Interested in
   Increasing Sales?

    Add Value to Your Offering

by Harold Montgomery



   Most salespeople and executives in the credit card acquiring business have discovered that credit card clearing services have gradually been reduced to commodity status over the last 20 years. Even as late as 1985, small retailers viewed credit card processing, especially through a VeriFone terminal, as a new and compelling necessity. Since then however, point-of-sale (POS) terminals have become commonplace and much less expensive. In an attempt to create significant product advantages, VeriFone, Hypercom and other manufacturers have introduced various upgrades and new features over time, but essentially, the function, form and capabilities of the POS terminal have not changed dramatically.

Bankcard ó itís a commodity, get over it

   A commodity is any product or service which appears to be the same to the customer, regardless of provider. Electricity, sugar, gasoline, heating oil, corn, wheat and hamburger meat are all familiar examples of commodities. Any individual manufacturer of these products has not been able to differentiate their product from that of another manufacturer. The only way to create a compelling difference to the buyer is to cut price.
   Bowing to their commodity status over the last four years, merchant acquirers have increasingly offered ISO pricing at interchange rates. (One might well ask how anyone can make a profit selling card processing services at interchange, but I will leave that for another time.) The point is, they are competing on price. Why? Because thatís all there is. With so many acquirers stressing price as their advantage, the field has become increasingly competitive and profitability has suffered as a result.
   Sales also suffer. Itís no favor to a salesman to force him to sell on price. Reducing the salesmanís product tools to price (as opposed to value) changes the salesman into an order taker and leaves the acquirer

   vulnerable to later switching based on the customer finding a better deal elsewhere. And why shouldnít the customer switch? If the original premise of the sale was based on price, then the customer has a license to shop for a better deal.
   The result of price based selling is a wicked downward spiral of prices, merchant profitability and ultimately, portfolio value.

Add value ó what have you got to lose?

   The only remedy for this trap is to add value to the sale. The customerís perception of value is the key driver in your profitability. A substantial value proposition gives your client more reasons to buy from you and puts the price of your product in a context that favors you from the outset.
   What else can you do for your customer? What problems does he have? How can you explore those problems, understand them and then craft solutions which make sense for both of you? How can you show the customer you care about him and understand his business and the issues he is facing?
   These are key questions for anyone running a business ó and they are hard to answer. They take a lot of time and effort. But the answers are worth millions in value to the right team that can create services which add value to the relationship.
   In order to really understand the issues facing a small retailer today, you have to stand in his shoes. You have to get behind the counter and see the world from his vantage point. What are the daily woes he faces? Whatís his most annoying problem? Youíll get a lot of answers about problems you canít do anything about ó thatís par for the course, but once in a while, you will hear something that works. Some gem, some off-hand comment will spark a thought that might lead to the discovery of a problem and its solution. Applied to your business and multiplied by your customer base, you can create tremendous new wealth this way.
   Adding value to your offerings ó real solutions to real problems ó is how you strike a relationship with your customer that will last. Itís also how you increase the power and effectiveness of your sales approach. More on leads next time.



Harold Montgomery is the CEO of Checktronic, Inc. Located in Dallas, TX, Checktronic provides payment processing, check verification/guarantee and equipment warranty and leasing services. To contact Checktronic, call 800.642-4325.



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