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The Green Sheet Online Edition

August 26, 2013 • Issue 13:08:02

Street SmartsSM

Five keys to successful partnerships

By Dale S. Laszig
Castles Technology Co. Ltd.

In business, as in life, partnerships can take many forms. Some are based on a solid business fit; others are based on problem-solving and solutions. A number of our largest ISOs can trace their origins to a couple of feet on the street who pooled their energy and resources and went on to build empires.

In today's global business community, many companies are taking a similar approach to building new competencies and achieving economies of scale by entering into strategic alliances with partner companies.

Why are some partnerships wildly successful while others end badly? I sought the sage advice of some of our leading payments industry professionals in GS Online's MLS Forum, whose views have been shaped by their own partnership experiences. Following are five attributes of good partners:

1. They have skin in the game

Clearent defines a partner as "someone who works with you, knowing that as you grow, they grow. I think that a partnership is a two-way street." He added that ISOs should be there for their independent sales agent (ISA), merchant level salesperson (MLS) and other ISO partners.

"They should encourage them, provide them with guidance, and help them increase their portfolio and revenue," he wrote. "They know [it's in] their best interest for the partner to succeed."

2. They show up

In our business, the real work begins after agreements are signed. That's when both parties get to work and make it happen. "The ISA/MLS/ISO partner should have a commitment to their partner. They should work with them and send them business," Clearent wrote.

"Sadly, our industry has had poor partners - who protect themselves." He added that in turn, ISAs who have been burned become wary of any partner; the result is that they don't treat their ISOs as partners.

It's a good idea for both parties to agree in the beginning on common standards and performance metrics so that all involved can stay in sync throughout every phase of the developing relationship.

For Jdeckard, following through on commitments is a matter of integrity.

"In my humble opinion, it's all about the 'character' of both parties," he wrote. "It's about doing what is 'right' as opposed to what is right for the bottom line."

3. They earn trust

The majority of payment professionals interviewed believe trust is an essential component in any successful partnership. Clearent wrote, "Many ISAs have had their trust unreturned and have actually been damaged by partners they trusted. So, they hesitate to trust anyone.

Clearent added that trainers, ISOs, processors and others need to recognize this challenge and understand that trust must be earned. "The effort begins on their side, not on the damaged ISA," he wrote.

"In turn, the damaged ISA has to understand that not all partners are like what they suffered. They need to do their due diligence and try very hard to find a partner that fits them, too."

TPSS//Tiger concurred, stating it's all about trust and that member service providers (MSPs) who have been burned many times over will tell you, it takes "actions to gain the trust and also talking to others in the field for their opinions."

TPSS//Tiger also recounted how he has had partners in the past who seemed to be "trying to derail any success I may have and creating this tension and almost hatred in regards to the partner or ISO. When the ISO treats the MSP like a true partner and is there for them in every way, then both sides are happy because this is where the MSP will send the business."

Marianne Tawa, Attorney at Law, vouched for the importance of trust in business. "Trust should underline every relationship, whether between doctor-patient, pilot-passenger, accountant-client or ISA-ISO," she wrote.

"Trust is essential, a required prerequisite, [and] the sine qua non of every business arrangement. Therefore, and with great deference to the views expressed, I don't believe it carries much additive value as regards this particular discussion."

4. They seek compatibility

One leading cause of partnership disputes and terminations is a basic disconnect between partners regarding goals, visions, policies and procedures. Clearent recommended conducting research before making a commitment to a new partner. Following are some of his suggested research questions:

"What are they seeking in a partner? Do they want and need that instant bonus gratification? What is the ultimate cost for that gratification, and does that cost fit their model? If not, is there an alternative that would fit better? Where do they want to be one year, five years, 10 years from now? And lastly, do they find their partner trustworthy?"

Relationships begun in haste, without sufficient research and planning, may have difficulty achieving common goals and sustaining growth. Each party may have entered into the relationship with different definitions, expectations and desired outcomes. As time goes on, these expectations may become increasingly divergent.

"I agree with Dale that there seems to be a disjuncture in the way ISAs and ISOs view the term 'partnership,'" Tawa wrote. "Frankly, as a trained lawyer, I try to stay away from this nomenclature since it is a technical legal term that generally signifies shared profits and losses among an association of two or more persons engaged in a business enterprise.

"I bring this up not to be pedantic but because I think the above legal definition, to the extent it informs our popular notion of partnership, may also be the source of the disjuncture to which this string of posts refers. Simply put: the ISA-ISO relationship does not neatly fit into the classic legal definition of partnership.

"Like a Venn diagram, there are definitely points of intersection (both ISA and ISO want to place merchant accounts and increase revenue), but there are also points of divergence (ISO's overall corporate strategy may be at odds with ISA's).

"Also, getting back to the legal definition, there is often no sharing of losses: as we know, in many cases ISOs assume liabilities (e.g., underwriting costs, chargebacks, FTC investigations) which simply do not affect ISAs.

It also bears underlining that the definition doesn't say equal share of profits and losses."

5. They maintain open lines of communication

The best partnerships are built on strong, flexible frameworks that can adapt over time to changing market needs.

While it may be challenging to maintain equilibrium during times of regulatory and technological disruption, ISOs who empower their partners to be part of the decision-making process, and who create a collaborative environment and sense of community, will build stronger, more resilient partnerships.

"ISOs should better communicate decisions to their ISAs before implementation and allow for some input," Tawa wrote.

"This will go a long way towards enhancing the feeling of being a 'partner.' Good partnerships involve give-and-take, participation and a sense that one's voice matters."

While we may have more than one definition of a partner, we can all agree that we're in a relationship business. If we want to build strong and lasting relationships, there's no better place to start than right here at our home offices. end of article

Dale S. Laszig is a writer and payments industry executive specializing in business development and sales performance improvement. She manages channel sales at Castles Technology and sales effectiveness programs through IMPAX Corp. and C3ET Credit Card Consortia for Education & Training Inc. She can be reached at 973-930-0331 or dale_laszig@castechusa.com.

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