By Steve Norell
US Merchant Services Inc.
Hiring, training, supporting and motivating merchant level salespeople (MLSs) is the most challenging job of any ISO or MLS seeking to build a sales force. I must have hired, trained or interviewed hundreds of thousands of candidates over the last 25 years.
When I opened my first office in 1995, I showed my 80-year-old uncle a Zon Jr and told him that when I lease this little box, I make close to $1,000. Being the old sage he was, he said to me, "Wouldn't it be better to have 1,000 salespeople selling, and you get $100 from each of them and they get $900?"
I told him that was a great idea, as well as an obvious one. But getting 1,000 MLSs couldn't happen overnight. So I began my search. This was 1996. Online advertising didn't exist. I ran an ad in the paper and arranged meetings at a hotel, not in my office since it was in my home.
Many potential hires not only didn't show up for interviews, but they didn't even call to cancel. Some who kept their appointments weren't half bad. I'd usually offer them a position. Guess what would happen next? While shaking hands before leaving the room, more than 80 percent would ask two questions: 1. When can I get paid? 2. Can I get an advance on my commissions? From there it all went downhill.
As the years went by, I became convinced a better way must exist and that I would find it. I couldn't have been more wrong. There is no trouble-free model; none of us has the solution. Sounds bad, right? It is. I'll tell you why.
It takes a long time to make a decent monthly income no matter how good MLSs are or how much money ISOs throws at them every time they make sales. Most people attracted to this industry don't begin with sufficient money to survive on until they grow their sales. Under these conditions, it's impossible for people to last long enough to generate a decent amount of income. I've tried to find the secret sauce of compensation and have come to the conclusion that it does not exist. I have done straight commission, W-2 employees with straight commission, payroll, payroll plus commissions and residuals, etc. The only one that works is the one this industry started with: straight commission. If you want to get paid, sell something.
As I just emphasized, most people are broke when they enter our industry. How can they even put gas in the car, let alone succeed if they don't have a penny to their name? Maybe one out of 1,000 makes it big time. They end up becoming ISOs or successful MLSs. I should also point out that for every MLS that accepts a position, 20 percent or fewer will arrive for the first day of training. Don't expect them to call you to explain why.
This business is easy to get in and just as easy to leave. You don't need much education or experience to become an MLS. My initial interview lasted about five minutes. I asked one question: Do we get residuals? The answer was no.
During the Great Recession, this industry saw an influx of former real estate and mortgage people who, overnight, were out of jobs. For the most part, they couldn't adapt and hurt our industry.
I've wondered why people entering real estate or insurance seem to have higher success rates than ours. I think this is our industry's barrier to entry is not just low but nonexistent. At least with real estate or insurance, you must take a test and pay a fee to play in their yard. With us, it takes no money, no education and no training. In some cases, you can have a criminal backround. It requires no money upfront or money to stay in the industry. I believe if Mastercard and Visa took a more aggressive approach to this issue, we would all be better off.
To succeed, MLSs need great ongoing training. When they begin building sales teams, most people think they will do training themselves, believing they are great trainers and know everything there is to know to make it work. This is a mistake. Training is extremely time-consuming, and trainers have to be continuously studying and honing their training skills. Ours is a dynamic industry and trainers must always be evolving.
I have yet to meet or know a sales manager that actually manages sales. Most of the time, they are problem solvers and/or baby sitters. Also, our industry doesn't favor micro-managing MLSs. We are a firecely independent group and would rather start our own ISO, working as hard as we like, rather than have someone asking us daily how many calls we made.
So my conclusions are that finding and hiring a decent person is next to impossible, the training is tedious and long, the turnover is huge, and many times you find you are doing all the work and paying someone else for your own efforts.
The heyday of the on-the-street MLS is fading. Before you say hogwash, let me point out that this is the case in many other industries, not just ours. Kiosks are replacing counter staff in all types of retail businesses. Sales forces are being replaced by online data entry.
Look at Square and PayPal. Neither has a sales force, and they are signing up merchants at a mind-boggling pace. They don't have to take call after call from MLSs complaining about something stupid for the 10th time or I saying they want to sell their residuals and asking how much you'll pay for them, or grumbling about pricing. Square and PayPal have eliminated the pain that comes with an outside sales force.
If you think this won't happen to you, think again. The very ISO or processor you're writing for is moving in the same direction. Our industry is becoming more automated. People can buy software products that include merchant accounts, and all they have to do is click to become a merchant.
Doom and gloom, right? Sure, only if you don't adapt. If I were to start over again today, I'd build an inside sales force paid to sign merchants over the phone or online. I'd create a great workplace atmosphere, and remember turnover will always occur, but it won't cost or hurt as much. Will what I predict come to pass, or will the MLS model with feet on the street always exist? Time will tell, but I'm betting I'm right.
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 email@example.com or by phone at 772-220-7515.
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