GS Logo
The Green Sheet, Inc

Please Log in

A Thing
View Archives

View flipbook of this issue

Care to Share?

Table of Contents

Lead Story

Mobile leads 2014 payments parade


Industry Update

Pulse network sues Visa over debit card policies

Bebe breach a reminder of security vulnerabilities

NSA unleashes Nifi for commercial, government use

Cyber Week winners and losers


Relationships are integral to rapid growth

Global travelers shifting to mobile


Merchant life cycle marketing in acquiring

Marc Abbey
First Annapolis Consulting

Payments? Nah, we're a tech company

Todd Ablowitz
Double Diamond Group LLC


Street SmartsSM:
Spreading the word: Marketing tactics for the MLS

Tom Waters and Ben Abel
Bank Associates Merchant Services

Mastering the original merchant 'app'

Dale S. Laszig
DSL Direct LLC

The ISO calendar: Don't set and forget your ISO agreement

Adam Atlas
Attorney at Law

RDC and improved FI risk management

Company Profile

Chosen Payments

New Products

Fully integrated POS inside custom mobile apps

CardFlight SDK

Easy, interactive online menu

Online Ordering
EasyWay Ordering


Don't let broken resolutions shut you down


Readers Speak: Talent for addressing issues of substance

Boost Your Biz: Customer marketing bolsters bottom line

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

December 22, 2014  •  Issue 14:12:02

previous next

Merchant life cycle marketing in acquiring

By Marc Abbey

Consistently, First Annapolis research has revealed that the average small merchant is called on or contacted by ISOs and acquirers more than two times a week, and it is a safe assumption that few, if any, of these acquirers are proposing higher pricing than the merchant's incumbent acquirer.

Yet only on the order of 26 percent of merchants attrite in a given year, and much of that is through business failure. Even if an ISO or acquirer is objectively uncompetitive in every aspect of its offering, an attrition rate of 30 percent to 35 percent would be a pretty bad outcome (as opposed to 100 percent attrition in other industries). Why does the merchant market work this way?

When are merchants most receptive?

We at First Annapolis believe that the single best explanatory factor for this attrition profile (and really the single best model for merchant buying behavior) is a merchant life cycle model.

Our belief is that, in general and over a large number of instances, merchants are most receptive to an acquiring pitch at key moments in their life cycles: when they start up, when they hire a professional finance manager, when they implement a new POS system, etc. Lead sources and sales channels have advantages and disadvantages as they relate to a merchants' life cycle.

Who can gain an advantage?

So, for example, a bank has an advantage in that opening a commercial demand deposit account (DDA) is one of the first things a merchant does. (And for established merchants, a change of banking relationships is a life cycle event in its own right.) Selling merchant relationships to the flow of new commercial DDAs in a bank is a well established and highly effective model; selling merchant services to the stock of existing businesses at banks (as opposed to the flow of new businesses at a bank), by contrast, is devilishly difficult.

The current emphasis on independent software vendor (ISV) -based strategic business development relationships is a function of this phenomenon in that ISVs and their dealers have a huge advantage at a key moment in a merchant's life: when a business implements or changes its point of sale solution. However, all lead sources can be evaluated in this light by asking, does a particular lead source give an acquirer access to merchants systematically at a moment when the merchant will be receptive to a pitch?

What else influences merchant receptivity?

A life cycle model does not explain all merchant behavior, of course. It is certainly true that a merchant is receptive to a pitch when the incumbent has messed up – failed to resolve a service problem, triggered unwanted change, surprised the merchant with some unanticipated commercial term, for example. Therefore, competitive strategies will certainly be more important in our industry looking forward than they were looking back.

There are also many in the industry today who are making a bet that merchants will respond to a better mousetrap – a new product or new feature that is different from what other acquirers can offer. There are many examples of merchants responding to this sort of offer; however, the jury is out on how large this segment is. How many merchants will trigger a buying decision purely as a result of the product differentiation acquirers and others are developing?

Why should acquirers incorporate this?

Even considering these other influences, a life cycle sales and marketing approach remains highly explanatory of merchant behavior and should be a foundation in acquirers' business development and sales and marketing strategies.

Side Note:Incorporating email into life cycle marketing strategies

In addition to determining when merchant customers and prospects will be most receptive to your pitch and positioning yourself to take advantage of those times, you can devise email campaigns to work in tandem with your life cycle marketing strategies.

The important thing to remember is that it's a matter of sending the right message to the right merchant at the right time.

One example is to identify the stages a new merchant customer typically goes through after boarding. Begin with a welcome email in which you invite the merchant to interact with you in specific ways that will be of use to the merchant and help strengthen your bond. Be sure to address all issues your new customer brings up in response.

Then, based on your analysis of other customers in the same vertical market, send a series of follow-up emails at meaningful intervals that address the issues likely to arise at critical points in your relationship.

You can employ numerous variations on this to augment your life cycle marketing strategies.

Marc Abbey is Managing Partner at consulting firm and M&A advisory firm, First Annapolis and is responsible for its Acquiring Practice. For more information contact

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

previous next

Spotlight Innovators:

North American Bancard | Simpay | USAePay | Impact Paysystems | Board Studios