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At anywhere from $50 an hour to $7,000 a week, sales consultants do not come cheap. But many ISOs see their services as money well spent.
Using a consultant typically costs less than hiring an executive with comparable expertise to fill that role. That would take six figures, a relocation package, a piece of the company and likely a headhunter's fee, most say.
"A consultant can really be a money-saving option," says Scott Kimsey, senior partner at PayEx, a Columbus, Ga.-based consultancy. "Many ISOs are owner-operators. It is rare to see an ISO with a deep bench. So I believe it makes sense that they should use consultants as often as they have gaps."
Some ISOs see bringing in sales consultants as a way to step back from the daily grind and learn new techniques. "When you're out there pounding the pavement all the time, and you don't come back to sharpen the ax, you're not as effective," says Bill Ryken, vice president of global sales at Nxgen Payment Services, a Whitefish, Mont.-based ISO.
For new agents with no experience in the payments industry, consultants can provide the step-by-step primers necessary to get started.
"The consultant could enhance training for new sales staff by providing or writing scripts that aid in sales training," says Ken Musante, president of Humboldt Merchant Services LP, a Eureka, Calif.-based ISO.
Sales consultants also can help ISOs acquire the expertise to enter new markets. Examples include ethnic merchants serving booming demographics, such as Laotians, Mexicans and Pakistanis, and vertical markets, such as health care. In the case of vertical markets, sales consultants can train new agents who have a sales background in another business but no knowledge of the payments industry.
"A consultant could be very valuable in helping the ISO to expand [its] product offerings, gain access to new sales channels or get a foothold in new, previously unexplored vertical markets," says Tony Morrison, co-founder and chief financial officer for Integrity Payment Systems, a Des Plaines, Ill.-based payment-services company.
Evaluating Value
ISOs and their consultants should agree on what to expect from each other before they start working together, experienced ISOs say. Next, both parties should agree on ways to measure success throughout the engagement. "It's very important the consultant gets honest feedback early and often," Morrison says.
In the engagement's early stages, ISOs can find it challenging to tell whether the consultant is on the right track. "In the very beginning, it is very difficult to gauge whether a consultant would properly fit with a particular ISO or organization," says Ted Svoronos, who oversees e-commerce at Group ISO, an Irvine, Calif.-based ISO.
Soon, the ISO will start to see what challenges the consultant should address, Svoronos says. "Professionalism, understanding, respect for each other [and] the willingness to work well together are also key factors in setting up his relationship," he says.
Some ISOs assess a consultant's value in terms of the recommendations he or she makes. For Xavier Ayala, vice president and director of national sales at Humboldt Merchant Services, those recommendations fall into five categories:
- Loss prevention-policies and practices that increase the ISO's collection of losses while mitigating future exposure.
- Security assessments-helping the ISO comply with association standards and regulatory requirements, thus minimizing the risk of fines and litigation.
- Portfolio profitability-establishing merchant pricing matrices that match the ISO's profitability goals and risk tolerance.
- Contract review-"When evaluating acquiring banks, processors and third-party agreements, consultants can typically negotiate a better deal on behalf of the ISO due to their industry knowledge, contacts and experience," Ayala says.
- Operations and risk audit-working with the ISO to develop recommendations for day-to-day policies and processes in risk monitoring, customer service, equipment deployment, marketing and sales strategies.
Sales consultants also can help ISOs identify alternative products and services. "A consultant can open an ISO up to substitute products that can accomplish the same tasks and have the same functionalities as the products they are selling-but for a lesser price," says Humboldt's Musante. "The consultant may even know a distributor that is selling the exact same product but at a lower price. The consultant may provide advice on an integrated point-of-sale terminal or software that the ISO is not familiar with and not using."
Quality vs. Quantity
ISOs also can measure a consultant's value by monitoring the accounts the sales staff starts bringing in-not just in terms of sheer quantity, but quality, too, says Integrity's Morrison.
"The ISO should be looking at the quality of the merchant and how well the incremental merchants fit in to the ISO's portfolio," he says. "Certainly the ISO needs to be looking at the profitability and attrition rates associated with merchants derived from the consultant's efforts."
Some ISOs also look for ways to ensure the consultant thoroughly trains agents-particularly new ones. If newly signed merchants still have lots of questions and complaints, the agents need more training, Morrison says.
Proper training helps agents and merchants avoid frustration, while guarding against the need to staff call centers to field the additional questions.
"Educated sales agents are agents that stick," says Pat Reed, president and CEO of Merchant Management Systems Inc., an Ashland, Ky.-based ISO. "If not properly trained, they open you up to heavy call volumes for misrepresentation."
Other ISOs find it inevitable that some agents bring in accounts that drive a lot of calls. "With new salespeople, you have to expect a certain [number] of customer calls," says PayEx's Kimsey.
"There are many people who have been in the industry for years, and interchange is still something of a mystery to them," Kimsey says.
In some cases, ISOs need more than one consultant, a fact they may not recognize at even the beginning of the engagement. "It's incredibly important that the ISO clearly defines their expectations and closely monitors the output of the sales consultant," says Integrity's Morrison. "Based on the success of the consulting initiative, it may make sense for the ISO to layer in more consulting help."
Finding the Right One
ISOs recommend a variety of sources for finding sales consultants, but references stand out as especially helpful. "A great place to start is the ISO's sponsoring bank," says Humboldt's Ayala. "Industry trade publications are also a great resource."
Ayala and others also recommend checking with regional or national trade associations such as the Washington, D.C.-based Electronic Transactions Association.
Networking-particularly at trade shows-is another common tactic that can work well, observers say. "Networking probably garners the most success," says Nxgen's Ryken.
"Network with your colleagues [and] you may find the answers you are seeking without ever engaging a consultant," suggests Humboldt's Musante. "Networking events and industry trade shows provide an opportunity to meet the consultants."
Other ISOs agree trade shows not only offer opportunities to find consultants but also provide face-to-face encounters that help identify serious candidates. "Trade shows are a key meeting ground," says Merchant Management Systems' Reed.
Word of mouth is another option for finding good consultancies and avoiding ineffective ones. "Bankcards is a small world," says Integrity's Morrison. "You can always check a consultant's background."
PayEx's Kimsey agrees. "You should interview the consultant and then get a referral," he says. "Find out if they know any people you know and whether they've been successful before. That's common sense."
"Ask for references from companies that are the same size as yours," says Humboldt's Musante. "Ask the consultant [about] specific problems they have solved."
Whatever the approach, finding the right consultant can prove challenging. "It takes a lot of time to thumb through possible candidates and pick and choose those which you feel would best benefit the organization and the industry," says Group ISO's Svoronos. "You can find candidates in different fields, as well. Candidates that wish to have their own businesses [are] looking for recurring revenue streams and are willing to be compensated for the time and effort that they put into an endeavor are decent candidates."
Some consultants say steep fees do not always mean a consultant will prove more effective.
"I wouldn't necessarily look for a big name or pay a lot of money for somebody who used to operate at an executive level. That is not always applicable to many ISOs," Kimsey says. "I would look [for] someone who has been successful with the actual execution of a project."
Letting Go
Just as ISO should research the candidates for a consulting job, so should consultants research the ISOs.
"How quickly can the consultant grasp pricing concepts?" says Integrity's Morrison. "To what extent does the consultant truly understand some of the difficult concepts facing a sales professional, and can the consultant write profitable merchants?"
If the consultant seems unable to articulate the ISO's needs and expectations, he may not fit the situation, says Humboldt's Ayala. In his experience, other warning signs include failing to reply to an ISO's request for a proposal in a timely manner, reluctance to meet face-to-face, hesitancy to provide a timeline before the engagement begins, resistance to disclosing fees upfront, an inability to articulate what the results will be, a preoccupation with when and how much you will pay them, a tendency to outsource some or all of the work and an unwillingness to sign a non-disclosure agreement.
