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This article appears in the March 26, 2009, edition of ISO&Agent Weekly.
The economic downturn is not increasing voluntary agent attrition because many agents are choosing to remain with current employers, agree industry insiders. With voluntary agent attrition, agents choose to switch employers.
"I'm not seeing agents moving around on their own because of the economy," says Dane A. James, executive vice president of corporate sales with Cynergy Data LLC, a New York-based processor and ISO.
Many merchant-level salespeople are staying with the ISOs they work with instead of seeking new ISO relationships during the economic downturn, agrees Mike McCormack, executive vice president of Noblett & Associates LLC, a Fort Lauderdale, Fla.-based consultancy. "In the downturn and the economic issues of the last six months, I've observed as long as the ISO continues to service merchants properly and pay residuals promptly and without issue, agents don't want to move," says McCormack.
Some revenue risk exists for agents moving among ISOs, he says. An ISO may stop paying an agent's residuals if he or she leaves the company, and "agents may not have the resources to pay for the battle to get them back," says McCormack.
Residuals are monthly payments agents receive, typically from credit and debit card processing, but they also can come from such products as gift cards and ATM programs.
Despite many agents choosing to stay with their current employers, ample talent is available in the market for companies to pursue because of company layoffs, according to industry insiders.
"There's a significant number of people" looking for positions, says James. "I'm going to assume the economy had a hand in it."
Merchant-service providers that are hiring should be considering their long-term needs when interviewing potential agents, agree industry insiders.
Achieving low agent-attrition rates begins with hiring practices, says Curt Waite, sales manager with Equity Commerce LP, a Hagerstown, Md.-based processor and ISO. "We are selective in bringing on good agents," he says.
Cynergy Data also is selective about hiring. The company has created a hiring profile and looks for integrity, work ethic and a successful sales background with job candidates, says James. "If we can start there, we're off on a good foot in terms of having a sticky salesperson," he says.
Loyalty With Transparency
While many agents are choosing to remain with their current companies, merchant-service providers should continue to consider ways to decrease employee turnover. From sound hiring practices to agent education, attracting and retaining top-performing sales agents is an ongoing process that does not stop when the agent signs a compensation contract.
The initial compensation package with a sales agent is a relationship foundation on which service providers can build a loyal, trusting relationship, says Xavier Ayala, vice president and director of national sales and marketing at Humboldt Merchant Services, a Eureka, Calif.-based merchant-service provider. "Trust is built upon exceeding expectations of the ISO by providing not only a fair contract and phenomenal pricing but by building a relationships," he says.
Loyalty is an "extremely important" aspect of provider-agent relationships, says James. "I've worked for both extremes," with a company that did not create loyalty and a sense of community among employees and with a company that did, he says. "One had extreme turnover, and the other had none," says James.
Humboldt Merchant Services builds trust among its agents by "completely disclosing all the financial aspects of our business," such as fixed costs, says Ayala. The merchant-service provider also ensures ISOs and agents understand how they earn revenue. "We give them a real basic understanding of the mechanics behind what makes them profitable," says Ayala.
Sales agents need to understand "how we make money and how they make money," agrees Mike Leatherman, senior vice president of business development with First National Merchant Solutions, an Omaha, Neb.-based processor.
First National Merchant Solutions gives its agents a pricing tool that enables them to estimate how much they could charge a potential merchant client, how much the company would make from the contract and how much an agent would make, says Leatherman. The tool has been "very effective" in helping agents understand how revenue works, he says.
"If you are selling financial services and if you don't understand how revenue works, you won't be successful," says Leatherman.
Creating a transparent environment for the agents also can lead to increased transparency for merchants, says Leatherman. The industry has margin compression, and merchants want to know how their spending money on card processing. Agents with a full understanding of their revenue and their service provider's revenue can inform their merchants more effectively about costs. "The transparency internally translates to transparency externally," he says.
