Differentiating Your Sales Equation to Make the Positives Add Up

D ouglas Mack Card Payment Systems "Three years ago or so, the majority of ISOs and agents were strictly involved with selling credit and debit. As more and more individuals went independent, they realized how much more money they could make and how they could set themselves apart from the competition by diversifying. Nowadays, you may as well call people 'Business Service Specialists' instead of 'Merchant Service Professionals.'

"I don't think it's bad either way, really. The only problem with the 'Business Service Specialists' is that it is pretty much impossible for one person to FULLY understand each product. Therefore, I think that some merchants are being done a disservice. We prefer to stay with and act as 'Payment Solution Professionals' and provide solutions to moving money.

"The 'services' that one agent/ISO offers vs. another does not make that agent/ISO any different from the next if they don't provide 'service.' So, really, I don't buy the whole 'let's be different by offering this service' because if they don't FULLY understand the service it doesn't make a bit of difference.

"In my opinion, new agents/ISOs should be thinking of better names to differentiate and get away from the confusing three-letter thing. That's a good start to being different!"

Tom Haleas Bridgeview Payment Solutions "I agree that it might be difficult for a merchant to differentiate product offerings from different ISOs. In many cases, particularly for smaller merchants, the real choice is based simply on the lowest available cost. There is a lot of 'supply' out there for a fixed amount of 'demand.' This has been great for merchants, who are experiencing increasingly lower costs for transaction processing, but not so good for ISOs, whose profit margins have been reduced.

"In the near term, I see continued increased homogenization of ISO offerings. In the longer-term future, new products such as smart cards may benefit the more sophisticated ISOs who have greater resources to market, sell and support the latest product offerings."

Jason Burgess Artaban Solutions, Inc. "ISOs have to differentiate themselves from their competition or they will find themselves struggling to stay in business. ISOs have a wide range of ways to do this, such as focusing on niche markets or putting their emphasis on a specific product that they are willing to bet the success of their business on."

Robert Carr Heartland Payment Systems, Inc. "I do not accept the premise of your question. There are many ways for ISOs to differentiate themselves. The easy way out in this business is to sell on lower rates and promises of service. This method of selling dominates the industry and does not allow for differentiation among ISOs. Differentiation with unique products/real services can yield exceptional results. I refer to Heartland's building of $15 billion of organic, very profitable portfolios in four years as evidence. In my view, the opportunities for differentiation are increasing exponentially, and times have never been better than now for differentiation. How to do it is the continuing challenge!"

Jared Isaacman United Bank Card, Inc. "I don't really think it's a problem, even today. We all have similar services and product offerings, and that is why we are such a competitive industry. Sure, there are new advances with research and development with processors that lead the way for new technologies, but in the end the whole industry has it anyway. This year saw some great new things in Palm Pilot processing and smart card technology, but now everyone is catching on. The real focus is not distinguishing our product offerings but working on controlling attrition rates in the portfolio and developing more effective marketing strategies."

Craig Millington Compass Bank "I think this will always be a problem, especially in an uneven arena where not all ISOs tell the whole truth/price up front. They will continue to camouflage the facts until the contract is signed."

Steve Christianson TransPay Processing "Different ISOs/salespeople offer a myriad of deals to merchants. If a merchant has a specific rate that is not too low, the salesperson always goes under it, then may charge extra on authorization or transaction fees/statement fees, etc., to make up the difference. This is the case for residual-based salespeople.

"ISO salespersons just selling equipment usually give the lowest rate the ISO will allow, with the salesperson only making money on the equipment commission. Rates do not matter to them, and the ISO seems content to make a few basis points since it does not have to share with the reps.

"The hustle game is still out there, and many merchants are still being taken advantage of. I see no change in the near future. It is easier to sell low rates vs. selling service with lower equipment costs. We try to balance our portfolio by selling equipment at a fair price, pricing merchants at a fair price and providing great customer service.

"One way of determining a 'good' ISO is the attrition rate and average longevity of the ISO's merchant base. ISOs who keep merchants less than two years usually do not provide good local phone service. ISOs whose merchant base is with them five years-plus provide excellent customer service, low-cost equipment swaps and local service if possible."

Mitch Lau Money Tree Services, Inc. "There are only so many things to offer merchants, and even when there are new breakthroughs, eventually everybody gets on the bandwagon. I don't know that this is a problem, simply evolution."

Alan Gitles Merchant First Bankcard "We don't see it as a big problem - only with those merchants who only care about price. We feel we can differentiate ourselves."

Stuart Rosenbaum U.S. Merchant Systems "I believe we will see some significant changes."

Russ J. Goebel Retriever Payment Systems "On the surface it does appear all ISOs are the same. However, if you truly conduct your due diligence and understand the value-added business proposition of the ISO, 'differences' do surface. I believe one must view each relationship as a partnership and build your business as such. As long as the customer is taken care of and all fees are disclosed, our dynamic industry will remain intact." Larry A. Henry L. Henry Enterprises "Differentiation is the key to a successful ISO. Certainly, there are only so many ways to present discount, transaction fee and monthly minimum. With the changes in technology, however, the availability of new products and services are increasing. The lack of ' ... ways to differentiate' will bring about improvements to current products and methods of processing.

Bob Joyce Alliance Payment Systems "For as long as I've been in this business, it has been primarily rate-driven, with occasional emphasis on new equipment and software. Everybody pretty much sells the same thing and tries to develop rapport with merchants, either to sell equipment or to establish a long- term service and residual-based relationship."

Chris O'Hara Profitscentric "Having partnered with many ISO organizations, I believe that they have an opportunity to differentiate themselves in various areas. Here are a few of the qualities that I look for in selecting a sales partner:

"Product Set: Are they selling a complete POS product consisting of credit, debit, EBT, check, loyalty, etc.? It appears that most successful, long-term organizations provide a robust solution in order to differentiate their company to the merchant and safeguard their relationship by minimizing the competition's opportunity to win the entire POS business by offering any additional POS product that is unavailable from their current provider.

"New Product Adoption Rate: Does the organization embrace new technologies and product offerings beyond traditional credit and debit packages? Are they on the leading edge or are they a follower? Obviously there is a learning curve associated with new products - is the organization willing to exchange an investment of time and energy in order to reap rewards of early adopters?

"For example, wireless technology offers a tremendous opportunity to capture new revenue from retailers who can benefit from the speed and mobility that wireless technology offers. However, there is also an even larger opportunity for wireless as it relates to displacement of traditional "POTS" lines.

"Now, organizations can harness significant revenue that was formerly paid directly to local telephone carriers. All that is required is an understanding of where this product performs best. Another example of a more complex sale is the ATM sales and deployment opportunity. If sold correctly, ATMs benefit merchants and the sales organization; however, ATMs are not for everyone because they require an environment where the store has a traffic count of several hundred customers per day - otherwise there typically is not enough usage to generate a profit.

"Check conversion, loyalty and gift cards are other examples of new products that can be combined with traditional debit and credit offerings to create a full service, robust POS solution for the merchant community. Unfortunately, many organizations are satisfied selling the same old products, and their prior success leads to complacency.

"Commitment to the sales agent: How does the organization treat its man on the street? Most successful ISO organizations have a strong commitment to their sales agents that goes beyond a good buy rate or liberal approval policies. Therefore, in addition to providing a sound business model, they also provide the same level of respect, perks and benefits that they provide their full-time, internal employees." Stacy Bell Advanced Payment Technologies "I always wish that there were more products on the market. The more products we have to choose from, the easier it is to fill the needs of our customers. Not only will that help with potential clients, but also it can lead to add-on products and services for our current customers."

Douglas Mack Card Payment Systems "There are TOO MANY new products out there! The problem is that none of them are perfected! Then you have more companies deciding to duplicate the same service thinking that they can do it better, and yet they still have their shortcomings, too. Don't get me wrong; every company is going to have their shortcomings, but take a look at the check service industry. "You have some companies that are great at guarantee. You have others that are great at conversion. Some that are excellent with verification. All the way down to the recovery and collection experts. Yet NO ONE has combined all of these into one great, seamless service. How hard could it possibly be?"

Jason Burgess Artaban Solutions, Inc. "As a consultant for the merchant acquiring industry, my clients have had virtually no problem finding the products that they need to offer a complete processing package to their merchants. More and more vendors are offering more complete products that handle all of the processing needs of the ISO and the merchant."

Robert Carr Heartland Payment Systems, Inc. "There are so many products it is scary. The hardest thing is to sort them all out and see which of them can be packaged to meet real needs of merchants. The solutions are running way ahead of understood needs."

Jared Isaacman United Bank Card, Inc. "I am very satisfied with the products currently available for deployment, but, yes, there are some new technologies that I am excited to see roll out. It seems like we are finally starting to see the check world and the bankcard world integrate with products like the Hypercom ICE 5700. New designs like these will help sling-shot the launch of check conversion to the merchants dramatically."

Craig Millington Compass Bank "[There are] adequate new offerings."

Steve Christianson TransPay Processing "The more new products [that are] introduced to the business, the harder it is to service the equipment. Most new and old equipment do the same thing. But some people want new because it is new. Some ISOs sell new equipment to existing merchants, then keep the old equipment, clean it up and resell it anyway. We do not look forward to new equipment unless it offers something the old does not and the situation demands it for particular merchants."

Mitch Lau Money Tree Services, Inc. "There is not really much new coming from others, so we are creating new products/services for our partners to sell."

Joyce Leiser US Wireless Data, Inc. "Palms, PDAs, cellphones, pagers - all with card-swipe acceptance - will provide cost-saving business solutions and will be able to also handle card acceptance."

Alan Gitles Merchant First Bankcard "New products are not perceived to be a big problem."

Stuart Rosenbaum U.S. Merchant Systems "Need new technologies."

Russ J. Goebel Retriever Payment Systems "The products and solutions are available. New technology is being developed daily; look at the ETA and you will see new products. The key is the functionality, ease of use and delivery of such new products. Often new products 'hit' the market and they don't work - that's when everyone becomes frustrated."

Larry A. Henry L. Henry Enterprises "The major hardware manufacturers are now being challenged by smaller equipment suppliers that are able to appeal to the new technology 'needs' (mobile, wireless, reporting packages, etc.) and get them to market much more quickly. It will take awhile for the new products to attain a foothold and direction. Until then, competition and innovation is absolutely necessary."

Bob Joyce Alliance Payment Systems "More than enough."

Chris O'Hara Profitscentric "Unfortunately, it may be unrealistic to expect significant product development breakthroughs when the entire industry is serviced by a handful of back-end processors, each with their own legacy systems and stringent development standards. Therefore, many of the new, revolutionary products must be developed by independent third parties and integrated into the processors' platforms."