By Aaron Nasseh
There is no question that the merchant services industry has become more competitive with each passing year. Noticeable margin compression has occurred as a result. Unfortunately, many sales professionals are struggling with this and have been unable to adapt to the changing market. However, this doesn't have to be the case, because very lucrative opportunities are still available in the merchant services industry.
Before I suggest solutions that may enhance the profitability of your business, I'll review some of the reasons that got us here:
This further drove profitability down because the agents had neither the necessary sales skills nor the incentive to negotiate favorable terms with merchants. Instead, they lowered pricing as much as necessary to close deals and receive upfront bonuses. This cycle continued when the next agent visited the same merchant and cut pricing even further.
They started recruiting inexperienced agents who were lured in by the prospect of high upfront bonuses and free terminals, and when pricing is not an issue and you're able to give merchants free terminals, and you can place them on a month-to-month agreement, then there really isn't much selling taking place. More and more sales agents without real training or understanding of how to build a valuable portfolio flooded the market and drove prices down.
Other factors have also contributed to lower margins in our industry, including regulations and costs; however, this article is focused on selling as it relates to smaller agents and ISOs, and while every ISO has been affected by lower margins, it is the smaller ISOs that have suffered the most. In fact, this market has enabled the larger ISOs to participate in very favorable acquisitions of the smaller ISOs.
Now that I've reviewed some of the concerns, here are a few suggestions:
Whether you're going to offer them a POS or technology solution that will help improve their efficiency, financing solutions to help them grow their businesses, marketing solutions, or a list of other services that are available to a merchant but you're simply not marketing them, you need to provide a real value to the merchants.
Unfortunately, most smaller ISOs don't take the time to train their agents. If you think training is expensive, I can assure you that the cost of training is a fraction of the money untrained agents are leaving on the table. Train your agents to sell, and reward them for their performance. In today's market, there are countless opportunities to sell or lease POS systems, business and consumer financing and many more solutions that merchants could benefit from.
Aaron Nasseh is the founder and Chief Executive Officer at Finical Inc. His extensive sales and management experience includes having previously served as the General Manager of CardPayment Solutions and Vice President of Sales at iPayment Inc. He may be reached at firstname.lastname@example.org or at 818-330-4055.
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