By Jeffrey Shavitz
Charge Card Systems Inc.
If you sell a product or service that can be purchased almost anywhere from multiple vendors, you're selling a commodity. Such is the case for payment professionals endeavoring to sign and retain merchant accounts. And this poses significant, ongoing challenges.
I always find it amusing when I meet with a merchant who is processing less than $5,000 per month and is proud that he or she is such a smart businessperson for having changed processors three or four times within 24 months.
The merchant feels empowered for having negotiated a contract with no termination fee with each processor and reduced interchange-plus pricing from interchange plus 10 to interchange plus eight and now, finally, secured an amazing deal at interchange plus five basis points.
Why does this happen? Since merchant card processing services are ubiquitous, many merchant level salespeople (MLSs) sell only on price. But selling a commodity based on a price is a losing proposition. There will always be someone willing to undercut you, as evidenced by the scenario I just described.
On a typical sales call, many of us will ask a prospective merchant customer for a current processing statement. Why? To undercut the merchant's existing fee structure. And then one year later, the merchant will give our statement to another salesperson who will then undercut our rate structure. This is why attrition is such a big issue in the industry.
To become successful in our space and build future wealth (the kind that will include a solid portfolio five to 10 years from now), you must offer solutions that aren't based on price, as well as compelling reasons to buy from you. Salespeople always say to me there aren't any such solutions and that merchants are only interested in price. These individuals are wrong.
I'm not naive. Price is a significant variable. But it's not the only variable. Must you be competitive on price? Of course. Must you offer all of the traditional skill sets to get in the door? Of course. But you need to discover or uncover that "sticky" attribute that will make the merchant stay with you.
Maybe it's as simple as being a good friend and checking in with each merchant monthly. People want to feel loved; merchants are no different. My colleagues and I are always trying to improve ways to stay in touch with our merchant customers, because if we're not, it's much easier for our competition to rewrite those deals.
Think creatively. Study. Become inspired by the many relevant articles (mine included) in The Green Sheet archives. If you don't, your competition will be offering the same programs as yours - at a lower price.
Offer fair pricing whereby you can earn a fair profit, and teach merchants that you are not selling a commodity but rather a financial program to help their businesses operate efficiently, one that includes targeted, value-added services designed to keep their customers coming back, too.
Don't be like the shortsighted MLSs who sell on price. This approach cheapens both the industry and our profession. Of course, there are times you must take a deal at very low margin, but do it for the right reasons and in the right context.
I find it comical that merchants will allow unsophisticated MLSs to handle their processing programs. Transactions are the lifeblood of retailing; picking an MLS is as important as selecting an attorney or certified public accountant.
Merchants want to work with people they trust. Isn't it worth it to them to work with true advisers who want them to thrive instead of MLS hucksters who just want to make a few dollars per month per account? I hope so.
Jeffrey Shavitz is one of the founders of Charge Card Systems Inc. He is also an active member of The Green Sheet Advisory Board and the First Data ISO Advisory Board. He can be reached at firstname.lastname@example.org or 800-878-4100. For additional information on CCS, please visit www.chargecardsystems.com/gsadvisoryboard or the company's corporate website at www.chargecardsystems.com.
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