If that’s the case, it could be a sign the vendor doesn’t genuinely care about your organization today.

Know what a potential vendor’s plan is to make your organization’s data whole again before you do business with them.

2. Will you host my organization’s data in a cloud? If so, in what state is the datacenter actually located? How “green” is your cloud?

Cloud hosting is all the buzz now, but how much does your potential vendor actually know about it? There are a lot of different hosting solutions in a lot of different locations, and not all clouds are good clouds.

A quick way to find out is to ask them where the data center(s) of their cloud-based solution are located? Is it here in the United States? What city and state is it in?

So far, only about 20% of the vendors we’ve asked even know where their own clouds are located. Even fewer could tell us about the security of the data center. Where your cloud’s data center is located matters.

If they don’t know (or even if they think they do), you can test their solution’s hosting location online at site24x7.com and find out if what they are telling you is true. 

Depending on your organization’s values, it may be just as important to find out if their cloud is running on renewable energy or at least purchasing some form of offsets.

You can learn more about why green hosting matters on our site.

3. What’s the name of the person who checks your direct client work for accuracy, and how often does he/she review it?

The question of “Who checks your work?” shouldn’t initiate a song and dance or a change in subject; it should be a simple, quick question to answer.

At a good restaurant, your server checks the kitchen’s work before s/he brings it out to you. After a mechanic fixes the brakes in your car, someone test-drives your car to check the brakes before you pay for the work. Shouldn’t your web services or online software provider give you the same level of service?

If the potential vendor answers your question with another question like “What do you mean?”, then this vendor may not have sound professional practices and that could put your organization data and information at risk.

When entrusting a vendor with your organization’s electronic information, choose a company that has an ongoing peer review process in place.

4. Tell me about your relationship with your largest software vendors. Is there someone at that provider we could contact to verify your relationship?

Is your future vendor engaged with its suppliers? If something goes wrong with that software, does your vendor have an established relationship with the folks who built it? Or will they, and your organization, be at the mercy of a company or nonprofit that has no way of learning about your issues?

Let’s say a potential vendor uses Wordpress, and a year after launch Wordpress has an issue that’s really affecting your website in a bad way. Does your potential vendor have someone to connect with at Wordpress to get things resolved for you in a timely way?

“We have a guy here who can fix anything,” and, “All of our code is 100% proprietary,” are not the types of answer you typically want to hear.

If they did code all of the software, then ask who’s certifying that it’s secure.

5. What percentage of your company’s time is spent training and coaching clients to be successful with your software/service?

The more complex the software solution, the more you want the company invested in supporting its clients.

If the company believes its software is so easy to use that anyone could figure it out, it may not be the vendor for you.

If the company charges extra for training and support, then you should give that some careful consideration. Even if you personally don’t need much training, you may not be in the same organizational role forever, and the person following you might need more support.

We’ve seen countless startups that truly believe they are a product company and have little or no interest in client support. They often have no way to fund the time and expertise that quality customer support requires in their business plan. When you are having issues with their products, getting those issues resolved can be frustrating and expensive to your organization.

Ask yourself if you would you rather hire a product-focused company that offers training and support as optional add-on features, or if you would prefer a training and support-focused company that offers products as features of its core services?

6. Tell me about your personal experience working or volunteering at a nonprofit organization.

You probably don’t want a business that has little or no experience whatsoever in how nonprofits operate telling advising you on mission-critical services.

While there are many companies targeting nonprofits with their services, there are few that have employees with personal connections or significant experience working/volunteering in nonprofits. Many companies lack an understanding of nonprofit culture and nuance. This can make working with them very expensive.

Before you hire them to work with you, find out if they’ve walked a mile or two in your shoes.

7. Does your company/organization participate in any third-party review or certification process?

Does the potential vendor practice business transparency? Does it allow third-party evaluation of its operations? (Is it taking good care of its employees? Is it working to reduce its environmental footprint?) If it doesn’t, why not?

If your potential vendor is every bit as good as its website says it is, then there’s no reason for it not to seek out and participate in some form of high-quality independent evaluation. The more stringent the better.

Companies that participate in third-party evaluation/certification demonstrate that they value ongoing education and learning, and are much more likely to succeed.

8. Does your company post social/environmental impact reports online?

More and more companies are starting to post Public Benefit or Social Impact Reports. If your potential vendor has one, look it over and ask them questions about it.

If it doesn’t post/print a public benefit report, ask why not?

9. Is your business license and registration current? Mind if we look them up?

Just because a “business” has been in operation for some time doesn’t mean it’s done its homework. You want to be sure there’s some ink behind that “Inc.” it shows after its name.

Many of the cities and states in the United States have online directories where you can look up business licenses and registrations.

Over the years, we’ve run into several “businesses” that just haven’t gotten around to becoming an actual business entity yet. If they haven’t gotten around to getting a business license yet, then what shortcuts have they taken in other areas of their operations?

10. What’s your company’s client/customer turnover rate? What percentage of your clients is new within the last 12 months?

Be suspicious of a salesperson that answers this question by telling you how much their product or service is growing, growing, growing. If they don’t know what the client turnover rate is, or claim they are too new to have one, or don’t want to talk about it, then you can guess it’s pretty high.

Companies with low turnover rates know what their rates are, and they are focused on improving them. Do you want to hire a vendor that’s putting all its energy into growth, or one that’s focused on taking great care of the clients it has?

Strong client retention rates are a great indicator of a successful vendor that will take good care of your organization.

11. Is your company transparent about its fees? Does it post its pricing online?

Beware of companies that can’t publicly share what they are charging other clients. Do you regularly dine at restaurants that don’t have prices on the menu?

If a company is being honest, ethical and fair with its pricing, then it can be transparent about what its fees are.

12. What percentage of your clients are nonprofits/schools?

“Lots” is not a valid answer. Any company that truly cares about its nonprofit clients is going to know a quantifiable answer to this question.

The vendor’s answer to this question may help you know how invested a company is in working with organizations like yours.

Does its online client list or portfolio reflect the answer you are getting from the salesperson?