By John Tucker
1st Capital Loans LLC
Since I became quarterback of the Street SmartsSM column in April 2016, my focus has been on rebranding the merchant level salesperson (MLS) to sell innovative solutions that resolve complex marketplace problems for merchants.
For this discussion, I'll look at two options: rebranding as a payroll processing sales professional and rebranding as a marketing sales professional. Both of these have been considered value-added solutions for several years within the merchant services space, but should one or both of them become your core product(s) instead of your side dishe(s)?
A couple of credible organizations offer comprehensive payroll processing solutions that include a variety of human resource tools and regulation monitoring functions, all designed to streamline the payroll processing aspects of merchant businesses. This allows them to spend more time running their businesses, rather than managing the intricacies of payroll processing.
Key components of a comprehensive payroll processing solution would include:
Leading in with payroll processing allows you to target merchants who are managing these aspects in-house and convince them to allow your firm to manage the entire payroll aspect externally in exchange for a "small fee" or "no fee at all" if the merchant converts over the merchant processing account.
Some industry veterans from GS Online's MLS Forum believe leading in with payroll processing isn't worth the effort. Forum member Steve Norell said, "Years ago we sold all types of payroll; it generated some good money, but then the market shifted and it went sideways. I also found that when you were selling merchant processing and tried to get the payroll processing, Paychex and ADP would always win out [on the bids] because they were the [market] leaders."
Forum member ber concurred, stating, "Leading with POS, we make more from referral relationships with payroll reps than we would from referring or selling the payroll services ourselves."
Some industry veterans believe leading in with payroll processing is worth the effort. For example, forum member dvst8 wrote, "I would never prospect a merchant with credit card processing services. … I recommend leading in with payroll services as merchants do not get prospected like they do with card processing services, which can be as much as once a day."
Alpha Card Services was founded as an ISO but also became a payroll processor a few years ago, dvst8 noted. "As profit margins continue to shrink in merchant services, we thought it would be an excellent opportunity to make up for those losses and increase revenue," dvst8 said. "Profit margins are higher in payroll than they are with merchant services. The great thing about payroll, there are no contracts or ETFs, so there are less obstacles to overcome when switching payroll processing companies.
"If you are making $300 to $1,000 per month from an account, providing payroll services for free is an excellent opportunity to lock in those profits. So when a competitor tells your merchant they can save them $xxx per month, the merchant will ask, 'What can you do for payroll services, as my merchant services are tied into my payroll services, which is provided at no cost?'"
A variety of marketing solutions could be offered as a rebranding alternative. These solutions include big data solutions and mobile couponing, as well as selling ad space on television, radio, print, websites and through podcasts, online video, search engines, pay-per-click and more.
Neither Steve Norell nor ber believes rebranding as a marketing sales professional is worth the effort. "We spent substantial time pursuing revenue and stickiness from value add-ons like loyalty, rewards and text message marketing," ber said. "The group evaluation was that those solutions were not worth the opportunity cost for salespeople that make a great deal more from our primary products (POS, CCP, CA)."
Steve Norell added, "In my experience, every new and fancy product that has come along over the last 20 years has always turned out to be more sizzle than steak. This starts from checks, to gift, to loyalty to text … the MLS felt it was a lot of time and very little money."
But MLS Forum member dvst8 said he believes strongly in selling multiple solutions, especially as a package including multiple services such as "POS, credit card processing, payroll services, ATMs, gift & loyalty, MCA [and] prepaid." According to dvst8, this allows MLSs to:
"If the merchant is upset about his processing fees, you can focus on lowering those fees and make up the profit margins on payroll or vice versa," dvst8 added.
I believe leading with payroll processing or marketing solutions, or both, could be a blessing or a curse depending upon the business acumen of the MLS bringing the solutions to the market.
If you were able to identify a continual stream of merchants in need of more efficient payroll processing procedures – for example, merchants who are running their payroll processing aspects in-house with a limited staff, and by turning the management of said function over to your organization, they could save time, energy, and money – then leading with a payroll processing solution could be very beneficial.
If you were able to identify merchants who were not using a particular marketing medium and show them reporting and analysis that demonstrates how using said medium could attract an estimated specific number of customers, which would translate into an estimated specific amount of revenue, then leading in with said solution or solutions could be very beneficial.
The viability of payroll processing and marketing solutions will depend upon your strategic planning and research capabilities to determine how valuable (or not) these solutions could be to your office.
And, as I've said before, if you haven't researched a merchant and identified an issue or opportunity that particular individual faces for which you could provide assistance, then you have no business (literally and figuratively) contacting that merchant. 
John Tucker has over 10 years of professional experience in commercial finance and business development. He is also an M.B.A. graduate and holder of three bachelor's degrees in accounting, business management and journalism. To connect with John, please send him a connection invite via LinkedIn at www.linkedin.com/in/johntucker99 or email him at tucker@1stcapitalloans.com.
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