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Table of Contents

Lead Story

Bundle services, capture merchants

News

Industry Update

MasterCard, Visa form payment security group

Chicago's Ventra Card program back on track

Mt. Gox, Pony and other bitcoin troubles

Features

Large financial institutions choose mass card reissues in wake of Target breach

Casey Merolla
First Annapolis Consulting

'Surround sound' marketing

Views

Checks can still rival cards

Patti Murphy
ProScribes Inc.

Education

Street SmartsSM:
Lean in, sign on, step out

Dale S. Laszig
DSL Direct LLC

Which sales model is right for you? – Part 2

Aaron Nasseh
Prudential Payment Systems Inc

The value-add value proposition

Cynthia Bailey
The Idea People LLC

Georgia's Merchant Acquirer Limited Purpose Bank Act

Tyler B. Dempsey and
Brendan J. Thomas
Troutman Sanders LLP

Company Profile

The Formula

New Products

SMB cloud collaboration

Sage 100 ERP 2014
Sage North America

Check is in the email

Mobile Checkbook
VerifyValid LLC

Inspiration

Give yourself a tune-up

Departments

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

March 24, 2014  •  Issue 14:03:02

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Which sales model is right for you? – Part 2

By Aaron Nasseh

In "Which sales model is right for you? – Part 1," The Green Sheet, Feb. 24, 2014, issue 14:02:02, I discussed the pros and cons of building a feet-on-the-street sales program. In continuing with this four-part series, I will focus on the experienced-agent recruiting model.

This model can boost your application count rapidly, as you are dealing with experienced sales agents who generally require little or no training and have an established sales team that is able to quickly generate production for your organization.

That sounds easy enough; however, convincing an experienced agent to submit business through your organization is extremely challenging, more so today than ever before. Super ISOs and processors are spending a substantial amount of capital and resources to recruit the same agents you are targeting. Competition is fierce. It's important to have something more than pricing to offer; otherwise, it will be tough to recruit from this group.

Preparing your company

First, I'll take a step back and discuss the infrastructure you need to have in place before spending your advertising dollars on recruiting. If this will be your primary source of business, set up a direct deal with a processor. Most experienced agents are not going to work for a split of a split. While that may not be a major issue with less-experienced agents who require your ongoing training and support, an experienced agent is interested in maximizing profit and building resale value.

Experienced agents know the value of being competitive in the marketplace, so partner with a processor that doesn't unreasonably limit your ability to board accounts. Whenever you have to turn down an account, it is an opportunity for a competitor to steal not just that merchant, but also your agent.

Once you have a direct deal in place, you must have a support team of experienced relationship managers to service those tough-to-come-by relationships. This is one area in which you should not cut corners. From my experience, poor service, not inferior pricing, results in the greatest number of failed business relationships. As the saying goes, the bitterness of poor service remains long after the sweetness of low prices is forgotten.

Next, you must have a comprehensive agent portal in place. This system should, at the very least, include information about the underwriting status as well as detailed information pertaining to the agent's portfolio, including processing volume, copies of previous merchant statements, forms and thorough residual reports.

It is expensive to develop an agent portal from scratch; however, some larger processors enable their registered ISOs to utilize branded versions of their portals. When possible, take advantage of this and save yourself the development capital, which could be better employed in your marketing efforts.

Finding experienced agents

There are many ways to recruit experienced agents; your methods will depend on your budget. Some less expensive ways of recruiting include buying a database and contacting the agents directly. You can contact agents you know from the industry, or you can create a referral program for your existing agents and let them recruit their friends in the industry to work with your company.

If your budget permits, you can also do online marketing, or you can place ads in respected trade magazines such as The Green Sheet. You can also be more proactive by attending industry tradeshows and conferences where you can meet with agents face to face. Typically, a combination of these tactics is the most effective approach. Just make sure you budget accordingly; these recruiting strategies take time to pay dividends.

Maintaining profitability

Because they are in high demand, experienced agents can now command much higher residual splits than in the past. It is no longer uncommon to see 80 percent, 90 percent or even 100 percent splits being paid to agents. Additionally, ISOs typically don't have the added revenue derived from equipment sales or leases, as experienced agents tend to have their own direct relationships for such services. I strongly advise you to seek help from an accounting professional to establish a pricing model that works best for your organization. It could be costly if you are also paying an upfront bonus. Your return on investment (ROI) could take 18 to 24 months if not managed properly. I've seen ROI as high as 30 months, which is devastating – particularly to a smaller operation, as it kills your cash flow.

While this has become an increasingly competitive segment to penetrate, I still believe experienced agents bring value to your organization. However, if you have a small business, I caution against making this model your primary source of business. It is best for this model to supplement a more profitable model such as a direct sales team. When my colleagues and I launched this model, we were able to procure a sales growth of over 4,000 new accounts per month in four years. If we can do it, so can you.

Aaron Nasseh is the Founder & Chief Executive Officer at Prudential Payment Systems Inc. Mr. Nasseh has extensive sales and management experience. He previously served as the General Manager of CardPayment Solutions and as Vice President of Sales at iPayment, Inc. He may be reached at anasseh@payments-inc.com or at 818-330-4055.

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

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