The Green Sheet Online Edition
January 27, 2014 • Issue 14:01:02
Back to the future, MLS style
I recently heard from a friend who's thinking about returning to our industry. He sold merchant services in the 1990s, spent the following decade working with a few major food distributors, and was recently offered a job with an ISO that would give him a territory, training and a fair commission plan.
As I reflected on how much our world has changed over the last two decades, an old song from the musical Oklahoma! popped into my head: "Everything's up to date in Kansas City; we've gone about as fer as we can go."
Examine the pros and cons
The people who were singing weren't thinking about how quaint their modern fixings would look a mere 10 years later. And I can't help wondering how sentimental we'll feel about some of our leading-edge technologies even a year or two from now. But clearly, we have come a long way since the early '90s, when my friend was knocking on doors with a smile and a Zon Jr.
I asked my advisers on GS Online's MLS Forum to share their thoughts on re-entry as my friend weighs the pros and cons of this opportunity. Following are highlights from our discussion.
Think beyond service
Many of us remember a time when offering unprecedented customer service was enough to differentiate us from other merchant service providers. In today's always-on, always-connected world, consumers and business owners have come to expect excellent service and fast response times. We expect our suppliers to know our personal styles and preferences, and to use advanced analytics to anticipate our buying habits.
Today's merchants are savvier about pricing, payment technology and value-added services. Transparent pricing models, government regulations, security mandates and consumer advocacy have shaped the payments ecosystem and created a more level playing field.
Forum member www.paymentlogistics.com (Dustin Niglio) noted that merchant level salespeople (MLSs) who make service their value proposition and main tenet of their business may have difficulty competing with companies that offer holistic, end-to-end solutions.
"Work smarter and harder," he wrote. "Signing merchants using a savings and service pitch alone does not make for the long-term sustainable growth of a portfolio in today's market." He went on to say that today's successful MLSs who want to achieve year-over-year growth need to find ways to insulate themselves from their competitors.
So how exactly would an MLS differentiate in the evolving payments sphere, with so little variance in pricing and service models from one service provider to another?
Differentiate with technology
Forum members cited technical knowledge as both a competitive advantage and strategy for account retention.
"While excellent service and even excellent pricing can still land you good accounts, those accounts in most cases are in jeopardy of attrition - mainly technology based attrition," Niglio wrote.
He added that you can "provide the best service in the world and have a wonderful and close relationship with the merchant, but when that merchant purchases a point of sale system with integrated processing through a proprietary service provider, your close relationship will earn you an explanation as to why the merchant switched providers, along with a statement of gratitude for all the great service and an apology for leaving. You have to fight fire with fire to kick butt in today's marketplace."
Klinckphilip also saw technology as a powerful retention tool well worth the additional time and effort involved in selling it. "Go after bigger accounts," he added. "Sell POS. Sell anything that can lock you in. Get your margin while you can. Sign with big ETFs [early termination fees] to deter switching for a few bucks.
"Small accounts are all but gone. Wireless fees, IRS fees, PCI fees, etc., have killed all my small accounts. But, it was a good thing. Less to deal with and a similar sales cycle. I'd rather do all the same work but make $150/month than $15/month.
"POS is a different animal all together. You will spend lots of time on those. But they are locked in. They would really have to not like you and your service to switch."
Have a financial plan
Let's face it: transitioning from a job with benefits and a regular paycheck to starting your own business takes a leap of faith and a dose of sound financial planning. It helps if you have some money set aside.
Maketelinc wrote, "He shouldn't make it his full-time job, unless he has enough savings to survive until his check is large enough."
In How to Budget Your Own Salary, the staff of Entrepreneur Magazine recommended calculating what you need and determining what you're worth to figure out how much to pay yourself when you start a new business.
"Once you know the salary you need and the salary you deserve, it's time to balance that figure against your business's finances. You'll need to check the cash-flow projection in your business plan to ensure that you have enough money coming in to cover your own draw and other operating expenses." Read more at www.entrepreneur.com/article/217776#ixzz2pAsK7LZQ.
Don't forget cold calling
BMiller0630 reminded us that despite all the changes that have taken place in our industry, cold calling is still an effective way to get new business.
"Going out there knocking on doors is still a very effective way in signing deals," he wrote. "The one-call closes are a little bit harder, but still can be done. Building rapport and trust goes a long way. Many reps out in the field are lazy and don't really go out there. If you work it like a normal 9 to 5 job, you can close at least two to three deals a week. Just have to be motivated and persistent.
"Merchants switch on rates all day. If they like you, they will sign. All you have to do is go out there and talk to merchants. That is where so many reps come and go. They give up way to easy. I get at least 30 nos a day before I call it a day.
Leverage your professional network
Professional networks can be a lucrative source of prospective merchants and referral partners, particularly if you choose to focus on a specific vertical industry, such as food services or hospitality.
Ber noted, "Networking with existing circle and contact sphere is the way to go."
Brynne Tillman, of Social Sales Link, recommended using LinkedIn's search engine to identify prospects. "Every Monday morning I log into LinkedIn, click on my saved searches and I see that I have 10 new professionals in my network that meet that criteria," she stated. "I then click the hyperlink 'view' and the full list comes up in the window.
"I can then click on shared connection and ask for my warm introduction. Powerful stuff, wouldn't you say? There isn't an easier, more productive way to identify new prospects as they enter your network, whether through a new connection of yours, or one of your current contacts' new connections."
Leave the light on
Yogi Bera's famous words, "It ain't over 'til it's over" bears repeating when we consider how many of our merchants come back to us after briefly being lured away by competitors. Some of them wait until the end of the contract term. Others are willing to pay an ETF just to get away from a less-than-stellar situation.
Amsprocessing wrote, "When a merchant terminates my services for a competitor I typically call them back a month later to review a statement. I have a pretty successful track record recovering the merchant account. I have even ponied up the ETF to recoup the merchant. I like to send a message to the competition. The savings better be real because I will expose you."
Forum member nwbc mentioned a recent Strawhecker Group article titled "Developing Your Payments Sixth Sense." He quoted what he considered to be the defining idea of the article, namely: "2014 News Flash - The Future of Payments isn't about Payments" and that as our services become increasingly embedded in our lives that the "adaptation of new services will continue to push payments into the background."
What a grand, utopian vision of the future: when our technologies and services blend so perfectly with our environments that we no longer notice them.
Dale S. Laszig manages business development and strategic initiatives at DSL Direct LLC, a payments consulting company that helps clients promote, design, and deliver secure, leading-edge technology solutions. Her clients include software integrators, manufacturers, retailers, and value-added service providers. She can be reached at 973-930-0331 or email@example.com.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.