By Jeff Fortney
Editor's Note: In his last Street Smarts article, Jeff Fortney reflects on lessons learned over the past year's journey with members of GS Online's MLS Forum. It's clear that he shared information in each article that our industry's feet on the street can apply. We appreciate his outstanding efforts and are thrilled both that Jeff will continue to write articles for our Education section and that Dale Laszig is stepping in as Street Smarts author beginning with our April 8 issue. Thank you, Jeff, for your exemplary service, and thank you, Dale, for the new vision you will bring to the column.
For the past 12 months, I have stood at the corner of sharing and wisdom, offering up the experiences and knowledge shared with me by both experienced and inexperienced merchant level salespeople (MLSs). My goal has been to share practical, timely lessons to help reduce the time spent in the school of hard knocks.
In reaching for that goal, I have shared many anecdotes and experiences - my own and those of GS Online MLS Forum members - on many topics applicable to selling merchant services.
First we looked at what might lie ahead for our industry, and our analysis pointed to a strong opportunity in the payments world. Today, we hear in the news almost daily about economic uncertainty. On one hand, the economy is growing; on the other, several areas raise concerns. However, I see one thing as a certainty: opportunity.
Opportunity will abound for those who seek it and can seize it when they encounter it. An old expression first attributed to Henry Dodd: "The reason most people do not recognize an opportunity when they meet it is because it usually goes around wearing overalls and looking like hard work."
As another way to describe why some find opportunity where others see little of value, I will share one of my favorite stories. Told often by President Ronald Reagan, the story has many versions, but always ends on the same note and usually involves two children - one an optimist, the other a pessimist.
Researchers wanted to see if their attitudes could be changed. They put the pessimist in a room filled with brand new toys and the optimist in a room with a bucket, a shovel and a pile of horse manure. An hour later, they returned to the pessimist to find the toys scattered, many of them broken.
When asked why he wasn't playing, he said, "There's nothing to do here." When they returned to the optimist, they found him digging through the pile of manure. When asked what he was doing, he replied, "With all this manure, there must be a pony in here somewhere!"
This story conveys that if you want to grasp opportunities, you can't expect them to fall into your lap. This has been the underlying theme of Street Smarts throughout the past 12 months. That theme can be summed up in one sentence: In order to be successful, you must be different.
Being different does not mean chasing the next best product offering or the next new piece of legislation and the opportunity it provides. Being different is truly knowing your market and knowing what really concerns and ails its constituents. If you know your market well, you will most likely find that your merchants' greatest pain is not price. If you address the true underlying pain, you may not even need to lower the merchant's costs.
Being different means knowing the only acceptable answer from a merchant is either yes or no. "Maybe" isn't an answer, but rather their hope that you will leave and not come back.
To give you an example of how you can turn being different into a positive, I will tell a story concerning comedian George Gobel. In 1969, as nearly the last guest of the evening on "The Tonight Show," he followed two headliners who were bigger stars: Bob Hope and Dean Martin. Joining the other guests on stage, Gobel told Johnny Carson, "I'm glad you saved me 'til now," referring to his thankless spot near the end of the show.
"Did you ever get the feeling that the world was a tuxedo and you were a pair of brown shoes?" he added, to riotous laughter. Gobel meant that sometimes he didn't fit in. The quip is considered a classic moment in the show's history.
In truth, you will sell more by being a pair of brown shoes. And the first step in making this change is following this rule: if your competition is doing something, stop doing it. For some, this seems drastic. Yet it makes sense. How can you be different if you do what everyone else does?
Following are common actions your competition is likely taking:
We have all probably fallen back on one or more of these traps at times, but the result is typically a longer sales cycle at lower profit. This involves more than acquisition costs; it also means losing potentially profitable customers due to time wasted using unproductive tactics to engage merchants.
If you aren't different than your competition, what prevents the merchant from signing with the next person who walks in the door? I have asked this question of many ISOs and MLSs, and the most common answer they give is that their merchant won't leave because they will provide better service than their competitors do.
However, if the merchant signed solely because of price, no level of service will prevent him or her from considering the next offer. The only way to prevent this attrition drain is to be different and make sure the merchant sees that difference so he or she has a reason to stay with you.
Over the past year, MLS Forum members and I have discussed how to recover from a slump, what to do when the rules change and how to handle objections. And we have defined failure.
We have talked about the tools necessary for success, what it takes to build and maintain a sound foundation, and how you can lose a merchant by saying just one wrong sentence. We have shared how to make plans and set goals, along with the best sage advice we have ever received.
A projection of a continued decline in merchant business closings and fewer merchant bankruptcies was supported by marketplace statistics published by the U.S. Small Business Administration. The third quarter of 2012 saw the bankruptcy number alone drop 23 percent over the third quarter of 2011. That was the highest year-over-year drop in four years.
New merchant start-ups continued to increase, but at a slightly slower rate. Even so, the combination of fewer failures and more start-ups resulted in more active merchants in 2012. More merchants means a greater need for merchant services.
However, this does not necessarily mean lower attrition. In early 2012, the industry was concerned about the prevalent "cost savings" sales approach, which was ingrained during previous difficult markets. We expected that unless MLSs curtailed this behavior, the race to the bottom would continue and would result in high attrition due to merchants chasing the next best price.
Global attrition rates are not easily measured; processors and ISOs typically do not share this information. Even so, anecdotal information indicates this sales approach has not waned. Although industry participants generally agree merchants today are less price sensitive and have other reasons for choosing a processor, many sales reps have not adjusted their approaches. Thus, attrition continues to be a concern going forward.
One last futuristic prediction drove our efforts in sharing our collective street wisdom over the past year: unless we continue to learn and master our craft, our sales practices may be our worst enemy. My goal has been to move this effort forward, with the understanding that changing behavior is a long-term effort that requires practice and desire.
Even with unanticipated changes, most will say that signing new business over the past 12 months has shown a higher rate of growth than the previous 12 to 36 months. Several ISOs experienced the first growth they had seen in several years.
After 20 years in the business, I am still as excited about the future as I was when I started. I still believe this is an industry that rewards those brown shoes who hitch up their overalls, work hard and strive to stand apart from their competition.
Although my time spent at this intersection is coming to a close, I will still be traveling down the road with you, gaining and sharing wisdom and insights along the way. For those of you who have traveled this road with me over the past year, I thank you.
I appreciate your willingness to share your knowledge and expertise. I also want to thank those of you who have read and commented on these articles. Your input was extremely valuable to me.
One year ago, I said that it would be an exciting ride. What I didn't say was that the ride would end. Here's to the next 12 months, and to the months and years after that. As always, it will be an exciting ride.
The following list of actions can help you differentiate yourself from the competition. For further details on each item, review the last 12 months of Street SmartsSM articles in The Green Sheet archives at www.greensheet.com/emagazine.php?flag=view_archives.
Jeff Fortney is Vice President, ISO Channel Management with Clearent LLC. He has more than 17 years' experience in the payments industry. Contact him at firstname.lastname@example.org or 972-618-7340. To learn about how Clearent can help you grow faster and go further, visit www.clearent.com.
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