We have all heard the barrage of bad news. It is inescapable. But what about the good news? Sure, today's business environment is volatile. However, with risk there is always reward. Anyone who has been in the payments industry for any length of time knows that with every challenge new opportunities arise.
So we turned to members of The Green Sheet's advisory board to see what silver linings they see in the clouds hanging over the industry. We asked them to answer the following questions:
This article contains the second portion of responses we received; the first installment was published in The Green Sheet, Feb. 23, 2009, issue 09:02:02.
GO Direct Merchant Services Inc.
When the last merchant company I worked for was basically taken over by the Federal Deposit Insurance Corp., it set the wheels in motion to restart my own business.
In answer to what rewards I see and to be succinct about it: building a great business - at the same time, working with some great folks, be they our merchants or those walking around with GO Direct business cards in their pocket.
Likely most anyone reading this right now was schooled on don't sell rate. Well, right now with the economy in the shambles it's in, why the heck not sell rate?
If you can show a merchant savings, show them and show them now. Good deals are out there with the right partners. I know - we have one.
We all want our merchants to process with us for as long as possible, but at GO Direct our contract is not long term nor does it auto renew for three years or five years. How slippery is that? We want our merchants to stay with us because they want to.
Now is the time to put your head down, roll up your sleeves and grind it out. Make a goal, write it down and "make it happen." Grind it out.
Take care of your merchants, and they will take care of you. Wake up earlier, go to bed later and - I may have mentioned this last part - put your head down and grind it out.
If you feel like you have a good business home, stay there and take care of those taking care of you. If you haven't been treated well, don't have aggressive price points. Don't like the folks you work with? Do something about it.
You should feel comfortable about the company you work for and the people you work with. Likely you have a good story about who you are associated with. Share that story with your merchants. It helps to differentiate you and your company from the field.
Businesses of all kinds throughout the country are taking a long, hard look at their operating expenses and fixed costs. They have to be lean and mean if they want to survive.
Programs and services are being evaluated, waste is being eliminated, costs are being scrutinized, and that certainly has an impact on our business.
Now and in the near future, companies are looking for new and better solutions and are open to services that save them money, provide efficiencies and reduce risk.
Doors are being opened to MLSs that have been shut tight for a long time. It means that the payment providers have to respond with services that bring value and that can help merchants increase their bottom lines.
As a check services provider, we're bringing new services to market that combine front-end processing with back-end recovery, saving our customers time and money. Businesses that are operating with smaller margins and less staff can really benefit by services such as these.
I've often said that it is crucial for MLSs to be prepared with an arsenal of services to offer their merchants. That is especially true now.
To be competitive, you must be ready to demonstrate the value your services offer. Look around; make sure you have the programs you need for your merchants, and if not, get them.
Jeffrey I. Shavitz
Charge Card Systems
To say the economy is terrible right now is, of course, an understatement. The merchant processing business is in a very tenuous state of mind now with many factors affecting our industry:
With all these negative factors, where is the silver lining? I still love the payments industry and see an incredible future for our business; however, with some caveats.
Although it is hard to argue the issues I stated above, our business is not going away, and it's the responsibility of seasoned and professional sales partners to maintain our valued merchant portfolios.
At Charge Card Systems, we are more than ever focusing and energizing our sales partners to "touch" their merchants at least six times per year in order to maintain this strong relationship.
When was the last time your long distance carrier made contact with you? The same holds true with our business model if you plan on maintaining your customers for more than a few years.
Everything has cycles; the economy will turn around, whether in one quarter, six months or 12 months; and those ISOs and MLSs who continue to work hard every day and nurture and grow their portfolios will be the ultimate winners when the economy shifts.
Why? Assume you are earning $5,000 monthly now with your current portfolio. It will undoubtedly start earning $7,000 to $8,000 monthly once consumer confidence and spending start again.
Consider the type of merchants you are targeting. The industry has become so competitive with traditional retail merchants (restaurants, local neighborhood stores, et cetera) that we believe at CCS that there is greater opportunity and margin within vertical sectors like business-to-business, medical and other niche areas. Develop a sales strategy, and work that strategy.
The industry is constantly changing, and it is only those people and companies with an entrepreneurial spirit and ability to shift with the times that will have the greatest impact and success on our industry going forward.
The one constant in life is change. With each transition there are always winners and losers. So the question should be, How do you become a winner? You need to analyze the market, select the opportunities that offer the best chance for success and take advantage of your strengths, put together a plan to exploit these opportunities, then execute and deliver.
If you can do this, you will be one of the winners. If it were easy, everyone would be doing it, so it is not easy. There are no guarantees; however, there are a few things you can do to stack the odds in your favor.
First of all, you need to identify your customers' pain. If you can solve their pain, you can make money doing it. It you look at the headline today, you will see at least one major pain point just about all customers are experiencing - security.
It almost goes with out saying; everyone has security on their mind these days, and if you don't, you won't be in business long. One opportunity is to provide solutions around security. Look for the win-win.
Be proactive, not reactive. Talk to your customers, find out what their security concerns are and educate them on their options. Then you need to put together a plan to address these concerns.
You also need to figure out how to differentiate your solution from everyone else. If you can stand out from the crowd, you can charge a premium for your services. Our industry is a "me too" industry that is filled with everyone selling the same technology to the same merchants.
If you let yourself get commoditized, you can only sell on price, which is a long-term losing proposition. So what you need to do is add more value to the transaction in a way that makes your solution unique.
This approach is called solution selling or a consultative sale. You are not just selling a box or a discount rate; you are selling your solution and helping the customer at the same time. It's a win-win.
Innovation - unfortunately it is a word that is often overused and almost a clichÃ©.
However, if you take your industry knowledge and combine it with new cutting-edge technology in a way that truly adds value while solving customers' pain, you have a winner. That is what we plan to do, so look for some new and exciting technology from us soon.
Listening, learning and training - you need to listen to your customers. Learn everything that you can about opportunities you want to pursue, new technologies and the impact they will have on the market, and new solutions as they come to market.
Take classes, and attend industry tradeshows like the ETA to find out what's new. Shows like the ETA are good events to interact with vendors, get hands-on experience with new technology and form partnerships. No one can do it alone. Partnerships with the right vendors will be critical to your success.
US Merchant Services LLC
I feel that a number of inexperienced and short-time MLSs will leave the industry due to their inability to generate a decent living. Also the "free" mentality will come to an end.
Be more selective in who we hire, train them better and refrain from doing business with any merchant that expects a free ride. Research heavily the company and the product to make sure that you will be successful and they are on the up and up.
Unless we all start planning innovatively, our "reward" will be a gross thinning of the herd. All along the supply chain, from product manufacturer to merchant, innovative and creative ideas for sales are the order of business. If a supplier is stuck with product, that helps no one. Sell-through goes down to the merchant activating the unit and running their first transaction.
Helping to keep merchants alive is all of our responsibility. The reward will be increased merchant accounts and merchants who stay in business longer, thus helping to pull us out of the economic tailspin we are in. Creativity begins at home. Selling a product means that we must make sure we offer a sell-through plan. We cannot expect to dump products on our suppliers' shelves and hope for the best.
New thinking about opportunities that go down to the merchant level and even beyond that, the customer's level, are in play.
We all talk about increasing value, but what is value except what is esoteric and valuable to our customers? What we may think of as value may be worthless to the end user or his customer.
Push back on everyone and demand more, but hold onto less. If you get an incentive, pass it through to your merchants and, if necessary, demand they pass it through to their customers. Become more involved in your merchant's business. Stop selling and start helping.
United Bank Card Inc
Despite the current economic climate, there are still many chances to thrive by taking advantage of new sales opportunities. It is important to remember that now, more than ever, merchants are looking for ways to ease their own economic situation.
By taking a consultative sales approach and offering ways to make their life easier, you can build a strong relationship based on trust and mutual understanding. By nurturing this type of partnership with potential merchants, you will be able to persuade them to take a risk on a new product that they may have had an initial hesitancy about.
With the Harbortouch POS System, United Bank Card has created the perfect opportunity for ISOs and MLSs to utilize this consultative approach. The Harbortouch POS System is intended to provide a more productive and efficient environment for small mom-and-pop merchants who are currently looking for a way to get ahead.
By utilizing the various sales tools we supply, you can consult them about the benefits and cost savings this product will provide. Priced much lower than competing systems, Harbortouch can provide a quick return on investment while helping to streamline their business.
UBC has always maintained that the success of our ISO partners is critical to our own success, and we have created Harbortouch with this in mind. While the POS system provides countless financial and operational benefits for merchants, it is also an extremely lucrative sales opportunity for the ISO/MLS community.
Harbortouch offers substantial equipment revenue and even revitalizes the leasing sales model which has waned in recent years. By offering Harbortouch, you are able to build a stronger relationship with both your existing and potential merchants. As a result, this leads to new merchants, increased revenue and lower attrition of existing merchants.
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