The Green Sheet Online Edition

November 14, 2016 • Issue 16:11:01

Street Smarts^SM

Be bold, be innovative, be different

By John Tucker
1st Capital Loans LLC

Industry veteran and GS Online MLS Forum member www.paymentlogistics.com offered a perspective that effectively sums up the theme of rebranding the merchant level salesperson (MLS), which has been my main focus thus far as Street Smarts^SM author. "MLSs need to find out how to offer value in a way that differentiates them from the competition and provides tangible benefits to their target market," www.paymentlogistics.com wrote. "What makes you different from your competitors? What value are you offering that others are not?"

Since August 2016, my articles have centered on rebranding as a technology sales professional, zoning in specifically on technology solutions related to advanced POS technology. Options I've examined include electronic cash registers (ECRs) and feature-rich POS systems for the retail, restaurant, service and hospitality markets. And I compared the specific pros and cons of ECRs and feature-rich POS systems in "Rebranding as a technology sales professional," The Green Sheet, Aug. 8, 2016, issue 16:08:01.

B2B technology sales

Business-to-business (B2B) technology sales is perhaps the most complex sales process. To succeed, begin with intense, high-quality market research that spans an entire industry classification to learn about all current methods of technology delivery within that market.

Next, figure out what's missing. Consider what's being left out, what market segments have yet to adapt to recent (or not so recent) changes, and what market segments have already implemented the latest changes and are patiently waiting for tomorrow's new developments.

I'll offer you my rule of thumb as a guide: If you haven't researched a merchant and identified some estimated issue or opportunity that he or she faces for which you could provide assistance, then you have no business contacting that merchant.

Most of the marketing within the payments industry is all about selling POS systems, but the ECR still has its place. If you are selling to small startup companies or other small but growing businesses, you might want to recommend the ECR to begin a relationship. The lower costs and ease of use could be critical to a cash-strapped startup with a skeleton crew of overworked entrepreneurs.

Requisite assistance

As a business grows, you can look at recommending a feature-rich POS system as long as you provide assistance with the following:

• Equipment selection: As the POS system expert, you'll recommend a type of POS system appropriate for the merchant's environment. There are traditional countertop systems as well as virtual setups where merchants can manage the entire system through an online gateway or via mobile access.
• Implementation: The steeper learning curves involved in operating POS systems might spell a challenge for merchants and employees alike.
• Technical issues: Merchants need to know what to do if the POS system goes down and what back up technologies can be installed to keep operations functioning while IT managers work to get the POS system back up and running.

Long-term relationships

The power of professional sales, in terms of your income stream, is not found in one-off sales, but rather in ongoing sales relationships. The latter creates a business asset, reduces your need to continually produce new sales and helps fund your retirement.

Technology can help you establish long-term relationships with clients. The solutions you implement this month should setup your residual revenue streams for months going forward. MLS Forum member Mariusz reminded forum members of the power of this long-term value. "Merchants who use POS systems tend to stay with you for a very long time," Mariusz wrote. "I have merchants who use POS systems and who have been processing with me for 8-10 years."

The next two years

The next 24 months could secure your entire retirement. Let's take a look at how. After researching the marketplace, let's say an MLS named Jerry is able to sign up 75 new merchants with feature-rich countertop POS systems over the next 24 months. This means:

• Jerry makes $1,500 for each POS system sale ($112,500).

• Jerry ties merchant processing, check processing, stored-value card processing and marketing solutions to each of the 75 new merchants. Let's say he also gets a portion of revenue off of the service fees related to management of the POS system. And when recurring streams are considered, each of the 75 accounts produces $150 a month in recurring income after all splits and revenue sharing ($11,250 a month/$135,000 per year).
• The 75 merchants will use the POS systems for five years. Then through advancements in technology, Jerry will provide new POS system installations to each of the 75 merchants on or just a bit after year five, at the same revenue production levels.
• All 75 merchants remain with Jerry for a total of 15 years. The total compensation for the entire 15-year relationship with the 75 merchants would be $2,362,500. This breaks down to $337,500 from the three rounds of POS system installations over the 15-year period, and $2,025,000 from the annual residual revenue.
• Let's say Jerry is single, has no kids and lives below his means to where he spends only $30,000 per year on personal expenses and has few business expenses at about $10,000 per year. So over 15 years, that comes to $600,000 spent. Let's say through strategically managing his taxes, he gets his effective tax rate down to 15 percent.
• This could leave Jerry with at least $1,350,000 in monies left over throughout this period to place inside of balanced mutual funds with a compound annual growth rate of 5 percent. At that growth rate, he will have at least $2.1 million in his mutual fund investment accounts at the end of the 15-year period.

Of course Jerry's personal and tax expenses could change over the 15-year period due to inflation; tax hikes; emergencies; and marriage, parenthood or divorce; but this example exemplifies the power of selling for the long term.

The rest of your life

As I've said before, the payments biz today requires MLSs to rebrand to sell new, innovative, complex solutions that resolve merchants' new, complex marketplace problems. The field of merchant services will no longer be based on selling merchant services, but on selling other solutions and (potentially) tying merchant processing to the solutions implemented.

This new market requires technical and analytical sales professionals who also have the capacity to perform intense market research, comprehend merchants' buying cycles and provide diagnostic consultations.

Remember, rebranding as a technology sales professional will help you sell for the long term, which means that the next 24 months could set you up financially for the rest of your life.

John Tucker is Managing Member of 1st Capital Loans LLC, as well as an M.B.A. graduate and holder of three bachelor's degrees in accounting, business management and journalism. Tucker also has over nine years of professional experience in commercial finance and business development. You can contact him by email at tucker@1stcapitalloans.com or by telephone at 586-480-2140.

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