From the January/February 2010 issue of ISO&Agent.
Merchants always are interested in the cost of payment card processing, but sales agents should evaluate the importance of price when listening to merchants about their needs, observers say.
Indeed, listening to the merchant describe his payment needs can help shape an ISO's sales pitch. In today's economy, merchants still want to know how much credit and debit card processing is going to cost, but ISOs say price is only one part of the sales pitch. Listening to what the merchant needs can be equally as important to secure the deal.
"Never tell a merchant what he needs," says Linda Rossetti, president of Bluestone Payments, a Peachtree City, Ga.-based ISO. "Let him tell you what he is looking for and then make suggestions as to what product will fit his needs. Do more listening than talking, and the sale will be yours."
Keep The Doors Open
Though many merchants continue to receive unsolicited direct mail and walk-in visits from service providers, sales agents that sell on more than price stand a better shot at closing a sale, says Frank Grabowksi, a sales agent at American Card Service, a Seabrook, Texas-based ISO.
"A salesperson walking into a small business establishment has to be an expert in cost- savings strategies," Grabowski tells ISO&Agent. "With current economic conditions squeezing the small merchant, the issue of price has become more important than ever. Our job in today's economy is to help our merchants keep their doors open."
To do that, a sales agent should have a comprehensive understanding of the payments industry and how it matches with a prospective merchant's business, observers agree.
Retailer calls for lower charges for card processing and intense competition among ISOs to sign new merchant accounts has put a dent in profit margins. "The trend has been moving for the last number of years to more compressed margins," says David Fish, an analyst at Mercator Advisory Group Inc., a Maynard, Mass.-based consultancy. "Acquirers are pricing merchants at the slimmest possible rates while still being able to make money on the account."
None of that lessens the importance of price to the merchant, or to the ISO, says Rossetti. "However, other factors enter into the decision process for a merchant to switch service providers," she says.
Merchants want to know about product requirements, such as whether specific hardware or software is needed, what level of technical support is available, what security and compliance measures must be met, and how much data they can see about their transactions, Rossetti says.
Merchants also want to know whether cash advances are available, and they want a comfortable level of trust with the ISO, she says. "All play an important role in the ISO's sales pitch to win new business," Rossetti says.
Reframing The Pitch
With so many variables that could influence a merchant's decision, when and how a sales agent should talk about price often can be tricky.
One option is to be prepared with a wealth of payments industry knowledge, understand the merchant's business and be able to reshape the sales pitch away from price if necessary. "We have found that demonstrating a depth of knowledge to address a total solution for the merchant does make a difference in the decision process," Rossetti says. "One must price competitively, but it does not necessarily have to be the lowest-priced proposal to win a merchant opportunity."
Grabowski advises sales agents to find a merchant's "soft spot" to avoid selling on price alone. "Before the economy turned, was the merchant thinking about offering gift cards or accepting PIN-based debit? A successful sale not based on price must convince the merchant that adding these additional services will add to his bottom line and not become another drain on his resources," Grabowski says.
For Tom Della Badia, senior vice president of third-party acquiring at Cynergy Data LLC, a Long Island City, N.Y.-based processor, agents can reframe the sales pitch with better training. Inexperienced or poorly trained sales agents often fall back on price when nothing else seems to attract the prospect's attention, he says.
"As much as we rail against it, it's hard for merchant sales reps to go out and make a pitch not on price when the merchant says, 'I'm busy,'" he says.
Sales reps may assume the merchant just wants to know about price and not how the ISO's products could increase the merchant's revenue, Della Badia says. "Very few merchants ask, 'What else can you do for me to help my business?'"
Training Important, But Costly
Part of the answer to help sales agents avoid resorting to price as the sole element of the sales pitch is training, says Della Badia. "There's not enough training," mostly because it is costly, he says.
And agents do not make sales calls during training. "They're not on the street. A lot of smaller ISOs may be [signing] as many as 70 accounts a month and see that training is going to cost $1,000 a person and say 'It's too much.'"
The inverse rationale is that better-trained sales agents might add more deals to what they already are doing, Della Badia says. "It's not going to cost them too much if the person does about five more deals a month," he says.
Not that agents do not know how to sell, but their product knowledge often is not as strong as it should be, Della Badia says.
For example, a sales agent may have a new product to pitch, but when the merchant begins to ask questions, the agent may not know enough about the product to provide a quality answer or may not have the appropriate marketing brochures that could help explain how the product works, Della Badia says.
When they do not receive a satisfactory answer, merchants may say they are paying too much and ask whether the sales agent can beat the price, he notes. "When merchants ask about a product and the rep doesn't know the answer, the rep will take the path of least resistance and go back to price," Della Badia says.
American Card Service's Grabowski agrees. "The best way to reduce the importance of price in selling to a new merchant is know your value-added services inside and out," he says. "Your sales proposal needs to focus on the way that your value-added service is going to be a life-saver in today's economy."
Often that requires understanding the specific needs of the merchant and how products from an ISO's processing partners fit those needs, suggests Rossetti.
"Salespeople who understand how different pricing scenarios work for different processors and can clearly speak to those differences" can avoid resorting to price as the sole element of a sales pitch, she says. "A sales agent has to have an upper hand when explaining how pricing works in our business," Rossetti says.
For example, agent knowledge of interchange-a component of the overall discount rate merchants pay for credit and debit card transaction processing-is vital, as is knowing the fees an ISO or its acquiring bank may charge to a merchant, Rossetti says.
Agents also should know the billing practices of different processors so they can explain them to merchants. "One must price competitively, but it does not necessarily have to be the lowest-priced proposal to win a merchant opportunity," Rossetti says.
Price Issues Not Disappearing
Because of pressure from merchants and their trade-organization representatives, competition among ISOs and merchants' innate desire for low-cost products to reduce processing prices, ISOs may wonder whether price even should be part of the sales equation. Some observers, including Della Badia, believe the role of price in the sales pitch "has to be lessened."
"In this day and age, there are a lot of merchants with pretty low prices," he says. "They have good pricing."
And for some ISOs, they potentially can supplement traditional Visa Inc. and MasterCard Worldwide transaction revenue with that of Discover Financial Services and American Express Co. card transactions, says Mercator's Fish. In recent years, Discover and AmEx have opened up their networks to third-party acquiring.
Regardless of the value-added services offered, price remains a central element of a sales agent's pitch, says Bluestone's Rossetti. "Price will always be an important part of a merchant's decision," she says. "The more complex the sale or the more complex the servicing requirements, along with the need for value-added products, suggests that the total solution is the driving factor as long as the price is in the competitive range."
These factors, and general economic conditions, mean more merchants are shopping around. "When the economy was growing and merchants were profitable, you needed to find a few services that would help them grow their businesses," Grabowski says. "The merchant was not looking to save a few dollars here and there. He was profitable and if his current company was providing adequate customer service, he was content to stay."
Today, however, the pre-2009 guidelines for merchant sales pitches have changed. Price remains important, but its role in the sales pitch no longer abides by simple formulas.
