The Green Sheet Online Edition
September 08, 2014 • Issue 14:09:01
Race to the top
There is a phrase that has become part of our sales culture: race to the bottom. We hear it said whenever anyone speaks about a new product, offers tips on how to avoid attrition, shares reasons why some merchant level salespeople (MLSs) struggle, or talks about different sales practices.
I recently heard this phrase used in four consecutive sessions at a tradeshow. It was used to discuss trends in the industry, and what could be used to avoid that "race to the bottom." In another session, it came up when discussing building a sales force and how to hire people who would not perpetuate the trend.
It came up again in a discussion on reducing attrition, since retaining a customer today is better than trying to find a replacement in that race to the bottom.
A worn-out phrase
The term refers to a sale based solely on cost savings. In payment-speak, it means, Show me your statement, and I will save you money. We've all said it. We've all protested with statements such as, I refuse to offer pricing that is nothing more than a race to the bottom or I intend to sell service so that I can avoid the race to the bottom. Yet contrary to what people say, the race continues.
Ask industry old-timers (me included) about this form of selling, and they'll all say it's been around for as long as they can remember. The statement request may be said differently today, but the basis of the sales pitch remains the same: you're paying too much and I can fix that. Everyone admits this form of selling is inefficient and affects returns. But it remains the common sales practice of the majority of MLSs today.
Many who start in the payments business are told to get a statement, save the merchant money, and the merchant will sign. They hit the streets, maybe sign a few merchants, and in a month, receive a low return on their efforts. As a result, some potentially great MLSs decide that the hard work to sign merchants just isn't worth it, and they leave the business. Those who survive ask questions and look for alternatives to the savings-only approach. The challenge is that they are always at risk of falling back into this practice.
Three smart moves
Many successful MLSs never sell cost savings alone. They have three practices in common. They:
- One: Concentrate on a market or markets. It can be said that every merchant should accept cards in some form. However, each merchant type may have distinct needs and require different pricing models.
It's only logical to concentrate on one or two types of merchants and learn their language and needs. This isn't saying you need to concentrate solely on funeral homes, for example, although you can choose a merchant type that is that specific. You can also choose to concentrate on business-to-business merchant types. Or you could choose a group of merchants with similar practices. If you have experience in hospitality, it may be worthwhile to seek apartment owners and management teams.
Sometimes a concentration is chosen for you. For example, perhaps you recently signed several veterinary hospitals. You can develop a full industry niche just by asking them for leads and using the expertise you have gained from those you have signed already.
- Two: Be prepared to walk away. When asked what the most important action a salesperson in any profession can take, I always say, "Know when to walk away." As much as you may want to sign everyone, sometimes a steep learning curve, unreasonable merchant demands or the effort required make it prudent to choose not to sign an account.
Before walking in the door, or even talking to a prospect, you must be mentally prepared to walk away if the merchant doesn't fit your expertise or you don't have a solution other than price to sign them.
- Three: Only ask for a statement after the merchant says yes. This is the most difficult step of all. It seems illogical to not request a statement early in the conversation. You may even think this can work to your advantage.
However, the minute you ask to see a statement, merchants tend to move directly into price. Until you have convinced them that your solution is best for them, and that you likely can provide it at an acceptable price (which is often what they are paying) you should avoid even looking at their statement.
Who knows? You may save a client money as a bonus, not an expectation, if you first identify the merchant's needs and pain. The result is that your new customer's loyalty will be even greater.
Ultimately, price must be discussed. But if timed correctly, and if you create a value outside of cost savings, the proverbial race to the bottom will quickly come to an end, and you will find yourself happier and wealthier.
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 email@example.com 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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