How to Make Money Selling Merchant Services – Part 3
Just because you are in merchant services doesn’t mean you are making good money. Let’s discuss how to make money selling merchant services. Here are four tips. Read the previous blog post. 4 Reasons Not To Sell Merchant Services for a Processor – Part 2: http://bit.ly/2Alw8F1 #1. Be honest with yourself about your motivation. […]
Just because you are in merchant services doesn’t mean you are making good money. Let’s discuss how to make money selling merchant services. Here are four tips.
Read the previous blog post. 4 Reasons Not To Sell Merchant Services for a Processor – Part 2: http://bit.ly/2Alw8F1
#1. Be honest with yourself about your motivation. In all honesty, sales people in merchant services do not truly want the BEST deal for the merchants. The BEST deal for merchants would be a free terminal, zero transaction fee, and zero basis points mark-up. But IS that what you want to offer them? Then you may say, “Okay. Although I don’t want to give it away free, I’d like to provide the next best deal.” That would be a free terminal, one cent transaction fee and one basis point of mark-up. Would that make you happy?
Sales people are not running a non-profit. We all want to make money. The true motivation here is to provide a reasonable deal to the merchant which still makes money for the sales rep. There are several different “camps” in the industry who are criticizing each other. I encourage you to have a more open-minded approach. Let’s agree there are different ways to price and make money. In “the free terminal only” camp, there may also be a $25 monthly minimum, $12 monthly free terminal paper fee, $10 statement fee, 30-cent batch fee, etc. Every camp must make money. At the end of the day, whatever the merchant is paying monthly for the ability to accept credit cards is the crux of the matter.
I’ve come full circle since my older content after seeing quite a bit of hypocrisy on the free terminal side. Some who proclaim NEVER to lease may, however, raise the prices five times a year and add fees for this and that. I totally respect the mind-set which says, “I only do free terminals because that’s my pitch; it gets me more business. I’ve figured how to sell 15 or 20 accounts a month by just giving away a free terminal.” I did that myself for years but not because I felt the lease was evil. On the other hand, there are some sales people who lease because that works for them. They offer reasonable leases such as $29 a month. For a 36-month lease they make $500 or $600, but they also lower their prices more than those associated with the free terminal. Thus, they are front-loading their profits while the free terminal reps are getting theirs longer term. So, agree that one way is not evil and the other good. To be a success in merchant services, check your own motivation.
#2. Be open minded about different business models. Since the motivation is to make money, being open minded to different models will allow you to have a better overview. The model with which you’re first tempted to totally disagree may actually be a better choice for some merchants. Take time to think before making up your mind.
The experience of one of my local clients is a good example to consider. This client is a big business who has inherited a huge mess. They’ve had three back-go-back processors (one of them being mine) who gave them a free terminal. After canceling service, one processor wants to charge about $1,000 for a $100 four-year-old “free” terminal! Another processor insists the business can’t close their account without returning the “free” terminal and are still charging them a monthly amount. This business has a huge mess! Not surprisingly, when this business signed on with the fourth processor, they paid cash for their terminal. They would rather own their terminal than deal with the waste of time involved in a free terminal.
Those of us who have been in the business long enough understand there are situations where the free terminal is not the best deal for all merchants. When one of the free terminals breaks down or the merchant wants to replace, switch, or swap it, that is often a big pain in the neck! Therefore, I encourage you to be open minded about different business models.
#3. Sell technology for cash. Although I rarely produce content that could be potentially offensive to any processors, I may step on toes with this point. I have a fundamental disagreement with some models. I certainly understand the benefit from the processor point of view; I’m not just passing judgement. However, the sales people should understand from their viewpoint. Processors sometimes give away technology to secure the credit card processing. Thus, they are investing cash to get return on investment. The sales people, on the other hand, are investing time but not getting return on investment.
A processor may offer “free placement” on the Poynt terminal, even though there are usually other fees involved. That’s to be expected; the processor needs to make money. The processor point of view is, “This is a good investment. We have plenty of money. So, we’re going to invest $700 in the Poynt terminal (or whatever) and get $37 a month in return.” The processor viewpoint toward the sales rep is, “Hey, what do you need an up-front bonus for? You gave away a Poynt terminal and still want more money on top of that?! We can’t afford to do that.” This is a clever strategy for the processor to increase their profits. However, for the individual sales rep, it is stupid!
You as the sales rep could lease, sell, or rent the terminal and make $700 to $1,000 bonus up front on the technology. You could also focus your pitch on the technology, which is what you want anyway. This makes sense to the merchant who will not expect to get such a good terminal free. Even though you will need to lower price to justify a lease and make margins not quite as high, you will make more money up front for your time investment and have an account which probably won’t cancel for a long time. Sell any technology you provide – Clover, Poynt, ShopKeep, Gateway, NCR Silver, or an analytics tool. Don’t give it away; you want to focus on technology rather than just credit card processing.
#4. Get on leads as soon as you can. Don’t discount the possibility of making more sales. When you are on leads you will make twice as many sales. Whether your company offers leads or not, you should get on leads as soon as possible. Take advantage of any opportunity or option to get on leads. You may need to go to outside sources such as upwork.com or outbounders.com. Begin by paying $10 a day to a telemarketer who will call an hour and perhaps get you even one lead. You may need as much as six months to expand the process but be willing to work and earn the money and get the connections you need. The goal would be to hire an assistant to oversee this aspect for you; that will make you super effective.
Hopefully these four tips will help you make more money selling merchant services. Have an awesome day!