By Jeff Fortney
After World War II, my father held one job until he retired. Sure, his responsibilities changed over those 37 years, but it was all with one company. Like so many in his generation, he feared two little words: You're fired. He worked very hard out of fear that one day he would not be needed anymore. His philosophy was to give more than was required and be a team player at all times. His loyalty was continually rewarded. In fact, when he said he wanted to retire, the company offered him a big raise to stay.
Today, few seem to fear those words. Many members of Gen X and Gen Y have heard them more than once, but few have battle scars from it. Developer Donald Trump unsuccessfully attempted to trademark the phrase "You're fired!" to capitalize on his renowned use of it. On his television show "The Celebrity Apprentice," stars seek to rebuild their reputations and increase their popularity. Astonishingly, they wear with honor the badge of being on the receiving end of Trump's catchphrase.
Although fear of those words has waned, job loss is still one of the top five fears. So, when faced with the need to terminate someone, we often hesitate. In the payments world, that someone is often a merchant.
We've all known merchants who pushed the boundaries. Some demanded impossible levels of service. Others abused staff members, making them hesitate to take or return their calls. Sometimes, offsetting circumstances prevent us from firing these merchants. However, extenuating circumstances are often just used as an excuse for a merchant's bad behavior.
The experienced ISO or merchant level salesperson (MLS) knows that instances arise in which a given merchant's departure would be best for both parties. The challenge, though, is in identifying these instances. Why should a merchant be fired?
To evaluate a difficult merchant, you must first forget your emotions and think logically. You've probably wanted to fire a merchant who has called and started screaming at you. You wanted to react in kind, but you behaved professionally and held back. In a call like this, you must recognize the emotions involved. Don't allow yourself to react with an emotionally charged response. After the emotions have subsided, examine the situation to see if the merchant fits any of the following questions.
It all starts with how much value a merchant provides. Does the merchant's revenue justify your pain? GS Online MLS Forum member JMATHIS reduces it to a simple algebraic formula: "If the merchant generates X and your staff is paid Y and if X exceeds Y per hour, how many hours is the merchant costing us? If X per month is less than Y and the merchant calls in all of the time and my team has to get me involved, I would tell the merchant 'You're fired.'"
Some merchants provide enough revenue to justify their neediness, but they must be watched closely. "I had to fire a merchant one time," said MR.BANKCARD. "In fact, I'm hesitant to call [him] a merchant because [he] did next to no volume - less than $500 a month. He wanted me to give him everything for nothing. After ... a few years, he wanted me to waive his monthly minimum, which was the only way I was making any money whatsoever. It became clear that he was not worth my time, nor my ISO's."
Don't forget to factor in the cost of your pain and suffering. Determine if the actual cost plus the emotional cost exceed the revenue earned. If they don't, the merchant is a candidate for termination.
You know the type. He's a merchant who demands a level of service far beyond what anyone can continuously provide. A friend recently shared a perfect example. He had a merchant relationship that started off very profitably. Because my friend was relatively new to the business, he didn't want to risk losing the merchant. So he made it a practice to drive to the merchant's location every month to go over his statement. The merchant then began asking for free paper and specialized reports. He also made threats to leave if his demands were not met. My friend obliged and watched his margin shrink.
Finally, one month he was out of town when the statement arrived. He got a call on his cell phone. The merchant screamed at him because he wasn't there to review his statement. The merchant gave him 45 minutes to get there, or he would leave for another processor. By this time, my friend had built a decent portfolio. Moreover, his return on the merchant had eroded significantly due to his demands on the ISO's time, services and freebies. This is a prime example of a merchant who should be fired.
ASR3 offered a similar story and put it very succinctly. "Last month on Mother's Day at 7:02 p.m. while I was with my family, a high-maintenance merchant called to chew me out because I didn't show up last week to go over her statement. I told her to contact her bank and see if they would send somebody over." In this instance, termination was an easy decision.
While the majority of merchants are good customers, some can be deceptive. Now, it's important to note that some are purposely deceptive, whereas others are unintentionally misleading. Take, for example, a merchant who is about to open his store. He has to be optimistic that he will succeed, otherwise he will fail. Overly optimistic merchants may provide inflated expectations as to average tickets and volume. This is quite common. However, it can result in a misquoted price. Add to that issue the merchant's growing service level demands, and you have a recipe for disaster. Something must be done to correct the error. You could initiate a rate increase, or possibly terminate the merchant.
Cases of intentional deception can be either blatant lies or just failure to keep promises. We've all had merchants lie to us. Some lie to conceal facts about their existing relationships. Merchants have no excuse for lying, and often their past actions will resurface, leading to termination for cause.
Some merchants push for price reductions below your normal threshold, promising to deliver future business referrals in exchange. Reps often agree because such merchants can be very convincing. Don't be surprised when these merchants become demanding, refusing to send you referrals until you fix one issue after the other. In many cases, the issues are perceived and are not true problems. The result is a merchant with high demands who hasn't kept his promise of future referrals. If that puts you at a price you normally wouldn't have offered, it may be time to terminate.
Remember, the best time to fire merchants is before signing them. As MLSs gain experience, they begin to recognize merchants with the potential to fit into the categories above. Most will choose not to sign them. As JGARZA said, "Imagine the lost revenue and time spent. Pain in the behind in the beginning equals pain in the behind in the end!"
The challenge is that not all merchants present enough information to keep you from signing them. Even the most experienced rep can find himself in need of firing a merchant.
Before even attempting to terminate a merchant, fully understand your rights within the merchant's contract. Almost every contract stipulates grounds for termination. Know your options before acting. If your grounds for termination are that your expense to service the merchant far exceeds your profit, you may have an alternative. CARDPLAYER gave an example: "Why just say goodbye? Why not raise the price with the appropriate explanation of time spent, etc., and give them a chance to stay? If they leave, it's of their own volition, not because you fired them. If they stay, hopefully they'll be worth your while, and your profit will be commensurate with your efforts."
NWBC also believes in the price-increase approach. "I created a rating system that compares the profit from a merchant with the cost of servicing. It includes all costs, such as time spent on the phone, techs needed on site, supplies, terminals, etc. Once a merchant's rating fell to ... [nearly] break even, we sent them a letter informing them of a rate increase; some stayed, some left."
If you take this approach, make sure you abide by the merchant agreement. Some may require a 30-day notice to raise rates; others might not allow any rate change. If you decide to terminate a merchant, protect your position. From a legal standpoint, it's quite similar to terminating an employee.
Follow these guidelines:
Don't wait for the next time you talk to the merchant to terminate him or her. Instead, contact the merchant as soon as you have all your facts. When you make contact, have the communication prepared, and don't allow other factors to turn it into an emotional call. Also, don't let it become a debate. The decision has been made. You have nothing further to discuss, so don't let it become a lengthy conversation.
Even though it may be the right thing to do, most ISOs and MLSs will tell you that firing a merchant is a rather unpleasant experience. They remember the hard work they put in to signing the merchant, and they feel they have failed.
Sometimes, though, a merchant may surprise you. COACHBOB recounted such an instance: "We had a merchant that called every day for months complaining. He hated the agent and wouldn't deal with him. He told us over and over how bad we all were, how he didn't like us, and [he] was always nasty and sarcastic. I finally told him he could go back to his old provider or find a new one. He was stunned."
But eventually, COACHBOB "noticed that he kept processing, which led me to call him back. As it turns out, he didn't want to leave! That was about four years ago, and I haven't talked to him since. Talk about a win-win!"
Jeff Fortney is Vice President, ISO Channel Management with Clearent LLC. He has more than 17 years' experience in the payments industry. Contact him at firstname.lastname@example.org or 972-618-7340. To learn about how Clearent can help you grow faster and go further, visit www.clearent.com.
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