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This article appears in the April issue of ISO&Agent magazine.
Merchant-service providers rely on their sales forces to pursue clients and to sign contracts, which is why companies value their top-performing agents.
As ISOs focus on retaining merchants, while constantly searching for growth among new merchants, taking care of top-performing salespeople is paramount.
"I call [the top performers] the 20 percenters," says Xavier Ayala, vice president and director of national sales and marketing at Humboldt Merchant Services, a Eureka, Calif.-based merchant-service provider. "The 20 percenters are the 20% of the sales force that produces 80% of your revenue," he says.
Competitors solicit well-performing agents "consistently," notes Ayala.
Talent-poaching is targeted, says Mike McCormack, executive vice president of Noblett & Associates LLC, a Fort Lauderdale, Fla.-based consultancy. Some providers looking for talent have "a selective approach to a certain agent that has a good [reputation]. It's very targeted recruitment as opposed to blast e-mailing," he says.
ISOs and processors that want to retain well-performing sales agents-and keep them away from competitors-should not only pay fair monetary compensation but also provide ancillary value, including training and company trust and loyalty, recommend industry insiders.
"The rep needs to be compensated well, with a fair contract on good terms," says Ayala. Above that, service providers should create agent loyalty by providing ongoing sales education and communication, he says.
Fair Compensation
A major aspect of retaining well-performing agents is constructing monetary-compensation plans that give agents ample opportunities to earn revenue, note industry insiders.
Salespeople are "self-motivated. They want a link between their behavior and their pocketbook," says Mike Leatherman, senior vice president of business development with First National Merchant Solutions, an Omaha, Neb.-based processor.
Fairly compensating sales reps helps service providers by creating motivated sellers, says
Leatherman. A fair compensation package gives agents incentive to "continue to hunt" for business opportunities and additional merchants, he adds.
ISO and agent revenue streams differ from company to company, but overall they fall into two broad categories: revenue sharing and buy rates, according to industry insiders.
With revenue-share contracts, an ISO or agent earns a percentage of revenue from merchants they recruit as clients. In a buy-rate contract, agents earn all the revenue or a percentage of revenue above a base price the processor or acquirer sets.
"I've tried lots of different" compensation plans, says Joyce Cook, CEO of International CyberTrans, a Brentwood, Tenn.-based processor and ISO. "Giving a base [salary] plus commission seems to be very attractive right now." The base shrinks the longer the agent is with the company, and it "ultimately goes to a bonus program and recurring payments," she says.
Compensation plans must "walk the careful balance between immediate gratification versus long-term growth and incentive," says Dane A. James, executive vice president of corporate sales with Cynergy Data LLC, a New York-based processor and ISO.
Cynergy Data uses a multiyear residual program that "allows the salesperson to see a growing compensation" in addition to a salary, says James.
Ongoing monetary incentives can "keep agents interested in the long term," says Curt Waite, sales manager with Equity Commerce LP, a Hagerstown, Md.-based processor and ISO. Equity Commerce offers a bonus program for agents when they sign contracts with merchants, says Waite.
When an agent signs a merchant contract, Equity Commerce takes the total of the merchant's previous three months of processing and pays the agent 20% of what the agent would earn from the transactions up front. The agent earns the remaining 80% in commission over the course of the agreement. A merchant must have at least a year of processing history for this bonus program, says Waite.
"They have an option. If they need cash, it gives them instant gratification when signing, but they can opt not to take the bonus and go straight commission," says Waite, noting the importance of having revenue options for agents. "If you don't have an option for him, he may go looking somewhere else for up-front cash," he says.
Ongoing Training
Providing additional training for existing agents is an incentive that helps "immensely" with retaining reps, McCormack says. Offering continued training for existing workers also is less costly than hiring new workers, he adds.
"It's a lot easier to grow existing relationships with agents than it is to find new productive agents," McCormack says. "With existing agents, you have a track record, and you understand what they are capable of. With new ones, it's an unknown."
Cook agrees. "It's definitely a higher cost for sales acquisition to hire and train and bring somebody to a point where they are successful versus rewarding existing people for results," she says.
Training agents, whether new hires or seasoned workers, increases the likelihood of success and minimizes turnover, says James. "We want to make sure to give agents the necessary tools for success" with a multiweek training program at the beginning of an agent's tenure with the company, he says. Agents receive additional training after a few months of working, James adds.
To further increase their chances of success, new hires at First National Merchant Solutions train together before joining the existing agents already selling in a territory, says Leatherman. It can be difficult for a new hire to join an existing sales team and succeed, so "instead we give them classroom training and product training so they can learn together," he says.
Besides new-hire training, Humboldt Merchant Services provides ongoing Web-based educational seminars and guest speakers for agents, says Ayala. "Constant communication is key," he says. "We need to inform and educate them of things like the PCI standards" to lower the risk to their business.
Loyalty With Transparency
The initial compensation package with a sales agent is a relationship foundation on which service providers can build a loyal, trusting relationship, says Ayala. "Trust is built upon exceeding expectations of the ISO by providing not only a fair contract and phenomenal pricing but by building a relationship," 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 Leatherman.
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 they are 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.
The economic downturn is not increasing voluntary agent attrition because many agents are choosing to remain with current employers, agree industry insiders. With voluntary attrition, agents choose to switch employers.
Attrition In A Recession
"I'm not seeing agents moving around on their own because of the economy," says James.
Many merchant-level salespeople are staying with the ISOs they work with instead of seeking new ISO relationships during the economic downturn, agrees McCormack. "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 Waite. "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.
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. Retaining quality sales agents requires not only fair compensation but also ancillary value.
