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Street SmartsSM:
Blueprint for MLS Success: Part I

By Ed Freedman

Recently, I had the privilege of speaking at the collaborative education seminar, "Field Guide for the Developing ISO," held July 28, 2004 at the Drake Hotel in Chicago. The seminar provided information and insight on how to succeed as an ISO. It was open to all merchant level salespeople (MLSs) nationwide. The seminar wasn't just about selling. Most MLSs know how to sell merchant accounts, but not many know how to parlay that skill into achieving financial success as an ISO.

More than twenty experts were invited to participate in this unprecedented event, and I was honored to be one of the presenters. My topic: Blueprint for ISOs. I went to Chicago and gave my presentation to a packed audience of MLSs. It was a terrific topic and very well received.

Many people came up to me afterwards and insisted that I find a way to share my presentation with all the MLSs unable to attend, not just with the seminar participants. They were adamant that this information needed to be in the hands of every MLS. I agree.

So, I've revamped my presentation into a two-part "Street Smarts" article. The first part of the "Blueprint for MLS Success" looks at getting set up. The second part will focus on execution. If you read no other columns this year, read these two.

For those of you who don't know me and are wondering why you should read this column and listen to me tell you how to run your business, let me assure you I started out in this business right where you are.

Have you ever been working out at a gym and some guy comes up to you and starts telling you what you're doing wrong? He insists you don't have the right form or aren't using the machines correctly.

You look at this guy-overweight and out of shape-and realize he's not credible. You pay no attention to him.

Well, I am credible. I am a certified trainer at the payment processing gym who has put in years of hard work.

I started out in the streets just like you. I personally sold my first 1,000 accounts just like you're doing now. I built my company, Total Merchant Services, into one of the largest and most respected ISO/MSP organizations in the country.

The company has a 15,000 square foot state-of-the-art facility and more than 30,000 merchant accounts processing over $3 billion in sales annually.

We aggregately pay over 500 sales partners more than $1 million each month in accurate, on-time commissions (excluding all types of lease findings).

Because of these achievements, I can put myself in front of you with total sincerity and honestly share my secrets of success.

Let me help you succeed. I've designed a blueprint for any MLS who aspires to achieve this level of success. The main sectors of the blueprint include:

  • The Contract
  • Compensation Plan
  • Effective Vendor Partner Selection
  • ISO Partner Selection
  • Lead Generation
  • Closing Deals
  • Value-added Services
  • Industry Involvement
  • Doing the Right Thing

This column (Part I) will cover the first five items on the above list.

The Contract

Without a solid foundation, you will never get where you want to go, and the foundation of every successful MLS begins with the contract. I can't emphasis this point enough!

What do you need to look for in a contract? Here are the key components:

  • Residual protection
  • Merchant loss liability protection
  • Absence of exclusivity clauses
  • Absence of forced portfolio sales clauses
  • Knowing with whom you do business
  • Qualified legal review of the contract

Compensation Plan

An equally important cornerstone of your business foundation is compensation. Consider the following when you consider compensation plans:

  • Not one best program for everyone
  • Depends on needs, likes, personal situation and financial status
  • Companies getting creative with compensation programs
  • Upfront money vs. residual payments
  • Signing bonuses
  • Production bonuses
  • Conversion bonuses
  • Rewards programs
  • Free services
  • Leasing
  • Liability

When it comes to evaluating and comparing compensation programs, here are the questions to ask:

  • What is my exact cost structure (every line item)?
  • What percentage do I receive (on each line item)?
  • Regarding free services, who pays for business cards, marketing materials, welcome kits, Web site, PIN pad encryption, PIN pad swap out, merchant training, reprogramming merchants, wireless activation fees and Internet/gateway license fees?
  • What type of signing bonus, production bonus payments and conversion bonus payments are offered?
  • What is my liability for merchant credit losses?
  • What reputation/experience does this processing partner possess?

Effective Vendor Partner Selection

We've laid out the steps for building the foundation with a solid contract and a strong compensation plan. Another area that can make or break the foundation of any professional is partnerships. Neither you as an MLS nor your merchant acquirer can do everything on your own. We are all very reliant on vendor partners. Because of this, effective vendor partner selection has never been more important.

What's the most effective way to select the best quality vendor partners to ensure your success? The following three words must be at the forefront of your mind during your discussions and selection:

  • Compatibility
  • Service
  • Price

ISO Partner Selection

Your ISO Partner is the most important vendor selection you will make to achieve success. According to countless responses I received from MLSs around the country, the #1 issue is reputation and experience in the industry. I am in total agreement with this.

As I previously stated, a contract is only as good as the people who stand behind it. Many merchant account providers have an image of MLSs screaming, "Show me the money!" when, in reality, you're saying very politely, "Please treat me and my customers fairly." It's all about respect and fairness. Insist on that with your ISO/MSP. As with your vendors, base your ISO/MSP choice on:

  • Compatibility
  • Service
  • Price

Lead Generation

Equally important to productive partnering is securing lucrative leads. When successful MLSs are asked how they get business, they respond quickly and intelligently: they are effectively marketing their business. Local community banks, trade organizations and other strategic referral partners endorse them.

Unsuccessful MLSs struggle because they're not dedicating an ample amount of time developing quality lead sources. The difference between a sales agent making $50,000 - $100,000 per year and another agent making $250,000 - $400,000 per year is just one thing. The MLSs who generate the leads are successfully expanding their businesses. Every MLS has to spend as much time as possible developing quality lead sources.

I see two distinct groups:

Group #1: Lead Generation Methods,Non Third-party Endorsement

  • Cold calling
  • Telemarketing
  • Direct mail
  • Lead generation companies
  • Media: newspapers, Yellow Pages, advertisements
  • Internet: search engines, banner advertising

Group #2: Lead Generation Methods, Third-party Endorsement

  • Referrals from your existing merchants
  • Marketing partnerships
  • Trade/business association endorsements
  • Local business lead exchange groups

I recommend focusing on Group #2. Here are some suggestions on good types of businesses to contact to develop lead generating relationships.

For retail storefronts and restaurant leads:

  • Companies that sell Micros Systems products and other cash register types of solutions in stores
  • Restaurants
  • Hotels
  • Wholesale restaurant supply companies
  • Trade associations (doctors, dentists)
  • Local chambers of commerce

For new business leads:

  • Printers of stationery and business cards
  • Sign shops
  • Commercial real estate agents specializing in leasing retail stores

For wireless merchant leads:

  • Trade show operators
  • Service-oriented business associations (electricians, plumbers, locksmiths, towing companies, etc.)

For Internet-based merchant leads:

  • Web hosting/design firms
  • Internet marketing/advertising firms
  • Domain name registration companies
  • Search engine submission services

You now have in your hands the first part of the "Blueprint for MLS Success." It is a detailed guide to setting yourself up to succeed. My next column, "Blueprint for MLS Success: Part II," will focus on the effective execution of this guide.

We will look at closing tools, value-added services to enhance your blueprint, getting involved in the industry to enhance your professional positioning and embracing a business philosophy to ensure your financial and personal success. Don't miss it!

As always, I'd love to hear from you. Please send feedback on this topic (and any others) to . Your voice is an invaluable part of this phenomenal industry.

"Success in business requires training and discipline and hard work. But if you're not frightened by these things, the opportunities are just as great today as they ever were."
-David Rockefeller

See you next time where the rubber meets the road.

Ed Freedman is founder and President/CEO of Total Merchant Services, one of the fastest-growing credit card merchant account acquirers in the nation. Freedman is the driving force behind all business development activity as well as the execution of Total Merchant Services' marketing plan, including recruiting and training independent sales offices and establishing strategic alliance partnerships with leading vendors, so that Total Merchant Services can provide its customers with the highest quality and most reliable services available.

To learn more about Total Merchant Services, visit the Web site at . To learn more about partnering with Total Merchant Services, visit or contact Freedman directly at .

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.
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