One vitally important decision for merchant services sales people is choosing the right processor. While recently participating in my annual activity of speaking to about three hundred merchant services sales people, I have been interested to discover there is generally a lack of understanding needed to make this big decision. Since I have the […]
One vitally important decision for merchant services sales people is choosing the right processor. While recently participating in my annual activity of speaking to about three hundred merchant services sales people, I have been interested to discover there is generally a lack of understanding needed to make this big decision. Since I have the benefit of being in the industry for a long time, I’ve learned a few things along the way. I’ve consulted and sold for many different processors. Therefore, I’m offering a mini-series to teach the main building blocks needed to help you understand this very important topic. Today let’s discuss four important aspects of choosing the right processor.
Read the next blog post. 4 Reasons Not To Sell Merchant Services for a Processor – Part 2: http://bit.ly/2Alw8F1
#1. UNDERSTANDING YOURSELF. Consider these questions to know if you are the type of person who can sell merchant services. Do you have a problem talking to business owners face-to-face? Do you have a problem walking into businesses or calling them cold turkey on the phone? Do you enjoy running numbers? Realize this is a financial services business. If you dislike math and numbers, this business may not be for you! Does the idea of looking at an Excel spreadsheet scare you? Understand yourself!
#2. UNDERSTANDING THE INDUSTRY. To make a good decision about choosing a processor you must have a basic knowledge of the industry. You should understand terms such as “Schedule A,” “per transaction cost,” and “transaction fee.” If you are weak in this area, please go to instantquotetool.com and sign up for a free trial. There you can watch all my video courses such as “Understanding Merchant Services” and “How to Sell Merchant Services.” “How to Read a Processing Statement” is a very helpful one for knowing the basics. Understand the industry!
#3. UNDERSTANDING THE COMPENSATION. This is also a part of understanding the industry. The best way I’ve found for a person to truly understand the compensation structure of a processor is to ask for specific information as if you’re making a sale. In most compensation plans, these are the “breaking points” – under $5,000 in volume, $5,000 in volume, $10,000 in volume, and $50,000 in volume. You want to ask, “I’ve got a business who is processing $______ in volume:
What kind of pricing would you recommend?
How much money would I make up-front?
What kind of terminal would I provide?
Does the terminal cost money?”
Then ask the same questions concerning the other brackets of volume. This will help you understand the compensation program of each processor.
#4. UNDERSTANDING THEIR VALUE PROPOSITION. I plan to offer an upcoming episode here addressing the topic of “how to make money in merchant services.” However, you should have the basic knowledge that every processor does have a slightly different value proposition. I encourage you to keep an open mind. Rather than judging the evil or good of an individual processor’s value proposition, try to understand it. Ask how it works; what’s the pitch; what exactly would you say to a merchant?
Recently when a sales rep asked my opinion about a particular company, I noticed a slick gateway, very nice billing system, and some data analytics. Immediately I recognized this company has a technology value proposition. My questions to the rep were: “How much does it cost?” “Is there an extra monthly fee for this technology and analytics?” “Is it included?”
Some companies offer a very low price – “transparent pricing, free terminal, month-to-month agreement, etc.” If that’s the pitch (the value proposition), realize there is another side to this value proposition.
There is no processor which says, “Yes, we are going to pay you a bonus AND pay you monthly. We just don’t want to make any money; we love merchants so much that we don’t want to make anything ourselves.” That company does not exist! Some reps have assured me their company is the exception which just isn’t in business for making money. If the rep is right, the company will go out of business in a month. More than likely, the rep is wrong and has no idea what he/she is selling.
You must understand there are price increases which can be done. There are little extra fees added. Everybody has a model to make money, whether good or bad. Asking questions is very important in choosing your processor.
What is the value proposition for the merchant?
What is the value proposition for the processor?
What is the value proposition for you, the sales rep? What do you make? How do you make that? Why do they pay you that much?
Do they pay a huge up-front bonus? Is that because they only pay 5% or 10% residual?
What is your Schedule A cost?
Do they charge you for equipment?
The priority foundational question is not “Is this processor evil or good?” Rather, “How do they make money? How is this good for the merchant, and how does it affect me?” Once you understand all these, you fully understand the value proposition and can make a good decision.
After reading all this, you may be thinking I know much more about this than you. Because I’ve been doing this for a long time and know almost everybody in the industry, I probably DO know more than you. If you would like my help in choosing your processor, go to ccsalespro.com and click on “find processor.” My assistant, Angela, will schedule a 10 or 15-minute call for you. Then I will evaluate your current company by asking a few questions. I can affirm you have a good deal or offer another company for your consideration and make an introduction for you. This is a service I enjoy providing. Make sure you’re choosing the right credit card processor.
My name is James Shepherd. There will be powerful new episodes published here daily. Thanks for reading!