If it's low price,
game from the


you're losing the

by Harold Montgomery       

EVER BEEN THROUGH THIS?     "Hello, Mr. Merchant, I am here to discuss your credit card processing services," said the cheerful bright eyed young sales recruit.
    "I want a better rate and a cheaper lease!" shouted back the harried retailer.
    "We are the cheapest in the industry!" Shouted back the salesman.
    "You better be if you're going to get my business. Write it down and send me a proposal. I have to get back to work." And with that, the retailer was gone, and so was the salesman's chance of making a sale.
    Selling on price is a loser's game. It hands all the negotiating power to the buyer because there's nothing else to talk about � price is all that matters. What happened to service? What happened to quality? What happened to reliability? Or value-added terminal features? Or next day paper replacement? They all became commodity offerings, like bankcard processing itself. There's no difference nowadays. The retailer can buy the exact same services from at least a dozen vendors for about the same price. One often hears the sales mantra "The guy that gets there first gets the deal." You can build a merchant portfolio this way, but it's no way to make a profit on it.
    Merchants who are sold on price have a clear understanding that there is no other criterion on which to measure their satisfaction with their service provider. The minute the provider messes up, they are gone. Loyalty is a thing of the past in a price-driven sale. Furthermore, when another competing vendor shows up with a lower price, the merchant will switch, exacerbating already high merchant portfolio attrition rates.
    To compete, you have to lower your price, and chase the merchant all over again. Pretty soon, the cost of selling the merchant equals or exceeds the value of having him, and your portfolio is worth zero. Some retirement package.
    How do you stop this cycle? By giving the merchant something more than price to hold onto. What are you doing for him that he can't live without and get someplace else? Is there anything in your service package that makes him think twice when a competitor shows him a rate 10% less than yours? When was the last time a merchant said to a competitor's salesman, "I would NEVER think of switching from XYZ processor � they really take care of me!" Wouldn't it be nice to hear that from your merchants?

The Value-Added Approach

    Forget about price for a second. Focusing on price is worrying too much about what is going on in your business, and not enough about what is going on in your customer's business. All successful sales processes are based on empathy: What does the customer want? Better yet: What problems am I solving for the customer? Even better: "What solutions can I craft for the customer, based on the real problems he has, that no one else has thought of?" AHA! Now we are onto something.
    If you think providing bankcard clearing services to a merchant is solving a problem for him, think again. That's not it. Bankcard services are a standard feature of the retail landscape � an essential commodity. There has to be something more, and it has to be tangible, immediate and real.
    Back to our aspiring young salesman:
    "Good morning, Mr. Merchant, I wonder if you have a problem with uncollected NSF checks? MY company takes those checks and, at no charge to you, attempts collection on them. 100% of any amounts recovered are sent to you, and best of all there is no charge. Even if we don't recover the lost amounts, we still list the debtor on our nationwide database � should they come into one of our clients nationwide, they will be stopped from writing checks, and most likely pay off your debt. Would you like me to get started on these right away? All we have to do is sign you up for our service which will also eliminate this problem in the future." The retailer is dumbfounded � someone is actually solving a problem for him in a way that no one ever has.
    The salesman now has a clear dialogue going, started on the premise that we are problem solvers. Now, what other payment system problems could this retailer have? Bankcard? Debit? Out of date POS terminal? A good salesman will take it from there, and get out of the downward price spiral.

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 or visit the Checktronic website at