By Dale S. Laszig
For decades, merchant level salespeople (MLSs) have ably defended their turf as new players enter their space. A lead article, published Aug. 8, 2016 in Issue 16:08:01 of The Green Sheet, titled, "Maintaining the MLS hometown advantage," celebrates MLS champions, stating, "Thirty years after the original payment app came to market, the sky is not falling. MLSs can leverage their experience and relationships to stay connected with customers and ahead of competitors."
It's no secret that payments have become commoditized, selling on rate is a race to the bottom, and MLSs must differentiate by specializing in an industry or niche. While these truisms have circulated for years, some MLSs who want to update their selling methods find it hard to let go of old habits. This article shares practical advice from payments industry leaders on how MLSs can improve their "away game" and maintain their competitive advantage, even after they leave their comfort zones and travel to other vertical industry arenas.
Specializing in an industry or niche can help MLSs and ISOs stand out from their competition and expand the geographic areas they serve, according to Mike Ackerman, President at DigiPay Solutions Inc. "If you try to sell to everyone, people will question if you understand their needs or bring industry-specific knowledge," he said. "When you cater to a specific industry or vertical, merchants believe you understand them. Another advantage of this strategy is that you can justify higher pricing." John Tucker, Managing Member at 1st Capital Loans LLC, added, "MLSs must operate strategically using market demand, challenges, and opportunities as an operational framework." The former Street SmartsSM columnist and contributing writer at The Green Sheet encourages MLSs to rebrand by specializing in a vertical industry and outperforming competitors.
Tucker recently told The Green Sheet that effective MLSs do more than just sell; they conduct research, analyze data, diagnose problems and design integrated solutions. "Their research is focused on prospective customers and their current challenges, rather than random product sets, which may or may not appeal to prospects."
Once an MLS decides on an industry, the next step in rebranding is to address industry-specific issues, Tucker noted. "For example, a finance consultant might focus on an industry that has difficulty obtaining working capital during certain times of the year or operational cycles," he stated. "The segment may need working capital in general, merchant processing, check processing or other small-business-related services." An MLS with industry knowledge can offer a merchant a complete service package, with discounted, bundled solutions and the added benefit of having one agent to handle everything, instead of five different specialists, he said.
Sonny Wooten, Vice President of Business Development at National Benefit Programs LLC, said MLS specialists are indispensable to merchants because they help them solve problems. Specialists can diversify within a niche by addressing different areas of interest with multitiered products and solutions, which may include financing, discount programs, and gift and loyalty programs.
Diversification can be useful for both specialists and generalists, Wooten noted. Agents who specialize in auto dealers can provide targeted solutions to sales, rentals, repairs, accessories and retail departments. Generalists, whose target markets vary, can promote diversified solutions to broadly appeal to their base.
Wooten suggested MLSs offer bundled, discounted services and offered a potential opening, as follows: "Walk in and say, 'I can touch many aspects of your business and be a great partner for you. I can save you thousands by giving you one procurement portal, with access to 55 of the most-used vendors, for simple, quick, multiple benefits.'"
Wooten expects the old days of selling countertop terminals to soon be gone. Smartphones and tablets have immense computing power and can do everything, he stated. MLSs need to evolve from terminal-based to technology-based selling. "Decide if you want to specialize, diversify or do both," he said. "Don't stay stuck in the physical world without a baseline or reference point."
MLSs whose specializations match their interests and skill sets can improve conversion rates, Wooten noted. He supplied the following examples of how to tailor a sales pitch:
Each market has unique needs and buzzwords; MLSs who offer targeted solutions and speak the industry vernacular will get respect, Wooten added.
Sarah Schaaf is Chief Executive Officer at Headnote, a technology company that provides transactional services to legal firms. Headnote recently enrolled in Commerce.Innovated, a four-month accelerator program run by Silicon Valley Bank and First Data Corp. "As an attorney who was raised by two attorneys, selecting the legal industry was an easy decision," Schaaf stated. Her work at her parent's law firm, and as a litigator in Google's legal department, inspired Schaaf to create vertical solutions for the legal industry.
"I wanted to use modern technologies to solve inefficiencies mostly caused by paper transactions and regulatory restrictions," she said. "Most processors will not board attorneys. The legal industry's cash dependence and potential for fraud makes it a high-risk category. We're working with mentors at Commerce.Innovated to address these issues."
Some agents fear product discussions may overburden conversations with prospects. Wooten recommends de-emphasizing credit card processing. "Flip the script by leading with a suite of products instead of processing," he said. "Direct processing questions to your website, where terms of service are clearly stated."
"MLSs should see themselves as business services agents, not processing agents," added Tucker. "Value-added services, formerly served on the side with a merchant account, can be the 'main dish' going forward, with processing bundled into services as a 'value-add.'"
According to Wooten, traditional MLSs are far outside their comfort zones in the digital age. "They wish merchant acquiring could be the way it was, but technology, regulations and globalization have forever changed the game," he said. "Those who don't integrate service offerings are heading to devastation."
MLSs don't have to travel far to observe consumer behavior. Raymond Pucci, Associate Director of Research Services at Mercator Advisory Group, periodically downloads and field-tests mobile apps in what he termed an "unscientific method" of testing their effectiveness and identifying any barriers to adoption.
Consumers gravitate to apps that offer convenience, immediacy and value, and are quickly discouraged by awkwardness at the POS, Pucci noted. "Producing plastic credit cards at the POS is a form of muscle memory for most shoppers," he said. "To overcome that, mobile apps need to offer more than just payments."
MLSs can also field-test the on-demand economy, which Pucci defines as products or services that can be ordered immediately, conveniently and seamlessly, via mobile apps.
"Many consumers regularly use a mobile app to get a ride, order a restaurant meal, buy groceries for home delivery, and book short-term lodging at private homes or apartments," Pucci wrote in The On-Demand Economy: Mobile Apps That Deliver Convenience Boost Payments Volume, published by Mercator in August 2017. "Countless products and services can today be ordered via on-demand mobile apps connected directly to individual merchants or aggregator intermediaries. The payment transactions for most of these services ride on the processing rails of the card networks and their issuers."
The study identified four top-trending, on-demand categories:
"MLSs need to see what's out there," Pucci said. "Merchants want simplified packages that help them deliver fast and convenient products and services, run their businesses and get valuable key indicators to see how their businesses are doing."
There was a time when MLSs demonstrated their systems to merchants, recalled Steven Feldshuh, President of Merchants' Choice Payment Solutions East. Feldshuh, a contributing writer and current Street SmartsSM columnist at The Green Sheet, would like to see demos return. "Everyone has an iPad these days; if you learn one system, they're all very similar," he said. "You have to learn new tricks to stay in the game."
Feldshuh said technical knowledge is a good defense against predatory companies. He has seen technology companies "eat up small merchants," by luring them into business management solutions that can seamlessly run across all connected devices and integrate analytics, back-office systems and payment processing.
"Why let these competitors have all the fun?" Feldshuh said. "I know it's a hassle and no one likes to study, but this is 'fun study,' because you get to show merchants an affordable upgrade with access to the global app marketplace that puts them at par with major retailers. Set up a demo and play with it; watch a YouTube video. These systems are designed for non-technical people, which makes them easy to navigate."
Tucker suggested researching verticals to understand their challenges, issues and unmet demands. "Review data and reports, then deep-dive into the market by visiting businesses and interviewing prospects," he said. "This will help MLSs craft unique solutions that address issues and find unique ways to consolidate other business services to offer more convenience to prospective clients."
Wooten advised MLSs to closely observe their targeted industries. "Interview merchants in the vertical; ask what works and what doesn't work," he added. "Read trade publications and press releases; attend trade shows. Work a day in their shoes to see what they're doing."
It comes down to finding industries in need of solutions and the companies that are developing those solutions, Wooten said. That means finding out what a merchant is looking for and who can deliver it, and linking up with third-party service providers to test the waters and explore a potential partnership.
"Learn the basics; you won't learn if you move right into the space," Wooten said. "Learn the consumer side, sell solutions, understand how to handle chargebacks." He noted that payment processing requires skills and stamina, and he has seen payment newcomers "give it a shot, sweat, starve and give up." He advises MLSs to "learn with every contact, pick up some critical piece of the puzzle, and create a strong platform that will stand the test of time."
Payments industry leaders agree it takes persistence, intention and skill to succeed in merchant services. MLSs who have stood the test of time have a clear hometown advantage. Newcomers and rebranded veterans who have a vertical market focus are moving our industry forward.
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