By Tom Waters
Bank Associates Merchant Services
In "What is the most productive thing you've done today?" published in The Green Sheet, June 11, 2012, issue 12:06:01, I identified a bottom-line perspective for increasing productivity and establishing momentum. In this article, I will identify a framework for establishing a successful ISO.
At its core, the essential goal for every ISO is to develop and repeat processes that create revenue for the company. When built out properly, these processes become revenue engines: well-oiled machines providing continued income and driving you down the path to success.
Financial success in merchant services is measured in the number of approvals, number of transactions processed and size of the portfolio. In other words, it is a question of how many clients you have, how many customers your clients attract and how much money those customers spend on credit cards.
Each aspect defines in mathematical terms the relationships we establish. We can boil down the revenue we generate in merchant services to one fundamental component - the approved application.
As with any financial services portfolio, you should work to make your accounts diverse. Optimally, larger deals with longer pipelines should be accompanied by smaller accounts that help you gain experience and hedge your income base. Regardless of how you structure your pipeline, the general process remains the same.
Cultivating one relationship with one business owner to acquire an approval is the core process of merchant service sales. Many of the largest merchant service firms began by applying this simple formula, meeting one business owner at a time. Eventually, more complex processes become integrated into the system. But at the center, all revenue engines work on top of that basic process.
The simplest engine to draft is cold calling to create relationships where none yet exist. It is the act of reaching out to potential customers who likely have no idea who you are and convincing them to explore the possibility of working with you. The concept is akin to social fishing. You randomly encounter businesses, ask questions and build relationships with the proprietors.
The math is basic: one agent multiplied by one prospect signed equals one approval. On average, this method usually yields just one approval, unless you solicit multilocation chains. During a given work week, we expect each agent to reach out to several hundred prospects. Many agents discover that this method works for them. However, we call it the "grind" for a reason.
While this basic formula is a simple and effective engine, it is a short-term strategy for newly developed agents and ISOs. This period of soliciting accounts should be a way to gather the much-needed experience to counter advanced lines of questioning from often well-informed chief financial officers or controllers.
Sometimes a prospect has several locations that generate multiple approvals. Sometimes the prospect has partners who are also involved in other businesses. These are very real possibilities and should be explored. This advanced formula is a variation of the original.
It allows us to leverage new relationships through a prospect's existing network during or shortly after the sale. The math equation is only slightly more complex: One agent multiplied by one prospect plus one neighbor equals two approvals. Train all new agents to ask about neighbors.
These first engines are the most easily attainable forms of generating approvals. They are the most accessible for your direct involvement and they are the least complex by nature. But they are also the most time-consuming. The growth model here is linear. Using the formulas above to obtain dozens of approvals per month would occupy most of an agent's work schedule.
As you plan to grow your ISO, the obvious way to increase approval counts is to increase the number of agents involved. This method will multiply your growth in the simplest form, while maintaining the linear approach. It simplifies training and is the easiest to replicate. Teach single or multiple agents to establish relationships with business owners and to help the proprietors make sense of their card processing programs.
Have agents do what you learned to do. Show them the blueprint of your revenue engines, and give them tips on how to build their own. If your designs are solid and easily understood, soon you will have your own fleet of agents riding around, converting relationships into revenue.
An ISO should first master these fundamental processes before attempting to replicate that success through recruits. After you have cultivated a few agents to reproduce the basic tactics, you can explore new and more complex designs that have the potential to produce even higher returns. You will have more capacity to keep your clients and agents happy while they are aboard your vehicle.
If successful, at this point you should have a dispensable cash flow to invest in marketing projects and branding. If the relationship-building processes are the revenue engines of your vehicle to financial freedom, branding is the chassis.
You should see a tipping point in your ISO development when your "bodywork" attracts a flock of interested parties without your direct effort. If your engines are strong, you won't be embarrassed when you are asked to "pop the hood."
A flashy exterior is great. But if you do not have the power to truck around all your newly recruited agents and clients, their bad experiences may wreck your vehicle, leaving you with a poor reputation.
You'll need to balance the development of your brand image with powering the engines that drive your agent and customer experience. As you balance both, you can create an excellent atmosphere that welcomes your new friends aboard and keeps them riding along with you.
Since 2001, Tom Waters has risen through the ranks of merchant service sales. He is responsible for cultivating relationships with entrepreneurs in information technology, accounting, sales and marketing in his role as Sales Director of Bank Associates Merchant Services (www.bams.com). His open door policy for advice on pipeline and client management has been the source of many new and profitable relationships. Using fresh and matter-of-fact training methods, Tom has contributed to the success of thousands of agents, affiliates and clients. He can be reached via email through t.waters@bams.com or via phone at 347-651-1065.
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