Merchant attrition is a huge problem facing our industry. The lack of focus on merchant attrition in our industry is shocking. Instead of ensuring the best outcome for every client, most sales reps turn their attention to landing the next sale once a merchant is signed.
The outcome all too often is insanely high attrition – 20% or higher – leaving ISOs/agents scrambling to sign more merchants to make up for lost residuals. It’s not as though an ISO/agent can just sign another merchant to replace those who cancel, either. Acquisition costs, alone, should be enough to make ISOs and agents think twice about resigning themselves to the status quo.
Sticky merchants aren’t found; they are earned. If you make onboarding simple, price competitively, and provide consistent, quality service, you will earn your merchants’ loyalty. And when you’re not throwing good money after bad, trying to recoup revenues lost to cancellations, there is more capital available to invest in growing your portfolio.
But our industry’s reliance on out-sourcing key areas of portfolio management often gets in the way of this goal. Different providers with their own systems and processes, board merchants. They handle
- processing and settlement,
- merchant funding,
- and the list goes on.
This becomes messy, is not very cost effective, and makes managing the merchant experience impossible for an ISO/agent.
To stay relevant in today’s hyper-competitive market, an ISO/agent needs to be thinking outside the box. One outside-the-box strategy is to in-source rather than outsource as much as is feasible in the relationship.
Secure Bancard, the sponsor of this Merchant Sales Insight, has been blazing trails with this strategy. Secure Bancard, a wholesale ISO, focuses on in-sourcing many of the functions that are traditionally outsourced. Such as
- customer service,
- risk/reserve management,
By hosting everything on a centralized platform shared by its operations team, ISOs/agents, and their merchants, Secure Bancard has been slaying attrition while freeing up money to invest in new business and sales.
Elaina Smith, Secure Bancard’s CFO, told me recently that the majority of accounts lost in recent years were terminated because Secure Bancard terminated the relationships, not the other way around.
Building a profitable portfolio is about controlling the merchant experience. Make sure the merchant experience is a good one that a merchant isn’t likely to leave. ISOs/agents who master the process have three things in common.
- Onboard Smoothly,
- Price Competitively,
- Support Consistently.
Let’s take a closer look at these three steps to controlling a merchant portfolio.
Successful selling is about first impressions. However, the first impression in merchant services shouldn’t end with a handshake agreement. The merchant who just agreed to do business with you is likely already processing with another company. There are steps to be completed between that informal handshake and the time when the merchant is up and running with you. Any hiccups along the way could be reason enough for the merchant to reconsider the decision to switch.
The application needs to be completed and submitted, for example, along with necessary financials. There are many horror stories about underwriters who often want more – or worse – have misplaced documentation the merchant already provided.
No sales rep wants to return to a merchant he/she has already sold asking for additional documentation. It’s a nuisance, and it makes the rep appear unprofessional. But that’s the risk you take when you rely more on people than automation for routine steps like onboarding.
The entire merchant vetting process is people-intensive, and thus, prone to errors. Although there are times when the human touch is necessary, such as underwriting high-risk merchants, that’s not the case for every merchant.
I find it amazing that while our industry automates payment acceptance for merchants, merchant onboarding remains largely a manual process. This is not attributed to lacking technology. Rather, processors and their ISO/agent partners are simply accustomed to a manual process!
The reality is that the more protracted and complicated the onboarding process, the more time a merchant has to develop a case of buyer’s remorse. What seemed to be a good first impression evaporates.
Controlling the merchant experience starts with controlling the onboarding process. “You need to invest in technology, automate the repetitive tasks that can be automated, and use people only when really necessary,” Elaina says. “For example, using automation, we can board accounts in a few minutes. This eliminates the possibility of human error. In boarding, the most common is mis-keying important information that causes processing issues for merchants as soon as they start doing business with you. We want to avoid that bad first impression.”
Competitive pricing is not bargain pricing. The best pricing strategies are fair and transparent.
After spending years pouring over merchant statements and developing ISO Amp, the leading statement analysis tool in the industry, I understand pricing better than most folks in this industry. Rarely have I come across a merchant statement that doesn’t include junk fees. All too often I see processors marking up the card brands’ published interchange rates, presenting them as though the brands are making the charge.
Saving money is the biggest reason merchants give for switching processors. When an agent pitches cost savings, merchants expect to see those savings on their statements. A PhD in math shouldn’t be required to see whether they are actually saving money.
To make matters worse, there’s a lack of standardization between – sometimes even within – individual providers. Comparing merchant statements from different processors is like comparing apples to oranges. About the only thing they have in common is that they are confusing and / or deceptive.
Taking control of pricing involves making sure everyone is reading from the same page. Since Secure Bancard uses the pricing strategy from its ISOs/agents instead of the other way around, there are no surprises (like junk fees) in billing. ISOs/agents also notice significantly better profit margins with Secure Bancard compared to similar portfolios with other processing relationships. And since all parties have access to the merchant statement that is generated by Secure Bancard via its own platform, everyone is looking at the same version of the statement. If a merchant calls with a billing question, the ISO/agent should be able to pinpoint the problem and take appropriate steps quickly and completely.
Nobody likes poor customer service, no matter what they are buying. So, why do many merchant services providers seem to treat customer service as an afterthought?
I believe this is because of all the moving parts involved. When services are delivered by multiple providers, customer service often suffers. It languishes in the background until a customer has a problem.
Customer service shouldn’t be something that kicks in when phones start ringing in a call center.Rather, it should begin with the first conversation between agent and prospect. Agents should ask about the merchant’s pain points and understand whether there is a solution set that fits the particular needs.
If you’re not the right fit for a merchant, you need to be able to walk away. Signing an account that you can’t properly service does you and the merchant a disservice and is guaranteed to boost attrition.Build a network of other ISOs/agents that you trust. If you’re not the right fit for a particular merchant, you know another ISO/agent who is.
Once a merchant is on board, self service should be the first line of defense. Leverage technology to provide merchants the information and tools needed to manage their businesses. When there is a problem,
- Own it!
- Explain it!
- Fix it!
Don’t let it happen again. And if a merchant wants a refund or to cancel, don’t make that merchant jump through hoops.
Taking care of the merchants you have always pays off more than chasing those who cancel.
Sticky merchants aren’t found; they are earned. If you make onboarding simple, price competitively, and provide consistent, quality service, you will earn their loyalty.
To be successful as an ISO/agent, you need to pay attention to the little details – each merchant, each interaction. But managing details is tough when everything that touches the customer – onboarding, processing, funding, billing, etc. – is outsourced to another party.
It’s time to think “in-sourcing”.
Secure Bancard’s unique technology platform is now available to ISOs/agents who want to do better at controlling their businesses. Their platform, Pioneer, is a tool that ISOs/agents can use as for in-house merchant management. Secure Bancard receives transactions, performs risk analysis, funds and bills merchants all on the Pioneer platform. This solution thereby eliminates the complexities and costs of different functions being performed on disparate systems. Pioneer works in conjunction with Prospector, Secure Bancard’s underwriting platform. Elaina shared,
“We’ve made significant investments in technology to automate the boarding process with Prospector. By utilizing pricing templates, embedding our merchant application wizard on their website, or connecting via an API, we’ve made the boarding process easier, faster, and more accurate. While Prospector is a fully electronic boarding tool, it’s multi-functional and can also generate a PDF application when only a traditional application will work.”
“We give our partners the tools they need to quickly onboard and service merchants,” Elaina said. ISOs establish pricing and reporting schematics, and Secure Bancard supports full pricing visibility for ISOs/agents and their merchants. “It’s our job to provide consistency – to pay attention to the details.”
With Secure Bancard, an ISO/agent can:
- Manage merchant accounts for multiple processors and portfolios with a single login.
- Gain visibility into merchant transactions, batches, and funding from a single platform.
- Provide flexibility with billing and funding options, including split funding, at no additional charge.
- Access residuals reporting, including drill-downs and detailed reporting, and track downline agent commissions.
Take control of the merchant experience to grow your portfolio. Learn more about how Secure Bancard can help www.securebancard.com