The holiday season is approaching, and we all know what that means: Despite somewhat lowered expectations, merchants still will be too busy to take sales calls, but they'll be on the phone fast and furious if they have POS problems.
When retailers are swamped with holiday shoppers, some ISOs and merchant level salespeople (MLSs) take the season off. Others spend the time setting 2009 goals, cleaning their desks, compiling leads, catching up on educational opportunities, and re-reading past issues of The Green Sheet.
Steve Slagle of South East Merchant Services Inc. said his leads ebb and flow throughout the year, but he consciously avoids starting anything new toward the end of the year in order to spend more time with his family. "The downside to this strategy is that residual income does not grow, but it does not have time to decline either," Slagle said. "One of the beauties of this business is the money and time it provides so we can spend more time with people that are important to us."
Sam Caine, President of Card Payment Services Inc., said when things slow down "during the final weeks of the year, we tend to do a lot of analysis and planning for the coming year." But if you, as ISOs and MLSs, expend a little effort now, you can help ensure that your merchant customers are ho-ho-ho'ing their way through the holiday season rather than bah-humbugging.
Speeding the lines
System upgrades or replacements that will speed shoppers through checkout lines faster are particularly useful to merchants this time of year. Self-service kiosks, curbside and pay-at-the-table options can help speed transactions. But these should be in place well before the holiday rush.
If a merchant inquired about enhancements that speed checkout in the past - but didn't commit - an immediate follow up call is in order.
"The time to sell value adds for the holiday season is now," said Doug Small Assistant Vice President of Business Development for National Processing Co. "Do not wait until November/December because retailers will be very busy, and that is not the right time to sell/add additional services. They all need to be set up ahead of the holiday rush."
Matt Hoskins, Chief Executive Officer of Payment Processing Technologies LLC, said his company is ramping up sales efforts to make a final push for the year. "That includes gift cards, multi-app terminals and supplies necessary for retailers to maximize their prime season profit potentials."
Once the optimum selling season for value adds is over, take note during the thick of the season of merchants who do not have full-featured terminals or adequate POS systems and determine what each one's average wait time seems to be. Approach them after the season with a quick analysis of how much faster they could have served their customers had they been properly equipped.
Readying the team
This is also an opportune time to burnish your customer service operations so they are totally up to speed. For most retailers, this will be their busiest season, so they'll need to have all of their POS and back-office equipment in good working order. Any new equipment or systems should be installed, and people must be well-trained before the rush.
According to TSYS Acquiring Solutions, a processor serving banks and ISOs, during a typical holiday season, transaction volumes can increase by as much as 25 percent. ISOs should have extra service reps on hand. With increased business volume, there will be additional breakdowns, some during peak times - all called in with an extra note of desperation. The holiday season can make or break retailers, and no merchant wants to let even one customer walk out the door without a purchase due to an equipment failure.
Lombard, Ill.-based Premier Payment Systems ramps up its customer service starting in October. "Our first step is to call each merchant processing with PPS to ensure that their equipment is functioning properly and processing is fast and efficient," said Executive Vice President Angela Ross.
She noted that sometimes an issue is so small at the time that the merchant doesn't think to call. "For example, we may find out that they are using a splitter which is causing a 'comm error' or 'time out' on every few transactions," she said. But something that seems insignificant on a typical business day can halt the POS cash flow like a disabling migraine when a merchant's traffic increases.
"We like to verify that our merchants feel confident that their merchant services will meet their needs for the upcoming shopping season," Ross added. "Reaching out to our merchants before they have a need to call in provides them with assurance that their processor will be there for them, whatever and whenever a need may arise."
Peggy Olson, Vice President of Marketing at TSYS, said that to maintain "a seamless and flawless transaction flow during the holiday season" TSYS institutes a "system freeze" from Nov. 17 to Jan. 7 each year. The system is overhauled before Nov. 17, but during the freeze, no new programs are installed, and routine maintenance is put off to ensure that the system is speedy and stays reliable during the holiday crunch.
As part of the overhaul, TSYS conducts a series of audits to determine system readiness for increased workloads, performs transaction trending, and monitors the impact of increased volume and usage on system performance and capacity.
Olson also said that because TSYS boards most merchants from spring to fall and pushes gift card programs and equipment updates to occur well before the seasonal rush, the company has more employees on hand to monitor day-to-day operations during the holiday season to respond quickly to any problems.
In addition, it's a good idea to assume that anything that can run out (paper or blank gift cards, for example) will run out. And busy, anxious merchants are likely to blame their suppliers when that happens - even if it happens because they forgot to restock.
"Make sure your merchants are stocked with supplies ahead of the holiday season," Small advised. "A merchant running out of paper in the middle of the holiday rush is not a good thing."
Selling by season
Very early in the season, some ISOs and MLSs target seasonal retailers like shops selling Christmas ornaments and decorations, Christmas tree lots, vendors at holiday fairs, or calendar shops. Residuals can be uneven in this sphere, but the competition for these types of retailers is typically less intense.
Others target retailers who are likely to be unaffected by a seasonal rush: automobile dealers, granite and tile dealers, tobacco stores, business-to-business enterprises, plumbers, roofers, electricians, medical professionals, or summer holiday merchants like hotels, marinas and campgrounds.
"From mid-October until January we avoid retail and restaurant, concentrating on automotive, medical and anything else that does not have holiday-effected spikes in business," said Bob Dickerson, CEO of Money to You EPI LLC."
This may also be the perfect time to sell prepaid payroll or employee benefit cards. "Our payroll business has its best months in the last three months of the year," said Bob Carr, Chairman and CEO of Heartland Payment Systems Inc.
And some ISOs add sales incentives to help boost sales in what might otherwise be a flat season. "We add promotional monies, productions monies and bonus dollars to make the holiday season most enjoyable for our sales channels," Hoskins said. "All of these incentives coupled with our [residual] programs allow our agents to end the year with a bang."
Merchants who believe they are underserved by their equipment or processing providers will feel the pinch more acutely during the holidays, even if they can't take action during the rush. Keeping this in mind, some ISOs and MLSs identify merchants who are dissatisfied with their providers during this time and prepare for post-season sales calls.
"We look for the other processors who are debiting "peak season fees" (or other ridiculous fees some of them steal from merchants so they can meet their year-end promises to their owners after another failed year of performance) from their merchants, and we solicit their business," Carr said.
It's not news that gift card usage is growing dramatically, and merchants who don't have gift card programs will likely lose out on some sales during this important time.
According to JupiterResearch, 71 percent of consumers under the age of 35 received a gift card during the 2007 season; 50 percent of them redeeming the card by the end of January. Also, in 2007, gift card recipients spent an average of $27 above the face value of the cards.
In a weak economy, gift cards may be even more important to merchants. Some have suggested there will be more gift cards given because anxious consumers don't want to waste their money on merchandise recipients may not like.
"In 2008, companies such as Wal-Mart have noted that their customers are using gift cards to purchase necessities like groceries rather than gift-oriented items - most likely due to the economic issues currently facing U.S. consumers," said Patti Freeman Evans, author of a JupiterResearch report, Gift Card Sales: Exploiting a Post-Holiday Retail Sales Opportunity.
"However, if retailers are proactive in their messaging about use of cards across all categories of merchandise, they may still get the incremental dollars customers spend as they redeem their cards," she added.
Of course, these programs should be put in place now so all the bugs can be worked out before shoppers are swarming stores in search of ideal gifts. Some of your clients who don't yet have gift and loyalty programs in place may be thinking of adding them. Why not see if you can help them get these programs up and running?
Chargebacks and fraud (as well as shoplifting) tends to increase this time of year, mostly as a result of rushed and distracted retail employees. If any of your merchants are having problems with chargebacks now, this is likely to escalate over the next month or two. Now, while it's relatively quiet, is the time to help merchants protect against chargebacks and remind them of steps they can take to avoid fraud.
"It is PPS' year-round policy to assist our merchants in disputing chargebacks," Ross said. "We always, regardless of the time of year, encourage our merchants to ask to see an ID for all credit card purchases; we encourage our merchants to keep all signed receipts for no less than one year from the date of sale; we emphasize the importance of having a clear refund policy that all consumers are made aware of before or at the time of purchase.
"Any of our merchants following our recommended processing procedures, which are suggested solely with the intention of protecting them from chargebacks, will not see a spike in chargebacks due to the holiday season."
According to Jeff Fortney, Director of Business Development at Clearent LLC, the simplest enhancement merchants can make during the holiday season is to not lose their diligence.
"Don't rush just to move the line along," Fortney said. "Do all the basic steps they do all year long, and the ratio of chargebacks won't increase. If there is a product or enhancement that will reduce chargebacks, and chargebacks are an issue with a merchant, then the holiday season shouldn't be the reason to install them. They should have them now - and throughout the year."
This is the season that brings out etiquette angst: Will your merchant customers expect or appreciate gifts? Will presents cause merchants to wonder just how much profit you're making off them anyway? Will holiday cards please or offend recipients? Are cards just a waste of time and money, going unnoticed in the holiday hubbub?
It can be hard to decide just how to celebrate the season - and with whom. But it is an appropriate time to show you appreciate your merchants and employees. And a small gesture, unaccompanied by a sales pitch or demand, can go a long way in cementing relationships well into 2009.
"Offering gifts to merchants is difficult if you have been telling them it's a penny business," Fortney said. "However, acknowledging all good clients is always wise. How that is done can vary, but the statement 'it's the thought that counts' really comes into play here."
Patrick Fitzsimmon, President of NWBC LLC, sends out handwritten Christmas cards to each of his merchant customers. NWBC also purchases cookies, which agents can hand-deliver to their largest accounts.
"My first year, I made the decision to send out cards that carried a Christian message regardless of the 'cost,' and some of our agents were concerned since we deal heavily within the Petroleum market, which can be largely non-Christian," Fitzsimmon said.
"As we were visiting our merchants after the cards had been delivered, it was amazing the compliments we received from the merchants we feared to offend; many of them displayed the cards we sent to them - we do always send a very attractive card," he added.
Small advised ISOs and MLSs to send "gifts or cards to your most valuable customers. The more personal the gift for your large customers, the better. If they are local, stop by and deliver it in person."
Lazaros Kalemis, CEO of Alpha Card Services Inc., said he buys gift baskets for all of ACS' active sales groups and the top 10 percent of the company's merchants (by volume). He also invites employees and any MLSs who can make it out for dinner and drinks to celebrate the season.
Even small gestures of thoughtfulness can stand out. MLS David Hanlin personally signs and hand-addresses cards for his merchant customers every season.
He also drops in a Florida lottery ticket or two. He said this simple act always engenders a significant number of favorable comments.
This holiday season may be more nerve-wracking than others in the recent past. But a little preparation can go a long way toward easing anxious merchants' speed bumps.
And a relaxed egg nog and exuberantly iced gingerbread man shared with friends and family can go a long way toward easing the pain of residual watching in a recession.
So go on out - now - and prepare for a splendid holiday season.
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