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In an increasingly competitive field, ISOs and agents can boost their sales by combining old-fashioned values with industry knowledge and proven sales techniques.
Without those time-honored values of honesty, transparency and diversity some agents may find it difficult to make a sale, especially when numerous other companies are selling similar products. However, an agent's reputation and knowledge matter the most, industry observers agree.
Asked to choose the most important of three factors-company, product or sales agent-the agent always comes first, says Michael Wiener, president of Advanced Merchant Group, a Warminster-Penn.-based ISO. "The salesperson is always No. 1, the company is No. 2 and the product is No. 3," Wiener says. "People buy from people they like and trust and, No. 2, they want to know that the company is reputable."
ISOs and agents need to take an open-book approach when dealing with merchants, says Dan Price, CEO of Gravity Payments, a Seattle-based ISO. "Our industry is getting more competitive every day," he says. "To stay ahead of the curve, you have to be transparent and innovative."
That means agents need to become knowledgeable about their products and services. Agents "have to be passionate about this business. They have to live, breathe, eat and sleep this business," Wiener says.
In a saturated market, ISOs and agents need to offer value-added products and services that save time or cut costs for merchants, says Craig Thomson, president of Victoria, British Columbia-based Beanstream Internet Commerce Inc., a merchant-services provider.
"We've reached a saturation point in terms of merchant accounts," Thomson says. "You can't walk [into] a store anywhere in North America where they don't already accept credit cards. The easy pickings of 15 years ago are gone. Now you have to approach merchants with full-service offerings," he adds.
Switching merchant accounts in a softer economy requires new methods. In today's tight economy, merchants are becoming aware of interchange rates, says Abe Maghaguian, vice president of business development for Atlantic Pacific Processing Systems Inc., a Walnut Creek, Calif.-based ISO.
"There have been so many people who come in and lie to them, that merchants are doing their homework," Maghaguian says. "They want to know where every penny is going because every penny counts."
That is why determining the appropriate pitch is important.
Making The Pitch
Before meeting with merchants, agents should review a recent payment statement to look for selling points. For instance, maybe the merchant pays 5% for nonqualified transactions when it should pay no more than 3%, Wiener says. Some ISOs charge hidden transaction fees that a savvy competitor can find and point out to potential clients.
"We make pricing transparent," Gravity's Price says. "We explain how much money we make, and we try to make it really concrete. "We try to flesh out the negative," he continues. "You have to understand what the customer needs and not just sell on price."
But agents begin to understand customers only after accumulating know-ledge of the industry and learning to understand complicated interchange rules.
Know Interchange
Along with honesty, agents need a clear understanding of interchange rates and how they work before approaching merchants to make a sale, Wiener says. He estimates 95% of agents do not understand interchange rates or the more than 300 interchange categories.
Agents need to understand interchange so they can explain to merchants why transactions might be downgraded if they do not meet the criteria for a cheaper rate. For instance, most merchants are charged a nonqualified rate on business-to-business card transactions, but depending on how many business cards the merchant is handling, Wiener says, the ISO or agent can set them up as a business-to-business account. "We have the ability to break out all different categories," he adds.
Agents should know the differences among interchange categories, including, for example, the subtle variations between e-commerce basic and e-commerce preferred rates. E-commerce preferred rates require capturing the three-digit security codes from the back of credit cards and performing address verification. Capturing that number can save merchants five basis points, which determine a merchant's interchange rate. For instance, an e-commerce preferred merchant might pay 1.8% compared with 1.85% for an e-commerce basic merchant, Wiener says. "It doesn't sound like a lot, but if you're an Internet merchant doing 100 transactions a month, those five points can really add up," he says.
Typically, agents need a proper understanding of interchange rates to sell to merchants successfully. Agents can learn about interchange on both Visa Inc.'s and MasterCard Worldwide's Web sites.
Advanced Merchant offers training that covers interchange for its 100-plus agents every Monday afternoon by conference call and Web seminar, Wiener says.
Understanding interchange is important, but agents also should consider enlarging their mix of products and services.
Diversify the offerings
In today's sales environment, ISOs and agents need to offer as many products and services as possible, says Wiener.
"There are so many opportunities in our industry," he says. "It's not just about credit card processing anymore. It's about gift cards, it's about cash advances and it's about PCI compliance."
Offering such additional services as payroll, e-commerce, gift cards or cash-advances can set an agent or ISO apart from the competition, Thomson agrees. "These all add value for merchants who are looking at things beyond retail," he says.
Along with providing a range of products and services, agents and ISOs should consider entering untapped markets.
Exploring New Territory
While most merchants accept credit and debit card payments, some retail markets remain unexplored. For instance, utility companies that accept credit card payments have a zero discount rate, Wiener says.
Instead, they pay dues and assessments as well as a minimal cost per transaction. It is not as high as the 1.5% to 2% transaction rate paid by other merchant categories. "When my sales people go after this particular industry, they'll let them know that if they're paying anything over a half percent, their cost is too high," he says.
Townships or other taxing bodies can accept credit cards for property-tax payments, and states can accept them for license fees and income tax payments. Private schools, daycare centers and universities are eligible for special pricing through MasterCard's emerging-market program, Wiener says.
"This is where it's important to know your industry," he says. "If you're selling emerging markets, you need to know what qualifies."
While some universities may not accept credit card payments, they may need automated clearinghouse check-cashing services, Thomson says. "The university still collects the payment, and you still receive a residual but the university doesn't have to pay a 2% interchange fee," he says.
Working with universities can be lucrative. "Once you build a relationship with a couple universities, they will talk to their counterparts," Thomson says. "You'll build word-of-mouth referrals and become an expert."
Agents also can explore new territory by concentrating on a particular niche market, Thomson says. For instance, an agent focusing on fitness clubs can become an expert in club-management software and special interchange rates for clubs.
"Maybe they have a need for additional services like recurring billing," he says. "Learn the different nuances, and approach those businesses as an expert instead of walking down the street and seeing what you can get."
To reach niche markets, Thomson recommends purchasing mailing lists, approaching industry-specific associations and advertising in trade journals. With industry-specific knowledge, agents can focus on consulting with merchants.
Consulting
Rather than simply trying to make sales, agents should offer a cost-and-benefits analysis of a merchant's payment plan. "We come in and analyze their business to see if we actually can help," Maghaguian says. "We're more service-oriented."
Providing consultation services rather than fixing on price is key to sales, Thomson says. "Essentially, only 20% of the target market is focused on price," he says. "Sometimes we have the lowest price, but we avoid that pricing discussion."
Instead, agents concentrate on specific areas where they can provide products that add value for the merchant. For instance, one product line allows merchants to off- load stored credit card information to a third-party data-management company. The merchant maintains payment-data security compliance and can access the information if needed.
Beanstream keeps customers aware of changing interchange and PCI requirements by sending a quarterly newsletter with tips or providing information about new services. For instance, the newsletter may include information on interchange changes that can reduce a merchant's costs.
"We try to go in with a different approach. We ask, 'What can we do to make your life easier?'" Thomson says. "We do a lot of monitoring of transactions."
Agents need experience with their customer accounts to help with problems. For example, an agent should know why a merchant has to send its batch of transactions at 11 p.m., Maghaguian says. This knowledge helps agents and ISOs provide better service to their merchant customers, which is especially important, but not as important as honesty, he adds.
Honesty Counts
Atlantic Pacific maintains an open-book policy for its merchant customers, Maghaguian says. "We sit down right in front of them and do a cost-benefit analysis," he adds.
In return, the ISO expects the same honesty from its customers. Agents are expected to know how their merchant customers handle their business, which is particularly helpful for avoiding fraud. "We will not take any merchant that we don't go visit ourselves," he adds.
For instance, an agent visits a dry cleaner to see how the entire operation works, including payment processing and bookkeeping. By asking questions and expressing interest, the agent has a better sense of how to help.
The merchant may not have a debit check rate, and the agent can offer one. If an agent cannot help or cannot decrease a merchant's costs, however, Maghaguian encourages his agents to be upfront.
That technique can lead to repeat business as well as build an agent's reputation, he adds. Merchants remember them as a result. "When you go to buy a car, you remember the sales guy who gave you the most information. That is who you are most comfortable with," Maghaguian says.
Providing incorrect information or lying to a client can cause agents to lose merchant customers, which is why Maghaguian values honesty above any other selling technique, he says.
"I'm a very honest, direct guy. Even if I lose a client, they usually come back in seven to eight months," he says. "They always find out the truth eventually. We work off of honesty and service."
Using service as a barometer means making sure that agents or ISOs keep any promises they make.
Offering value-added programs and additional services are great ways to entice merchants, but the best sales tactic, Price says, is coming through for customers. Gravity always "underpromises" and "overdelivers," he says, which leads to word-of-mouth referrals.
For example, when making sales calls an agent may find he or she can save the merchant $150 a month but will promise $110 a month savings, Price says. "This gives us some space in case things change."
After three months, the agent compares the actual pricing to the projected pricing, and he or she points out the savings to the merchant. In most cases, the merchant has saved more than the promised amount.
Agents apply that strategy to savings and to new installations, Price says.
When an 80-store chain of quick service restaurants needed its card-processing systems installed within two weeks, Price says, the agents guaranteed it and completed the job within one week. "We have a customer for life," he says.
However good the pitch, though, sometimes "no" does actually mean "no."
When 'No' Means 'No'
Learn to recognize the slow "no," Thomson cautions. Agents can ask merchants, "If I can show you a product you are interested in at an acceptable price, are you prepared to make a purchase today?"
Asking this question helps qualify customers. "Don't chase after the slow 'no,'" Thomson says. "Provide the information the customer wants, answer his questions honestly but determine whether there's really an opportunity."
If the answer to the question is "maybe," then chances are the sale is not going to happen. "Customers won't always tell you 'no' upfront," he adds. "Get in, close the sale or, if not, move on."
