A Thing
The Green SheetGreen Sheet

The Green Sheet Online Edition

October 26, 2009 • Issue 09:10:02

Ask the coach
Look ahead, prospect and prosper

By Bob Schoenbauer
Capitol Payment Systems Inc.

Question: I was approached to sell my business. What is your opinion regarding the industry today and where it will be in five years? Should I sell and start something new from scratch or wait on the economy?

"Coach" Bob's answer: My position has always been to look ahead, not back. Here is what it takes to be successful today and tomorrow: flexibility, being open to change and a big dose of perseverance. Like most things in life, your business is what you make it. When I entered the merchant services industry in 1996, I was already hearing statements like the following:

  • The good old days are gone.
  • Lease prices are down.
  • There is too much competition.
  • Dishonest agents and ISOs are misguiding merchants.
  • It's impossible to compete with processors' in-house reps.

Does most of this sound familiar? The fact is our business is up. I also just had this conversation with my processor yesterday and was told that, while a few are down, a surprising number are doing very, very well this year. I believe it is just another cycle.

My experience is that the model of processor and bank direct reps cycles in and out about every five to seven years. One day there is one on every corner; the next day they are all gone due to the management requirements they entail for processors and banks.

Many of you who know me know that selling my company is never an option for me. I think this business is the best thing that ever happened to me and my family, and it has been a great fit. It is just way too much fun. Hopefully, one day my business will be run by my three sons.

In this business, like any other service industry, all you have to do is the right thing. Treat everyone with the respect they deserve, and as the true partners they are, and do what you promise not only today but tomorrow. When the phone rings, pick it up and help the caller. With a little patience, the rest will take care of itself.

Start from scratch? We are all in a residual-based industry to avoid that very scenario. Where will you be in five years? Resting on your residuals, I hope.

Question: If you were just entering the business today, considering everything you have learned, how would you get started?

"Coach" Bob's answer: Building a strong business in the merchant services industry is about the satisfaction and retention of our valued partners, both merchants and agents. This question, though, seems to be about how I would find those first merchants and how I would quickly build a portfolio to support my family.

I would employ the same basic model I used from the mid 1990s until 2003. Our industry has undergone incredible change, but on the front-end this is still a sales-based industry in its purest form.

I believe telemarketing is the quickest way to get in front of a high number of qualified prospects. I started Capitol Payment Systems with two telemarketers setting appointments just for me in a small office above a restaurant. We started in January, and I signed up 12 merchants that month - the next month 18, and well over 20 the next. Four reps and a few more telemarketers started on May 1. We did 44 merchant applications that month and never looked back.

Running even a small telemarketing room while also selling is not easy. I came in early, handed out the newest, hottest list (copied out of the phone book) and got the crew motivated. I would be back around 3 or 4 p.m. to do paperwork, talk with the telemarketers about their day and help new reps with questions. If I didn't have appointments during lunch, I would drive back, if possible, to surprise them.

I realize this isn't something everyone can or wants to do. Running telemarketing is challenging and can be costly. Here are a few less costly alternatives that may help jump-start your sales. Admittedly, the first may require a little luck. A local coupon book business in Annapolis, Md., sold through telemarketing to homeowners in the evening and called my house one night. I could see the company was local, so I asked for the manager.

While talking with him, I learned the office was nearby and had six women working the phones in the evening. I asked if any of them would like daytime work. He said a few would, so I met with him and made a deal to pay him $8 per hour plus bonuses for two workers to make calls for us. This not only worked great for me but also helped him out.

I am sure you can track down a small telemarketing room in your town. Remember, it doesn't have to already be targeting business owners. If the outfit is calling homeowners in the evening, some of the telemarketers could very likely need part-time daytime work. You may find a local business with in-house telemarketing that would let you use its resources during the day as a way to help retain its part-time workers.

Looking for something a little less costly? Some of our sales partners have had great success using canvassers. Pay a high school or college student to go door to door passing out fliers. With just basic training, a canvasser can grow into a hot lead machine.

If a merchant shows interest, the canvasser simply asks for the merchant's contact info and explains that you will call personally to go over the program and set an appointment. In some cases, canvassers can progress into setting your appointments on the spot or even become salespeople.

If canvassers sound too expensive, find another business owner to share the cost of paying someone to hand out fliers for both companies. Alternatively, if you want to do outreach yourself, stop at shopping centers when you're out at night, and put handwritten notes in the doors of closed businesses. This works very well. A very effective variation is to mail handwritten notes to local business owners. For these to work, they must be handwritten. Describe your experience and emphasize that you provide local service during and after the sale.

With all this said, I'll admit that leasing made it much easier for us to get off the ground. But while leasing isn't what it once was, it is still a viable part of our industry. Many of CPS' sales partners still lease terminals every month when adding value-added services such as prepaid cards, selling POS systems, moving to Payment Card Industry Data Security Standard-compliant equipment or just upgrading to newer, faster, more compact equipment.

While telemarketing was the answer for me, another method may work for you. Most of all, don't say no to new ideas before trying them. Stay open to change, and always think outside the box. end of article

"Coach" Bob Schoenbauer is the President and founder of Annapolis, Md.-based Capitol Payment Systems Inc., which was established in 1997. Bob attests that CPS is a debt-free ISO/MSP built on clarity, respect and an open door for MLS partners. He is always available for advice, drawing on his experience in both face to face and phone sales. You can reach him at bob@capitolpaymentsystems.com, coachbobs@verizon.net or 410-8974960. For more info on CPS, please visit www.capitolpaymentsystems.com.

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

Prev Next
A Thing