By Steve Norell
US Merchant Services Inc.
Many years ago I went to New York and took in the Broadway show Rent. The opening song, "Seasons of Love," began with, "525,600 minutes; 525,000 moments so dear; 525,600 minutes; How do you measure, measure a year?"
After years in this business, I continue to ask myself a similar question: How on earth do most ISOs and merchant level salespeople (MLSs) measure success when signing merchants? After looking at thousands of statements over the years, I have to say they must measure success only on deal count, because the pricing is shear lunacy.
Let's go back 20+ years and look at the traditional recruiting method for ISOs looking to sign MLS. The MLS calls the ISO and says, I would like to hear about your program and, more importantly, how much do I get? Guess what the first question out of the recruiter is? Yep, it's: How many deals do you do a month?
There was a time when this question and especially the answer had value. However, that time has passed. It's a foolish question at best and is similar to when the merchant asks the MLS another foolish question, What's your rate?
I want to make one thing clear. The job of MLS recruiter for an ISO is the worst job anyone can have. You spend all your time talking to MLSs that promise you 100 deals a month and say they'll give you all their business as long as your ISO gives them a 95 percent split, a 0.02 trans fee, no monthly fees, free equipment, ETF rebates, signing bonuses, a 70-inch flat screen TV and, for good measure, a $100 gift card to Starbucks.
To add insult to injury, the ISO signs him, he sends only three deals a month and claims the program delivered was not what was promised. The next thing you find out is that the MLS's current ISO matched your ISO's offer, which means you were being used the entire time as leverage to get the MLS a better deal from his current ISO.
After a year or so of going through this you, the recruiter, get canned or quit and are hired by the next ISO, who hopes you will bring over the MLSs you signed at the last ISO. It's a vicious circle and one that can be halted easily.
Stop using deal count as a measure of success. Whenever I would be asked how many deals I can you deliver a month, I would give one of two answers. The first answer was: one, and they do 5 million a month in volume. The second answer was: 100 and they do 1,000 a month. Which do you prefer? My point is that it's a foolish starting point for a partnership.
Now that I've established a little background to the insanity of deal count as a measure of success, what do we do?
Our industry has gone through a multitude of changes, and one practice that should be brought back from the dead is that the ISO has the right to minimum pricing or profit on each and every deal.
I can remember one ISO I spoke to back in the day told me that if I submit an app and it does not meet the minimum for profitability, the ISO would either reject it or change the pricing so it met the ISO's minimums.
Today, this policy is deader than a dinosaur, and the reason is simple. The ISOs that do heavy online recruiting and followed by a six-hour online training session, and then provide appointments that are poor, at best, only care about one thing: getting these poor neophytes out the door and writing deals. It's all about getting the merchant to sign the app because the ISO lowered their pricing and allegedly saved the merchant money.
The MLS gets a signing bonus, not much in the way of residuals, and three to six months later is out the door. Despite the fact that our industry has morphed from this model, much to the surprise of many, it is still being used by ISOs, albeit less and less. Hopefully its future is not very bright.
Many in our industry use their own methods of measuring success. Hopefully they're not based on how many deals they wrote last month. After seeing and sometimes trying just about everything ‒ both good and bad ‒ I've decided that my measurement of success is this: Whenever I walk into a merchant to discuss my program I have only two thoughts. The first is that this is my pricing model, along with hardware or software solutions, and I am not deviating from it.
God help the merchant that is about to sign and says, "Is this the best you can do?" or "Are these the best rates, or can I get better elsewhere?" I am delivering a better package all the way around, and if a merchant is just buying price, then I ask for the app back so I can stop wasting my time.
The second thought I have as I walk in the door is that I don't care if the merchant signs with me or not. My feeling is that merchants should count their lucky stars that they found me and that I will allow them to be my customers. I know you are thinking that this is extremely arrogant, but I promise you that, over the years, the more arrogant I have gotten the more merchants I have signed. I reached this point because I got better and better at what I do, and my confidence is higher than a fraternity day trip to a Colorado pot shop.
Remember this: When you visit a merchant who is deciding whether or not to sign your app, also be evaluating the merchant to decide if his or her business is worthy of being your customer, which means being profitable.
So, after reading this, decide how you want to measure success. If it's deal count, then give me a call. I can find you a job at a donut shop where success is measured by the number of donuts sold every day. If it's anything other than deal count, you have a shot at making more profit and building a life-long business.
Steve Norell is director of sales at US Merchant Services Inc. Based in Port St. Lucie, Fla., he oversees the USMS sales force and maintains the company's bank and processor relationships. You can reach him by email at firstname.lastname@example.org or by phone at 772-220-7515.
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