What to Expect as a Merchant Services Rep – Part 4

What should you expect when selling merchant services?  What’s it like to be a merchant services sales rep?  Following are some things you can expect.

Read the previous blog post.  How to Make Money Selling Merchant Services – Part 3: http://bit.ly/2ymdHiI

#1.  Expect to prove yourself with submissions, not talk.  This is a great industry in which to be involved.  I love the simple metrics of it.  The processing company has one expectation and one measurement of whether you’re doing a good job:  How many deals are you sending them a month?  -or- How many deals did you send them last month?  That’s how they measure your success; it’s really simple.  That simplicity can be hurtful when you feel, “I don’t understand.  I called this processor; they won’t give me the deal I want.”

Let me tell you how to negotiate with a processor.  Say something like this, “Fine, I will take your offer.  But if I send you twenty deals a month for three consecutive months, I want to get THIS deal.”  That’s the way you negotiate with a processor; the currency they deal in is submissions.  They want processing volume – deal counts.  A few processors out there value the volume more than the deal count because they want larger accounts.  But the general idea is how much business you’re putting through them.  Don’t think they’ll be impressed if you call and say, “I told them I’d do all these deals.”  EVERYBODY tells them that!  They want to see the deals come through.  Don’t be surprised when the processor asks you to prove yourself with deals.

#2.  Expect to walk into twenty businesses to make one sale.  That’s a good general number.  You may make a couple additional sales by doing follow-up with the other nineteen businesses.  But if you ask, “James, how do I get five sales a week?” I’ll tell you to walk into a hundred businesses.  Unless you suck at selling, I guarantee you’ll get five sells.  This is not walking into the same business eight times.  No, you walk into one hundred individual, different, totally separate businesses in a week.  You may get all five sales the first week.  But most likely you’ll get those five sales over a two to three-week period.  You might only close one or two deals that first week.  Then you have all these extra statements and follow-up appointments, so you’ll probably close four more deals later.  Next, you’ll be selling six deals and the numbers will increase from there.  Expect to walk into twenty businesses to make one sale.

#3.  What should I expect as far as commission? 

• Expect some up-front bonus on every deal you submit that processes over $5,000 a month in volume – even over $3,000 in volume. Every processor has some restrictions of the amount of up-front bonus, the minimum pricing, but you should expect to make an up-front bonus on the deals you’re submitting.  Whether you’re an ISV channel or an ISO, you should have the option to make an up-front bonus on every deal.
• Also, expect to have lifetime vested residuals. You should expect there is nothing you can do to lose your residual income, as long as you reach a certain level.  Many processors have a level of $50, $300, $1,000.  I get a little concerned if it gets above $500 or $600.  However, if you are a serious rep, you’re going to get up to a certain point.  As long as you get to that point, your residuals become lifetime vested; you cannot lose them.  This is a question I ask processors, “God forbid, tomorrow I get hit by a car and die.  Show me (don’t just tell me) in the agreement where I know my wife is going to continue getting my money.”  I would never sign with a processor without asking that question.  If they say, “It’s not in the agreement, but we will take care of you.”  Suppose that person gets hit by a bus?  Suppose that person isn’t as honest as he/she says?  I’m going to see it in writing before I sign anything.  Two absolute expectations:  up-front bonus on every deal you price decent and lifetime vested residuals.

#4.  For a merchant processing $10,000 in volume, you should expect about $60 in monthly profits.  The amount of those profits YOU get is between you and the processor.  I won’t judge anybody’s compensation program.  Some may have a high up-front and low residual or a high residual and low up-front.  But there should be about $60 a month in gross total margin (profit – or whatever you want to call it) on an account doing $10,000 in volume.  If the number is $5,000, monthly profit is $30.  You can run the numbers.  The multiples don’t keep going up and up the higher you get.  Even on an account doing $100,000 a month in volume, there is probably $250 or $300 monthly profit.  These are good expectations to have in place.

#5.  Expect a good financial partnership with the processor.  Referring back to point number one, you should expect this as you start producing deals.  Once you have 40, 50, 60 deals with one processor, you should expect some serious financial partnership.

• They should be willing to loan you money.
• They should be willing to do buy-outs.
• They should be willing to finance programs in which you’re interested, cover costs for you.

I don’t mean a legal financial partnership, of course.  Talk about your plan up front.  Say, “If I’ve got 60 deals with you guys and am doing 10 a month, I want to get to 20.  That means I need to hire some sub-agents (or do marketing, whatever.)  I need $10,000.  Are you guys going to help me out?”  You need to ask that question up front; be looking for a real financial partnership from the processor.

My name is James Shepherd.  Thanks for reading!

How to Make Money Selling Merchant Services – Part 3: http://bit.ly/2ymdHiI

Should I Lead with Merchant Services? – Part 5: http://bit.ly/2mrcJ3e