By Steve Norell
US Merchant Services Inc.
Time and time again, merchant level salespeople (MLSs) have heard prospective merchant customers say they do not want to sign long-term contracts - or any contract at all. I'm sure you've heard this, too. And like any good salesperson, the last thing you want is to lose sales because you cannot waive contracts or provide them for shorter terms.
When I hear this from a merchant, I immediately think I will lose the account the minute another MLS promises to save the merchant a lot of money. However, over the years, I have come up with a plethora of responses to counter a merchant's resistance. Here are a few:
The list goes on. No single, perfect answer fits all situations.
Even if merchants sign agreements with early termination fees (ETFs), we all know that sooner or later they will call and say they are being quoted new and improved rates. And they will ask you to lower yours to match the quote. Yet, what good is a contract if the merchant can ask for it to be altered every time a new pricing scheme comes along?
Some of us have a standard ETF ranging from $250 to $500. Some have a liquidated damages fee or a flat monthly fee times the remaining months on the contract.
And, as we all know, some MLSs will pay that ETF to gain a merchant's business regardless of the profitability of the account. Such situations are frustrating for all of us, and no one has really devised a better mouse trap - until now.
Why shouldn't I try to come up with a win-win scenario? After much thought, I came up with a solution. If a merchant is reluctant to sign an agreement with a set contract period, why not offer the opportunity to process with you for one full year without a contract?
This may sound nonsensical, since the merchant appears to win while you lose. But here is how you win: the merchant must agree that after one year, he or she automatically enters into a 36-month agreement with you. If the merchant terminates during that three-year period, the merchant must pay the ETF.
This makes the merchant feel comfortable since the individual has a full 12 months to either love or hate what you do. And you may get four years of service from the merchant instead of the usual 36.
The important thing to remember is that on the 366th day, the 36-month agreement goes into action - unless, of course, the merchant had notified you on or before the 365th day that he or she was ending the relationship.
I tried this strategy with the first merchant who complained about contracts and an ETF. He loved it, and signed on the spot. The year has not yet run out. But if we do a poor job during the first year, then we haven't earned the contract and don't truly deserve to have him for four years.
We are all looking for a different strategy, and I believe this can work to our advantage. If it works, I may just do this with every merchant we sign. Getting 48 months instead of 36 sounds pretty good to me. How does it sound to you?
Steve Norell is Director of Sales at US Merchant Services Inc. Based in Port St. Lucie, Fla., he oversees the USMS sales force and maintains the company's bank and processor relationships. You can reach him by email at email@example.com or by phone at 772-220-7515.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next