Recently, ePay Consulting Services contacted The Green Sheet to share results from its latest survey of acquirers and to offer tips on how payment businesses can be more effective in retaining their merchant customers.
According to ePay's report on the survey, titled Merchant Acquiring: Leading Practices in Retention Management, attrition is a growing concern for the payments industry. "As many as 50 percent of respondents are facing rising attrition of their merchant business with attrition rates ranging from 20 to 25 percent," the consultancy found after surveying a cross-section of ISOs and acquirers that had "collectively transacted $550 billion in bankcard sales for more than 1 million merchants."
In addition, ePay stated that in an effort "to stem rising attrition rates, more than 60 percent say they have changed the type of offers presented to merchants today compared to three years ago." However, ePay found that such offers are focused on price, and ePay believes this "is clearly contributing to the price wars" and not aiding with retention.
The consultancy endorses a more proactive approach, claiming that those who implement a proactive strategy focused on improved execution and timing experience an attrition rate that is 2 percent lower than those whose approach is merely reactive. It goes without saying that having a retention team is crucial. In addition, ePay provided five steps designed to shape such a team to become maximally proactive.
Excerpted, with permission, from materials provided by ePay, the five steps are:
For less investment and therefore less sophisticated tactics, internal triggers and analysis such as impending contract expirations, call history analysis and sales volume alerts can be leveraged to help identify at risk merchants. However, there are drawbacks with using less sophisticated tactics which can lead to too much noise in the data, inefficiencies and what some refer to as the risk of "waking up a sleeping giant."
Management should consider the capacity requirements to optimize workflow management of its proactive retention campaign (for example, we have five reps available that can contact 30 merchants each per week). In cases where there are resource constraints, consider leveraging digital channels, statement messaging and email campaigns to target lower priority merchants.
Some examples of pre-work activities may include scanning the prioritized list of target merchants for business exclusions, current account status, recent call history, last rate review and rate changes, analysis of current rates and fees, downgrade history, current equipment and account set-up, and potential cross-sell opportunities. As a result, reps may find that an offer can be made without negatively impacting margins and, in some cases, add new net revenue.
For a full copy of the report, please visit www.epayconsulting.com.
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