Not all marketing tactics merchant-service providers use are equally effective at piquing merchants’ interest, some observers note. Independent sales organizations often go through multiple marketing techniques to determine which ones are less effective.
The marketing efforts responsible for acquiring the least merchant accounts are telemarketing at 6%, cold calling at 4% and direct-mail campaigns at 1%, according to a recent Aite report. Aite surveyed 45 ISOs and acquirers between July and October for its report “Merchant Acquiring in 2010.”
EnCards Inc. “has tried many different techniques” with mixed results, says Michael Mattos, president and CEO of the Aliso Viejo, Calif.-based ISO. “No pattern has emerged for what is effective in reaching different categories,” he says.
Most recently, the ISO launched a campaign that uses online social-media networks such as Facebook, Twitter and MySpace, Mattos says. “We’re taking it slow and doing some testing,” he says. “We’re going with a conservative approach until we identify that something is making sense and money.”
EnCards spent roughly $25,000 during the first six months of the initiative to test it out, but the campaign is “not a great success yet,” Mattos says.
Similarly, Equity Commerce LP has tried varying marketing methods. The Hagerstown, Md.-based ISO now focuses its marketing on recruiting new agents to sell for the company instead of attracting new merchant accounts, says Jerry Julien, Equity Commerce executive vice president of business development.
The ISO previously tried direct-mail postcard campaigns and telemarketing to attract clients. “We really didn’t see a return on investment for any marketing sales efforts like that,” says Julien. “Merchants are just inundated with mail, and [promotional materials] tend to just go into the garbage can.”
The least effective marketing campaigns for Dharma Merchant Services have included print media, says Jeff Marcous, president of the San Francisco-based ISO. “We’ve tried print ads, and those have just been the worst,” he says. “They garnered almost no response.”
The majority of ISOs are interested in better understanding the effectiveness of acquisition methods, according to the Aite study. Sixty percent of ISOs Aite polled said they were “somewhat likely” to “very likely” to study the efficiency of different acquisition methods this year, 31% were “not at all likely” or “neutral,” and 9% already had completed such a study in 2009 or 2008, according to the report.
Though ISOs want to learn more about effective marketing methods, few have staff members dedicated to a marketing department, according to the Aite report. Only 3% of survey respondents’ employees were allocated to a marketing department, which garnered the least employees of the departments listed, according to the results.
