Ever wonder how long our industry can go on relentlessly cutting prices and margins and still stay in business? You may have noticed that the average residual you receive each month per merchant rooftop in your portfolio is trending down. Sometimes, it's all a salesperson can do to squeeze $5 or $10 per month from a given merchant relationship. That is a tough place to do business and perilously close to disaster.
This is the kind of trend which results from years of selling a commodity. With a commodity, your only method of differentiation is price cutting think gasoline, for example. But our services do not have to be a commodity. There are additional things we ISO's can do to make our overall package more attractive to merchants and stop the erosion of our profit margins in the process. Think service, vital, critical service.
What can you do for the merchant that makes you a vital player in his business, not just another salesperson whom he can force to cut price through comparison shopping? How can you be an indispensable partner to your merchant?
Keeping the merchant in business when he would otherwise be inoperative is one way. Since you know your local area and you know your merchant base, try doing something extraordinary. Try service to the merchant like no one else can do.
For some types of merchants, POS terminal uptime is a critical issue. These are merchants with high traffic at the POS, and for whom a large percentage of their business is done Friday through Sunday. If the POS terminal fails on a Thursday night, and that merchant has an out of town processor, they will not get a replacement terminal until Tuesday of the following week. How many merchants like this want that kind of nightmare weekend even once every two years?
A mature merchant with at least three years in business understands this kind of risk since he or she has likely experienced the frustration and lost sales resulting from a broken Tranz 330. It's unacceptable and they will be looking for ways to prevent it in the future.
Are you offering a service to them which addresses this need? How about 24 hour terminal replacement with a fast response time? What would that be worth to the merchant - an extra $5 or $10 per month?
Sure, that kind of thing is more work for you, and it forces your organization to change from exclusively sales to sales and service. You will need beepers, customer lists, new billing procedures to make sure you get the charges paid, and a reserve of replacement terminals that you can rely upon with short notice. Most of all someone will have to be willing to get up at 2 a.m. some night next winter when a terminal fails and replace it on the spot.
But, think about protecting your margin. Think about protecting your customer base with a deeper, long term relationship in which you are seen as a mission critical vendor and partner not just a here today gone tomorrow POS terminal salesperson.
Developing this kind of relationship with your customer cuts attrition, increases your margin and stabilizes your business model. In short, it's a viable long term position for you in the marketplace.
Another way to look at this is to segment your market into groups of customers with similar business characteristics. Take the basics like operating hours, mix of business, bias of revenues by day of week or even hour of day, and you will begin to see patterns there which will in turn suggest opportunities for you to serve their needs better and more profitably.
I have found that nothing in business works so well as to present a potential customer with a solution that he or she has not seen before. It communicates loudly that you are thinking about what is best for them and their business, not just trying to pull off a sale. It shows you understand the issues they face, and you are willing to commit to solutions which make them successful. This is powerful marketing.
It takes time to be sure. The sales cycle with mature merchants, particularly multi-location merchants, is longer than with new. Change your business gradually and take your time. It's all about the long term.