The New Reality
In today's new transaction processing marketplace, there is vicious competition between ISO Organizations. Everyone is trying to gain new market share in an increasingly saturated market. This often causes sales agents to struggle finding new merchants and new ways to earn income.
All ISOs want to increase merchant loyalty and reduce customer turnover rates, but other competitors are stealing existing customers on a daily basis. The three most important things that separate the successful from the undercut, is the level of disclosure at the time of sale, the customer service after the sale, and the number of services (hooks) the merchant has with the ISO. Today we compete in a 'Brave New World' of mega-processors, large ISO organizations and rock bottom dollar pricing. Credit card processing has become a commodity that often goes to the lowest bidder.
This often is a vicious cycle, where the less you explain and the lower your rate, the more likely you are to get the merchant - but consequently you are then much more likely to lose the merchant, all their residuals and referrals!
So, how does one rise above the fray and become a more ethical ISO while at the same time increasing revenues? The first step is never to engage, or allow your sales agents to engage, in questionable business practices, or in the any of the infamous bait and switch tactics that some unscrupulous ISOs have engaged in in the past. By instituting a regiment of Best ISO Business Practices, your ISO organization can become as successful as possible in the new era of electronic processing.
We are not in Kansas Anymore, Dorothy...
Below are some Suggested "Best ISO Business Practices" to help savvy ISOs be successful:
Customer Service and Training
- Never allow your sales force to use bait & switch tactics to make quick bucks because it leads to high attrition rates and could hurt the ISO organization's reputation.
- Always train sales agents - They don't often understand what is in the merchant contracts unless they are trained on the implications.
- Teach your sales agents to make it a point to call their merchant base every other month to check in, see how business is, and ask if there is anything more they can do to help the merchant compete. This is a great time to ask for referrals and present new services to your merchants!
- Teach your sales agents how to properly train and install merchants. They can install and train merchants themselves if need be, but more importantly they can call or stop in after the initial install has been done to "answer any questions" and get referrals.
Communicating Agreement Terms Clearly to your Merchants
- Ensure your Sales Message is Clear and Accurate.
- Train your sales agents never to imply that merchants can cancel any time, etc., if that is not the case.
- ISO agents should be trained to clearly explain the major points of every contract with the customer.
- ISO's and their sales force should understand and explain fees involved (monthly minimums, cancellation, what truly happens at the end of a lease, for example)
- Let merchants know when their accounts will be funded. Merchants deserve and need to know when they will receive money from store sales in their bank account.
- Disclose how and when fees, both discount and lease, will be deducted from the merchant's accounts.
Going Beyond the "Quick Sale"
(Accurately explain what your products and services will do for the merchant. Our motto is "under promise and over deliver."
- Teach the sales force to look at customers as sources of possible future revenue, for repeat sales of new services and products.
- Consider salaried sales personnel or paying more residual and less up-front commission on equipment and new accounts. Try paying a bonus based on the longevity of accounts. This will build a more loyal and satisfied customer base in the long run.
- Don't oversell the customer this way as their needs change, or as your product suite grows, you can go back into them with add-on products and services. If your initial product or service doesn't live up to their expectations, it makes it hard to go back with credibility.
Turning Merchant Customers into Partners
One way to separate your ISO organization from the competition is to consider adding a suite of products and services to your existing portfolio of POS terminal and processing services. If you can get your company on the 'leading edge' of some new and exciting products and services, you can beat the competition to market and gain significant market share. Additionally, you can market new services to your existing customer base, turning them into new sources of revenue. Your customers will benefit and they will be more likely to stay with an ISO who brings them new innovative products and continues an ongoing business relationship. You can counter the 'commodity trap' and create a customer for life!
New Trends to Watch for and Products that "Add Value"
There are a number of new and interesting products and services that an ISO may want to consider in order to retain and attract new customers and drive new sources of recurring revenue.
- Gift & Loyalty Programs
Consider adding a Gift & Loyalty Program to the products you sell. There are many loyalty programs out there, which can sometimes be added to existing POS terminals. Ray Clopton of Smart Transaction Systems says "Merchants of all sizes have a much better understanding of the benefits of gift and loyalty programs than they used to. Being able to provide merchants with these services has become an important part of competing effectively. Gift cards are a very good way to improve retention because switching giftcard processors is much more difficult than switching to a different bankcard processor."
- Pre-Paid Services (Phone Card, Cellular, Debit Cards)
There are number of vendors that can add this service to many POS systems. In some environments these services can be used to turn POS systems into revenue producers for the merchant. This makes it easier for the merchant justify the investment in new equipment.
- High Speed EFT Data Communications
Managed Communications and EFT networking is fast becoming the next "Big Thing." Look for a leading Managed Network Service provider with experience POS transaction processing arena that offers "turn-key" Wireless, Frame Relay and VSAT services. James Stroud of Thrucomm says "The Comm. service should be highly packaged and easy to sell. Network services can help customers achieve 2-4 second transaction times on credit authorizations. Bundled network service providers often can also carry store-to-HQ data transport and perform device monitoring as well. Several phone lines can be condensed down to one, and the customers telecom savings can be used to lease purchase additional equipment and services."
- Check Conversion
Look into new check conversion services These can bring new services to your merchants, and can be an opportunity for new equipment sales. Mike Smith of EZ Check states, "You can dramatically increase customer retention by adding a check service to your merchant account. We've found that full disclosure at the time of sale and proper merchant training are two of the most important ingredients in keeping a satisfied customer. If a new merchant doesn't process any transaction within 10 days of being put on our system they get a courtesy call with some follow up training."
- Recurring Payments
Some processors have programs that can automate recurring billing. This service is nice for certain market segments where customers need to pay over time.
- Get Biometrics on Your Radar
Watch closely, Biometrics is out there! Recent events have caused biometrics identification to be revisited in many areas of society. If biometrics takes off in the world of POS transactions, there will a need for a whole new round of equipment, service and sales opportunities.
Not Your Average Knuckle Buster
If you and your ISO Organization first become a "trusted advisor" to your merchant base, and follow the best practices outlined above, you can then expand your sales effort to your merchants by offering additional new and innovative services, which can be sources on recurring revenue and loyal customers for years to come!
Gone are the days when an ISO had virgin territory, where merchants were using the infamous 'knuckle busters' and were more than thrilled to take credit cards electronically. Almost gone are the days of saving customers money by "lowering their rate". Nowadays ISOs have to act in a highly ethical fashion and become a 'trusted consultant' to their merchants to keep and capture new customers. Many times a credit card processing account can be gained by getting the customers interest in one of these "value added services". There are very few knuckle busting merchants left these days. Rather than compete on price alone, improve your service levels and business practices to become a better ISO. Also, look for the new 'Next Big Thing', it is out there keep you ear to the ground and be ready, and you will succeed!
Believe it or not?
I've often thought that if anyone actually read and understood an entire merchant agreement that no one would be processing credit cards! The fact is that the vast majority of merchants will never be affected by most of the terms. However, we owe it to our industry and our merchants to explain all the aspects that will most likely affect them and to price these accounts at a level where reasonable service can be provided! The smart ISO/agent knows that the more problems you solve and the better your terms, the less important price becomes. Believe it or not you can tell the entire truth, charge a fair rate while profitably growing your business, if you do it with conviction. We're living proof of that!