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The Green Sheet Online Edition

June 22, 2015 • Issue 15:06:02

Street SmartsSM

Controversial questions and answers - Part 3

By Jeffrey I. Shavitz
Affinity Solutions Inc

This is the third article in the three-part Street SmartsSM series titled "Controversial questions and answers." The articles are based on eight questions I presented to members of GS Online's MLS Forum who, collectively, serve as a compelling voice for our industry.

The first and second installments of this series appeared in The Green Sheet May 25, 2015, issue 15:05:02, and June 8, 2015, issue 15:06:01, respectively.

This article addresses questions seven and eight in the following list:

  1. Do you still offer the terminal leasing option when in reality, we know it's a very expensive solution for the merchant? As a follow-up, what percentage of your deals include leasing terminals, selling terminals and/or offering gateways?
  2. What percentage of your deals do you now price on interchange plus pricing?
  3. If a merchant has 3/6 tiered pricing, will you continue to use this pricing versus switching the merchant to interchange pricing?
  4. What do you hate about our industry?
  5. What do you love about our industry?
  6. Do you think the majority of salespeople in our industry have high standards and values and are truly looking out for the best interest of the merchant?
  7. Have you ever lied to a prospective merchant to win his or her business?
  8. Do you stay in contact with your merchants throughout the year to reduce attrition?
I intend to further explore some of the issues raised here in future columns and will welcome your thoughts about these and other questions of concern to you.

Question 7: Have you ever lied to a prospective merchant to win his or her business?

Jontucker1983 wrote, "No, because it does no good. The money in this business is made off of the client remaining with you for 'some time.' If I lie to him, he's going to figure it out sooner or later and then next thing you know, he's requesting to cancel his account. I like to present proposals to clients like a lawyer: I lay out all of the facts of the situation and argue my case based on those facts. If I have real value and can help him out in his current situation, then the deal makes good business sense, and usually there will be a sale. If I can't help him, or if he's pretty much already in a good spot, there's no need to 'lie' to him in order to get him to switch over, as once he figures out the lie, he will switch back anyway."

Diego also said he doesn't lie, but he added that "in sales it's better to ask for forgiveness than it is to ask for permission." 

 Marinesteban posted, "Not directly; I do admit that sometimes when I see that a competitor is flat-out lying and I consciously know that the client is making a mistake, I steer the client in order to avoid that mistake." Injecting some humor into the conversation, Steve Norell wrote, "I would not call it a lie but a marketing fabrication."

Steven_Peisner, stated, "Not ever … not even once!"

Babel posed a question: "Have you ever misled a merchant to do what is right for them while not being fully upfront about it?" he wrote. "For example, due to a statement design you cannot directly show 1:1 savings, but you know if you did something like put them on INT+ and it would help them, would you tell a white lie (mislead slightly) to do the right thing in the big picture?"

NWBC wrote, "I can confidently say that I've never outright lied to a merchant, but I would have to believe that over the course of years and numbers of merchants that I've spoken to, that I may have omitted a thing or two … such as when a merchant shows you a statement where they have 'not bad' tiered pricing and are yelling that they're being screwed by their current processor, and I may not have said things like, 'You know, this is really pretty good pricing and the cost of switching to us now doesn't make sense for you,' but instead said things like, 'Because you don't know what a 'qualified card' is or isn't, there's no way for you to know' (proceed to sales pitch on interchange plus pricing)."

In answering this question, I wouldn't call what I've said a lie, but a rounding error. Having done many cost comparisons over the years with analyzing merchant statements, I would get incredibly frustrated if I just couldn't get the number to be exact from the existing processing statement. Math is an exact science; however, if I was within $10, it was good enough for me. I'm still going to heaven.

Question 8: Do you stay in contact with your merchants throughout the year to reduce attrition?

NWBC answered in the affirmative. "Staying in contact is important if you wish to have long-term clients, and frankly, I find it easier than always getting new clients," he posted.

Diego wrote, "I have never met one of my merchants in person, but if anyone has a way to bring my attrition below 2 percent, I'm all ears."

Honesty trumps all, according to Jimtucker1983, who wrote, "Yes, but if you really want to reduce the amount of cancellations, be 100 percent honest with your client upfront. Again, if the deal makes good business sense, then there shouldn't be a huge amount of cancellations.

"The 15 other MLSs calling the merchant on a weekly basis shouldn't be able to provide a better 'deal' than you provided, if you truly did your job right the first time. Now, they might lie and say they can provide a better deal, that's why it's important to educate your merchant so they can be aware of the lies when they come up."

Steve Norell said, "Yes. It's the only true thing that works. The rest is all fluff."

Steven_Peisner stays in touch with his merchants throughout the year as well – "sometimes monthly," he noted.

Marinesteban posted that he does so "reactively, meaning that I cannot touch bases with each and every one of them constantly, but I make sure to address their questions and concerns in a timely manner if they ever need me."

Paymentlogistics extolled the benefits of staying in touch via newsletter. "We have a monthly newsletter, the PayLog, that is distributed in print and included with each merchant statement," Paymentlogistics wrote. "It is a single front and back page (with the exception of some special issues). It gives us an opportunity to introduce our clients to our staff, educate clients on emerging technology and trends in the industry, run promotions, warn clients of current threats around data security and cc fraud, communicate important announcements and even perform year-end surveys.

"The newsletter serves as a way to show our clients that we are human beings just like them and in doing so, our clients can better identify with us. For instance, we have an employee spotlight in each issue that highlights one employee and provides information about their role with our company as well as personal information (for instance, favorite music band, interesting fact about the person, annual holiday tradition, etc.). I've actually learned quite a bit about our staff members on a personal level from the newsletter (for example, Amy likes to Scuba dive, Victoria has an extensive PEZ collection, Martin is CPR/First Aid certified).

"Another thing the newsletter does is help to counteract the onslaught of aggressive and often less than ethical marketing tactics in use in the industry. When a client of ours receives a phone call from someone claiming that Visa told them their terminal was non compliant, and that merchant read the PayLog article warning merchants of the scam, the merchant is in a great position to tell the caller to go fly a kite. In fact, we've talked about EMV so much in our newsletters that those clients who read it regularly know more about the subject than many in the industry. "While it is hard to measure, we believe the newsletter reduces attrition in a material way and helps build a sense of loyalty among our clients."

In response to this question, I must admit that with our VIP and larger merchants the answer is yes. I need to do a better job with our smaller merchants.

Here are additional questions Forum respondents expressed interest in learning about:

  • mbruno asked, "Would you be willing to pay more for the security of flat rate? No personal bias. I'm just curious about your POV. So, say you could get a typically 1.9 percent effective with INT+ with the potential for card-based flux, or a 2.5 percent flat rate with stability, which would you prefer?
  • OldPro wrote, "How about the question what is the average yearly earnings in the industry for a single feet-on-the-street sales rep. Is there a future for a one-man shop in this industry?"

It's obvious there are a multitude of perspectives and feelings associated with our industry. Keep the questions and comments coming, and I will gladly post them in future articles.

end of article

Jeffrey I Shavitz is the Managing Director of Affinity Solutions Inc. and its Navigator product. His experience in payments including co-founding Charge Card Systems Inc. that was sold to Card Connect in 2012, Alternative Merchant Processing, dedicated to high risk merchant processing and Charge Card Funding involved in the cash advance space. His first book "Size Doesn't Matter- Why Small Business is Big Business; Profit NOW from the Small Business Boom!" will be released July 2015. For more information, he can be contacted at 800-878-4100 or jshavitz@affinitysolutions.com.

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