By Cynthia Bailey
The Idea People LLC
On the heels of the 2014 Southeast Acquirers Association's annual conference, I've been reflecting on the panel discussion I moderated regarding choosing the right value-added services and providers. As an industry, we've been talking about value-added products since the beginning of electronic draft capture – so the idea is nothing new. What is new is the array of value adds to choose from, as well as the fact that many, if not most, are being offered by organizations outside the traditional payment processing world.
This has caused me to ponder the following:
Is it delivering data to them about their customers' habits, demographics and purchasing histories? Or combining services such as loyalty programs with text-based marketing and geo-fencing capabilities? Or is it offering integrated omni-channel processing solutions that tie together online, in-store and mobile transaction processing with inventory management and fraud monitoring?
It's tough in the payments world today – with so many disruptive forces creating new offerings in the form of mobile solutions, peer-to-peer payment options, compliance and fraud monitoring, electronic benefits programs, charitable donation solutions, couponing and more. These "outsiders" aren't typical payment providers. If they even offer payment processing, it's typically as an afterthought.
Similar to consumers who assume they'll receive the basic, local cable TV channels when they sign up for HBO and Showtime, today's merchants expect to receive rock bottom pricing on fast, secure payment processing. But that's not what excites them and motivates them to buy from you. It's the bonus services that really sell them, allowing you to keep them as profitable members of your merchant portfolio.
So, in this industry of margin compression and increasing competitive pressure, it's mission critical for acquirers to have a plan for developing a captivating menu of products and services.
Adding service offerings to your product platform should be done deliberately and with strategic focus. After all, you will be, in a sense, reinventing your organization by cultivating new customer bases and revenue streams, as well as new expense items and support, technology and sales demands.
This is achieved not simply by responding to the current commoditized state of payment processing through cost differentiation, but through restructuring your offerings with a "customer value focus" so as to create the results you wish to achieve.
To begin, ponder your organization's overall strategy. All companies, regardless of size, have limited technology and human resources; it's important to allocate them toward their most efficient use. Sometimes it makes more sense to get to market faster by partnering with a value-added reseller. But for some, investing in a build-it-yourself approach that you own and control, and that is seamlessly integrated into your overall processing system, is the better choice.
Above all else, your value-add methodology should not only help you today – to sell better, faster and more – but it should also support your end strategy. Will creating proprietary products increase the overall company value come exit time, or will the immediate benefits of executing via a third party bring greater overall advantage to the organization?
When considering strategic reinvention, product enhancements or technology projects, do your due diligence. Consult professionals, both inside and outside of your company, who can help you assess your situation, determine the best steps forward and stay on track through execution.
Cynthia Bailey is the Chief Executive Officer and co-founder of The Idea People LLC, a full-service management consultancy. She has over 22 years' experience in payments industry leadership roles, most recently as Vice President of the Payments practice at management consultancy Brand Velocity Inc. Previously, she served as Chief Marketing Officer for Calpian Inc. and Editor-in-Chief of Transaction World Magazine. Cynthia has fostered innovation in strategic development, product management, investor and public relations, corporate development, marketing, and global team management. In addition, she sits on the Mobile Payments Committee of The Electronic Transactions Association. She can be contacted at firstname.lastname@example.org.
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