o you run your business like a bus company or a taxi service? Exactly what do buses and taxis have to do with the payment industry? Let's examine this analogy a little closer to measure your definition of customer responsiveness.

Bus companies follow a "make and sell" organizational model. They schedule bus routes in advance and don't rely on input from the riders to determine where to go or when. Following established destination and time schedules, they simply pick up and drop off riders. Bus fares are typically more affordable than other modes of transportation; these operations rely on quantity to generate revenue.

Taxi companies follow a "sense and respond" organizational model. Taxi drivers pick up customers on demand and take them directly to where they want to go, using their knowledge to navigate the best route. Passengers are willing to pay more for this individual service. In many cities, customers can choose from several taxi services, so it's important that each cab company maintains high levels of service.

How Does Your Business Stack Up?

If you model your business like a bus company, you typically have one fixed product offering and compete on price. All "buses" are perceived to be the same, so brand equity isn't important. It can be difficult to demand a premium for what is perceived as a commodity. (Consistency of service is important, but not at the expense of running a smooth operation.)

If you model your business like a taxi company, you adapt your service offerings to meet the needs of individual business customers. You look for ways to add value to that relationship. As a result, you compete on brand equity and superior service. Even when a service offering comes at a premium price, loyal customers will continue to do business with you.

It is impossible to sustain a competitive advantage over the long run with one fixed product offering. True competitive advantage requires people, knowledge, value-added applications and services, plus innovative means of winning and keeping your customers' business for the long haul. The Challenge In the payment industry, when customers want to buy from the bus company, the cheapest price usually wins. Brand and reputation differentiators are marginalized. Even if you offer a better, higher quality product, some customers won't be willing to pay a premium.

They simply want what they perceive as a means to credit card acceptance; they're often willing to tolerate terminals that don't perform at a certain level of quality standards. Other customers want to buy from the taxi company. More than price alone, these customers consider the total cost of ownership.

They are willing to pay a premium for a trusted brand that carries a high quality reputation. And they will pay extra for services that allow them to adapt the product to meet their own specific needs.

As a provider of solutions for this space, your challenge is to build an organization that follows the sense-and-respond model of taxi companies. It should also include a planned bus route for the lower tier of the business that simply takes customers where you, as the expert operator, tell them they will go.

Organize and Think Like a Taxi Company:

• Look for ways to add value to customer needs
• Leverage your brand, the total cost of ownership and superior quality
• Price above the competition, but view people, applications, advanced services and value to attract new business and improve retention rates

Be Available for Charter Bus Service:

• Scale down value and offer high-volume, lower-function solutions to meet minimum payment needs of lower-tier merchants
• Protect your product tier structure by clearly differentiating solutions and services you offer based on customer type
• Establish a bus route that is reliable and affordable for everyone
• Look for ways to up-sell customers to the taxi service

Bundling Service Offerings in Response to Your Merchant Portfolio

Truly successful, forward-thinking MLSs need a keen sense of the market and an innate ability to respond quickly. Not all merchants are the same. By segmenting your merchant portfolios based on application offerings and service needs, you will be able to offer new services at a premium while improving retention rates.

Savvy MLSs are able to bundle payment and value-added services based on the merchant profile to generate business, improve retention rates and generate new sources of ongoing revenue through up-sell models.

Take some time to understand the customer experience at the merchant's location. If customers write a lot of checks, would check authorization or conversion programs reduce losses? Could the merchant improve customer service and revenue by implementing an electronic gift and loyalty program? Is the location conducive to selling prepaid phone card services? If the restaurant or shop sells liquor or tobacco products, would it benefit from age verification services?

If the business processes payroll manually, would it be interested in hearing about automated time and attendance programs? All of these services can quickly add up to improved merchant loyalty-and a fatter paycheck for you.

What about the area of advanced broadband communications delivering transactions in less than four seconds? Is there an opportunity to connect the payment terminal to an existing DSL line or cable modem? Does that eliminate the cost of a second phone line for the merchant? The ability to upgrade from dial to broadband through the swap-out of an advanced communications module makes a convincing case for a terminal upgrade.

Talk to the merchant about the new generation of terminals that support payment plus value-added applications to improve customer service. If you can do this, you're on your way to establishing a long-term working relationship with the merchant. When that happens, you're also preventing attrition based only on the price of credit card processing.

Next thing you know, you'll be off the bus and traveling in a private limousine!

Michelle Graff is Director of Global Marketing for VeriFone.