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Issue 03:10:02

Industry Update

The EVO-lution of MSI

Success Is Spelled "ETA SLNF"

Scamming Spammers and the Scamming Spams They Spam

Hypercom Sells Golden Eagle Leasing


Intuit Buys Way Into POS Business


White Paper
What the Securities Industry Can Teach Us About Electronic Payments

Book Review
"How to Survive and Thrive in the Merchant Services Industry"


Street SmartsSM:
Eye on ETA

How About Them Reserves?

To Image or Not to Image ... That Is the Question

Interchange Untangled - Part 2

New Products

Triple Teaming for Powerful Mobile Payment Solution

A Flexible Billing Option for Merchants

Company Profiles

PaySystems Corp.

Pi Systems International


A Marketing Plan Will Lead Them to Your Doorstep

Consider the Next Steps



Resource Guide


Realizing the Value of Value-Added Solutions

If you're a Merchant Level Salesperson looking for ways to counter merchant attrition, you might need something new in your bag of tricks. If you're thinking bankcards, rates and basis points, think again. The sale of value-added products and services is the latest buzz in the industry and is proving to be an effective approach for acquiring and retaining merchants.

Many ISOs already know these types of solutions will help set their agents apart from the competition; it's just a matter of getting Merchant Level Salespeople to embrace them.

Christine Crocker, President of Los Angeles-based 2C Processor USA, Inc. (2CP USA), an ISO/MSP that has built a successful business by selling value-added products integrated with merchant credit card processing, recently shared with The Green Sheet her experience of selling these solutions.

"When all you sell are bankcards, then you're just a bankcard person. You're selling based on price," Crocker said. "When you're selling a one stop shop-an entire bundle of services-then you're really selling value."

"Bankcards have become a commodity, so agents will have to come up with better solutions," she said.

By offering value-added products, you can open doors for new merchant acquisitions, improve merchant retention and provide yourself and your merchants with opportunities for building continuous revenue streams.

Typically when you sell a value-added solution, you take an existing product or service offered through a particular vendor, or even through your sales organization, then add your own "value" to the product or service and resell it to a merchant.

Some value-added products include gift and loyalty programs, also know as stored value cards; check services such as electronic check conversion, check guarantee and check authorization through an ACH; point of sale terminals can be value-added products, especially when they support applications for these types of services; prepaid cards such as for wireless, long distance, and Internet access; and payroll cards.

Crocker has more than 16 years of sales experience and has built her business around selling merchant credit card processing integrated with value-added products. Before getting involved in the payment processing industry, she sold copy machines. She said her biggest breakthrough in sales came when she switched from selling individual copiers to selling full-office solutions.

Crocker now applies this "full solution" principal to merchant services.

2CP has a network of 900 agents-many of whom are struggling to move from selling only credit card processing to selling value-added solutions. They sell what they know, and that's bankcard, she said.

"My experience is that the agents are a very tough sell on the value add. I have to continually drill in their heads to stop selling just bankcard," she said. "The thing I keep trying to drive home to them is to stop leaving all that money on the ground."

Crocker goes the extra mile to change her agents' mindset. One of the ways she does this is through an intensive three-day training course she calls "boot camp." 2CP's top sellers run the classes.

She also has created all new marketing materials for 2CP' agents. "If you put the tools in the agents' hands that force them to go in a different direction than just bankcard, then you're ahead," she said.

Crocker's top-selling value-added solutions are check services such as check conversion, guarantee and authorization, which she called "the ACH umbrella;" gift and loyalty cards; and prepaid products.

2CP also sells point-of-sale terminals as value-added products. VeriFone's Omni 3750 is Crocker's terminal of choice because she said, "it supports the bundle."

Merchant Level Salespeople know the importance of selling a terminal-it's upfront cash. By offering a value-added, bundled solution with a sophisticated terminal that supports value-added applications, they have the opportunity to sell merchants not only equipment, but also a gift and loyalty card solution, a pre-paid phone card program, age verification, a time and expense capture solution and more.

"You get one deal, and then you start doing it correctly; you get another bundled deal and then your residual checks start coming in, and you start seeing the magic," she said.

Crocker suggests that agents take the time to get back in front of the merchants in their portfolios, instead of only going after new ones. Merchants to whom an agent sold credit card processing services may also be interested in check guarantee, but may not have been aware of such a service. Or they may find value in a gift card program.

"When one of my agents started selling the check service program, he revisited his portfolio, and in doing so, he signed up about half of them with at least one other value added service," she said.

Learning about and selling all these new products and services may seem a little overwhelming, but ISOs and MLSs will typically find a true partnership with their value-added vendors. Many of these vendors will collaborate with ISOs and agents on rates, opportunities for private labeling, marketing support and product positioning and added merchant incentives for closing the deal.

Valutec, a gift and loyalty card provider focused on small-to-mid sized merchants, sells its programs through about 5,000 agents working with more than 200 reseller partners-anywhere from a small office with only a few people to a super-ISO with 500 or more reps.

Valutec works closely with merchants once the sale has been made-anything from card design all the way through merchandising displays, depending on a merchant's particular needs. It also offers several different types of programs for different sized merchants. One program might require fees based on the number and amount of transactions, while another might charge only a flat monthly fee for the processing.

Greg Grove, Vice President of Marketing for Valutec, said there has been a recent change in the marketplace with value-added products. "There's a shift going on because credit card processing has become, frankly, a commodity," he said. "It's who's got the lowest rate to get the job.

"With gift card and loyalty card, there still are absolutely product and service distinctions still in that marketplace. If you walk in the door with that then you have set yourself apart from your competitors."

Grove also said value-added products and services such as gift and loyalty cards are being used much more by ISOs as tools for merchant acquisition than as tools for merchant retention.

"We have resellers that are actually doing it in reverse now; they are walking in the door with gift card and then adding credit card to the sale," said Grove.

"If you call up and say I want to talk to you about credit card processing you probably don't get a lot of interest," he said. "But if you talk about stored value cards, gift cards, loyalty cards, and you've got a free start up package and those kinds of things, you get appointments and you get in the door."

In a recent study on merchant retention, Valutec found that merchants with stored value programs in place have a retention rate of 93% from year to year for credit card processing versus an average of 75% without a stored value program. Merchant turnover is reduced from 25% to 7%.

Crocker has also seen improvements in merchant retention. She has a zero attrition rate with a particular vendor she uses for check processing. "I do not lose merchants once they have that value add," she said. "If a merchant has several products with you, the likelihood of them unplugging from the bankcard product is not high because you are a one-stop shop in your offering."

Like Crocker, Grove also believes in selling merchants a full solution. He said it's much more complicated for merchants to switch credit card processors and then re-download all the value-added applications. "They are usually separate pieces, but if a merchant assumes that it's getting all these things from one company, then it's less likely to change."

Selling value-added products looks like a "valued" solution for everyone: the vendors that are selling these products and services, and merchants, agents and ISOs who have gained many new opportunities for generating revenue.

Now it's only a matter of getting your foot in the door.

Selling value-added products "is a significant change because it's a change in a selling style," said Crocker. "You have to be willing to embrace the change. And commit to the change no matter what. And that is a rare find in an agent."

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