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Article published in Issue Number: 070202

Even newbies should outsource

By Biff Matthews, CardWare International

Work on your business, not in your business" is a familiar motto. It's also a wise credo for new merchant level salespeople (MLSs). When you follow this advice, you focus directly, and almost exclusively, on income-producing activities.

A DIY mentality is fine for weekend handymen. But there are compelling reasons to outsource tasks outside your core competence to a knowledgeable entity that can deliver economies of scale. There's much to be gained by maximizing your strengths and finding partners to supplement your weak areas.

Cost is involved. But saving a dollar versus earning five is not a difficult choice. If you're obsessed with cutting corners, you'll never grow your business to its full potential.

What should be outsourced?

The MLSs I've known in my 30-plus years in business have benefited most by outsourcing these tasks:

  • Routine merchant service and help desk
  • Equipment programming and deployment
  • Kitting
  • Chargeback management
  • Encryption
  • Statement preparation
  • Merchant training.

The most critical are the first two, which typically drive the other operational functions.

In general, successful MLSs have excellent sales abilities and so-so business-operations skills. It's no surprise. Individuals who are top performers in one area tend to underachieve in the other.

Professionals in each discipline need working knowledge of the other. But most individuals perform best when working to their strengths.

How do I find a partner?

So, what should an MLS look for in an outsource partner? Overall payments industry knowledge is first. Experience is second. The two do not necessarily accompany each other.

Technology tools are also important, along with a potential partner's commitment to the work at hand. Measure this by resources the company has invested in people and training.

Checking references is essential. The references I request are unconventional.

A business will not include on its reference list individuals who won't endorse it. So, to get the clearest picture, I also request that a prospective partner provide names of former customers and companies that, for one reason or another, did not become clients.

I weigh the comments of these parties carefully, along with the reasons why, in the case of noncustomers, the fit didn't make the grade. And I compare this information with my own company's requirements.

In a surprising number of cases, I end up hiring the company that did not win the business of the reference I consulted.

The needs of my company and the other firm could have been radically different. Fit is, after all, everything when it comes to a working partnership.

If you don't have similar core values and goals, you're not going to have a successful working relationship.

For references doing business with a company I'm investigating, I ask why they selected the firm and why they have stayed in the relationship.

I want to find out what value they are receiving. In addition, it's revealing to ask what events would cause them to terminate the relationship.

This approach penetrates propaganda and allows me to make the most informed decisions possible.

How are problems resolved?

No partner is perfect. Occasionally, companies fall out of compliance with the agreed-to level of service. Find out if the vendor notifies customers of problems before they discover issues themselves. And once addressed, how are problems resolved? With what frequency do they recur?

The main thing you want to ascertain is whether the partner responds to problems with band-aid relief or meaningful solutions.

Next, get inside the head of the company you're working with, and vice versa. A sound marriage is based on straightforward communication; so is a sound business partnership.

It's important for the parties to get in sync, as well as establish short- and long-term exit strategies in case the relationship proves to be unsound.

The best outsource partner is also one for whom you are an important client. In addition, a partner should support your activities as you grow.

This may require choosing multiple partners for the various skill sets. An individual or team that excels in one area may not be proficient in another. However, one partner may be proficient in many areas.

Also, visit the offices of any outsource partner you are considering. A site visit quickly cuts through veneers and public relations smoke screens. It enables you to confirm, for example, that your potential outsource partner is not outsourcing the services it provides.

How do I maintain the relationship?

Outsourcing is critical to the growth of any new business. With this tool, new and seasoned MLSs can generate abundant new sales. But if the business you bring in is not serviced and retained, your success will be limited: You'll never maximize the value of your time.

Identifying partners that can enhance your success is every bit as valuable as sales expertise. Once you've qualified your outsource partner, pay a fair price for service. You must be profitable to succeed; your partner must be profitable as well.

You want the vendor to be in business long after you have sold your portfolio. (This happy scenario will not occur if you outsource to Bangladesh, with or without a site visit.)

Finally, you should not have to micromanage a partner. The firm should be able to achieve what you hired it to do without continuous hand-holding. If you have to walk a new partner through procedures beyond the first few days, you haven't chosen well. Consider making a new choice.

Also, if you are a startup venture, recognize you are a customer of value. But other customers are valuable, too. Be patient, and be open to your partner's insights. Like parachutes, all minds function best when they are open.

Biff Matthews is President of Thirteen Inc., the parent company of CardWare International, based in Heath, Ohio. He is one of 12 founding members of the Electronic Transactions Association, serving on its board, advisory board and committees. Call him at 740-522-2150 or e-mail him at

Article published in issue number 070202

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