By Jon Perry and Vanessa Lang
Anna Solomon (whose moniker is FastTransact on GS Online's MLS Forum) is one of our industry favorites. Always involved on multiple forums and blogs, she asks questions that stimulate constructive dialog.
In a recent post, Anna asked, "Is it just me or are others seeing a new trend here about the basic things an MLS's ISO should be doing for them but obviously aren't or at least telling the rep they can? So what are the 'basic' things an ISO should provide an MLS with support or knowledge besides statement analysis and product knowledge?"
This question has been discussed widely throughout the industry. The answer, however, is not simple. Let's start with acronyms. MLS means merchant level salesperson, a title given to those who sell merchant services but are not registered as ISOs with Visa Inc. or MasterCard Worldwide.
On Feb. 1, 2009, Visa issued a paper entitled, Payment System Risk Bulletin, North America - Agent Registration FAQs for Third Party Agents (Third Party Servicers/Merchant Servicers). It can be found online at http://usa.visa.com/download/merchants/Agent_FAQ.pdf. If you are new to this industry, we strongly recommend you make it a first read.
In this bulletin, Visa explains the new term "third-party agent" (TPA). Visa states, "The TPA is inclusive and replaces the old terminology of ISO, TPS [Third Party Servicers], ESO [Encryption and Support Organizations] and MSs [Merchant Servicers]. However, these terms are still used to classify the functions performed by a TPA." For this article, we will use the term TPA instead of ISO.
MLSs are not employees of TPAs. They are 1099 independent contractors (ICs). It is the responsibility of TPAs to ensure that the ICs they hire understand the rules and regulations set forth by the card brands. It is often said in law that "ignorance is no excuse"; the same holds true in merchant services.
So, to address Anna's post, all TPAs have the responsibility to provide their ICs access to foundational knowledge of industry requirements, be they legal, regulatory or ethical. To not do so puts both the TPA and the acquiring bank at risk of steep fines.
Beyond that, it is our humble opinion that nothing else is required. Does that make good business sense? Well, let's discuss that.
In most industries, ICs are assumed to have the necessary skills to perform the tasks at hand. They are not employees, so companies have no real incentive to invest in people they have no control over.
What are the prerequisite skills for our industry? Really, there's just one: Can you sell?
On the MLS Forum, ncrum and creditcardman stated they believe helping the IC understand interchange and supplying 10 key questions would be a good start. We agree. A basic understanding of interchange can be provided relatively quickly; the 10 key questions are sales techniques.
In any sales position there are two important buckets: technical knowledge and technique. On the technical side, do you understand what's under the hood? What makes your product or service work? If you make widgets, how are they made? How are they of higher quality or value in the marketplace? Technical is the "hard," empirical evidence - the engineering side.
Sales technique, on the other hand, involves soft skills. It entails understanding your potential customers' needs and requirements. It is the ability to ferret out likely suspects from qualified prospects and to convert qualified prospects into customers.
Your technical acumen represents 15 percent of your sale (and if you spew too much data about your products or services, your prospects' eyes may glaze over). Technique accounts for the remaining 85 percent of the sale.
In 2001, Jon was the Vice President and General Manager for North American operations for a large document management company. The company's business was paper forms. Working together, Jon and the company created a service that delivered the paperwork electronically to the end user, instead of using physical paper and the U.S. Postal Service.
Today that may not sound revolutionary, but in 2001 it was, and the company's customers included three of the largest international personal computer firms. The company had a North American sales force of over 1,500, and each salesperson wanted training on these new services. As training got underway at regional offices, two broad categories of salespeople emerged.
The first was those who wanted to know every last technical detail regarding the way the service worked and how it was delivered. The second category wanted to understand points related to the bottom line. What was the return on investment (ROI) for clients who used the service? How would their clients gain efficiency or better market share?
Almost across the board, those in the first category failed miserably, while those in the second were generally successful. Why? Because in any sale, understanding your customer's needs and requirements, having a genuine dialog, and showing care and compassion trump technical knowledge.
Today, when we screen potential employees or independent contractors, we look for the soft skills. Candidates who want to know everything about everything raise a red flag. They are usually the ones who will overwhelm customers by spewing jargon and numbers without truly understanding the customers' needs, both now and in the future.
When a company provides training, the investment is huge. The Society for Human Resource Management estimates the average annual cost of training is $955 per person. It is one thing to invest in training an employee. It's an entirely different scenario when you are considering independent contractors.
As creditcardman stated on the MLS Forum, "Too many agents are churn and burn ... Spend all that time and money teaching them, then they go work for some other outfit that provides nothing but offers a better split because they spend nothing on training."
Our independent contractors can sell anywhere; we do not require exclusivity (one of the 20 factors the Internal Revenue Service considers to determine if a person is an employee or contractor). However, there is one exception.
On occasion, we will bring on an independent contractor who has no industry experience, but possesses the soft skills to be successful. We provide the initial training and, where possible, prepare and go on sales calls with them. Afterward, we "debrief" the call. We ask: What went well? What could have been better? What did you hear? What did you think you heard?
To commit so much time to someone without experience, we require a two-year exclusive agreement, which does two things. First, as the person gets better, we can recoup our ROI. Second, as the person gets better and we provide greater financial rewards, we want them to acquire the sense that "the grass isn't greener on the other side." We treat our investment in people as we would any other capital outlay.
As MTY MSI wrote on the forum, "Every topic mentioned has been covered by the GS either on the forums and/or articles. This is the best place that exists to learn virtually anything about our industry, and you can ask questions." That said, continue to be an avid learner.
With the failure of the automotive industry, we have encountered many people who have lost their jobs. Too many are in the unenviable position of lacking the skills, education or training required for other competitive positions. If for no other reason, we all owe it to ourselves to be avid learners to remain recession-proof.
Keep developing your technique. If you can sell telecommunications services, you can sell merchant services; if you can sell merchant services, you can sell insurance. Given a choice, we'll improve our technique over our technical skills. Selling remains one of the highest-paid professions.
Here are three recommended reads that should help you remember that the operative word here is "selling":
Jon Perry and Vanessa Lang are the owners of 888QuikRate.com, an ISO based in Ft. Worth, Texas, that was named Small Business of the Year by the local newspaper, The Star Telegram. For more information, tweet them at http://twitter.com/dfwcard, comment on their blog at http://merchantservices.cc or visit their profile at http://linkedin.com/in/jonperry or http://linkedin.com/in/vanessalang. Alternatively, you can contact Jon and Vanessa by phone at 817-857-3557 or by e-mail at email@example.com or firstname.lastname@example.org.
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