To: greensheet@greensheet.com
1) I have followed your industry observations via The Green Sheet for a number of years and have watched it grow considerably in the types of valuable information that you have passed on to the industry. Your unbiased topics are credible. Your occasional "Tell it as You See it," good or bad, is consistent with your philosophies, concerns, and heart for fairness and equity for all levels of the industry.
2) I am Wyatt Baxter's son and a while back I read an article attributing Wyatt's contributions to the industry and it really touched me. Giving real credit where credit is due in this industry is rare. The time, money and commitment that he put into the vision of being part of the ground work of the BSA was immense and was a real passion for him in a very real and deep way. Thank you for crediting him.
3) When Wyatt retired I formed my own ISO based on his philosophies of fairness and the pursuit of the perfect organization. This is far from a solely monetary pursuit. I see the next couple of years as a major opportunity for ISOs to establish themselves as full service providers for what I see is a sizeable middle market that can be extremely lucrative.
For the little guys like myself it requires a paradigm shift in our total way of thinking. It means that we need to make serious and painful long-term investments in our infrastructure. We must deliver our total customer service package which does not come cheaply in terms of personnel and fixed overhead.
I have prospected approximately 18 processing possibilities in the past 7-8 months. Their programs vary considerably. Several tell an ISO everything the ISO wants to hear. And few live up to the service levels which are promised and that are built into a number of various pricing schemes. My thoughts are that the ISOs need to step up to the plate and negotiate those costs (vaguely quantified) and use those incremental revenues to assist themselves in developing their own service programsóEstablishing and living up to their own service levels on their dime is the only real way for an ISO to maximize their capacity for merchant retentionólong-term residual streams.
However, as a salesman and a business owner with a small sales force who is solicited frequently by what I call "Sales Rep Lookiloos," the only questions that I ever really hear from them are "What your rates?" and "How much can I make on equipment?" I write those types off immediately. I wait for those who are curious about our organization and who show signs of discomfort and displeasure in selling equipment on high dollar 48-month leases.
I simply chose not to answer those (traditional) questions and not to deal with those types of salespeople. They are not serviceóor residualóoriented. There is a major difference in thought between what I refer to as a residual service-driven organization and a sales with some residual type organization.
My thoughts are that too many ISOs are so driven toward sales that they take on just about anyone. They allow their destiny to be driven by a melting pot of salespeople who want to give away the discount (which is not healthy nor supportive of a service-driven ISO) to maximize the sales price of equipment for dollars, which is not necessarily a fair handshake for the merchant. This short sightedness leaves very little dollars for the ISO for continued operations, the salesman's life is feast or famine, and the potential for referrals is lost.
How can the small ISO compensate their employees to meet everyone's needs? This is a tough one. But through trial and error I will tell you what I have done that has appeared to be successful and rewarding thus far.
#1) I Set my own vision of my organization. I have selected every one of my salespeople based on their INTEGRITY, not their sales experience and numbers. (In the last two years I have chosen three out of about 35 candidates and today I still have three long-term, loyal, profitable residual producers. Last month I hired the fourth.)
#2) I defined who I was and did not compromise for anythingóperiod. I defined myself as a service company, not a sales company. So I had to structure my compensation package around a long-term residual stream. I also had to commit to providing a minimum base salary to my employees until the residual streams could support their own efforts. In other words, I had to invest in my employees to keep them within my vision of a service company. To fairly address compensation, I had to meet with each sales person individually, commit to guarantee bi-monthly payroll (not a draw) that was mutually negotiated.
And theoretically, they were expected to acquire profitable residual business my way. We do sell equipment at low margins, we also build it into our pricing in a number of ways to avoid the word "sale."
I did not set quotas on the number of accounts, nor volume, but focused on profitable deals. I set the base salary slightly below the known needs of each salesperson so that they would have the incentive to increase their income solely on the growth of their residual or the possiblity of a few extra hardware sales (I call them new customers) to raise their standard of living. If they are producers, I give what I can.
Whenever the employee's total compensation exceeded our negotiated base, I paid them 100% of the overage in addition to their base. Whenever the employee's total compensation fell below their base, all they got was their base. They can see their residuals grow every month and they have grown to be residual thinkers, because I have filled the $$$ gap during the transition. Each employee has cost me an investment for the first year. Also, each employee became a break-even investment by the end of the first year. So, although it was painful financially as a small company (I often sat on my own paycheck), each employee is now in position to carry their own weight without my subsidizing their tenure any further. The point being is now they share my vision, they get tons of referrals. We have incredible retention, our merchants often pay a little more than they were for our level of service. I am happy because I did not have to compromise my principles and vision to make a buck. We plan to duplicate this process as our cash flow allows us to, one person at a time, at a controlled pace.
Salespeople who represent you deserve the support and guidance to grow into your culture. It takes time.
Our nice margins, high-volume middle market accounts and retention also allow us to take on additional processors to fill underwriting voids, as well as to make major technological investments in our organization. This creates more opportunities for all.
Had we been a sales company, we would be struggling and stressing to sell hardware to make ends meet along with our sales force. By choosing those salespeople who fit into our vision and culture, and by investing in themóand technologies, and opportunities to further support themóour sales force has grown into residual producing machines who love their jobs, and produce a realistic base of revenues to allow our company to expand and make the necessary investments to stay ahead of the game.
I had a need to share this with you because I know salespeople often get the short end of the stick and that ISOs often are seen as the "Bad Guys." I believe most ISOs want more and want to give more to their people, but their vision is limiting their ability to achieve realistic results. Without a commitment to developing a stable residual stream to support their operations, and without making the investment in a quality sales force (like they do with their computers, ISOs, fees, etc.) they truly sell themselves short.
My opinion is that as much as to the extent that salespeople are taken advantage of by ISOs, ISOs are taken advantage by their salespeople due to the quality of salespeople they allow to be part of their organization. An ISO is the summation of its parts. If it's not working the way the ISO wants it to, redesign the ISO and get rid of the undesirable parts, to achieve desired results. This is easier said than done and nothing will change until a clear vision is achieved and committed to.
Thank you for developing The Green Sheet and supporting the industry.
Bob Baxter
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Dear Mr. Green,
Have you ever published an exhaustive National list of ISOs? If so in what issue. If not could you? I would greatly appreciate it and I'm sure so would many others.
If it is to much to ask I would like to see a list of ISOs in the Greater Chicago Area.
Sincerely,
Dan Bagger
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Dan:
The list you are talking about is not published, sold, or provided to any source. As you probably realize, there are thousands of unregistered ISOs and many that sell Financial Services other than bankcards.
One thing that all ISOs that receive The Green Sheet can count on is that the only information they are going to receive as the result of being a subscriber is information originating from The Green Sheet.
Paul H. Green
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To: The Green Sheet
I am interested in attending your seminar. How does one become an ISO? What does it stand for?
Thank you,
Paul
Paul:
Please call Ariel at 800-757-441 to register for our seminar.
ISO in this industry stands for Independent Sales Organization. There are a number of ways to become one, including contacting the ISOs Looking for Agents listing in our Resource Guide. Our issue 98:01:02 has detailed profiles on these programs.
Attending the GS seminar is another great way to find out how to become one.
Good Selling!SM
Julie O'Ryan
Managing Editor
Send Letters to greensheet@greensheet.com or P.O. Box 6008, Petaluma, CA 94955-6008.
