This is the third episode in a mini-series about Merchant Services Sales Commission. Please refer to the previous episodes if you’ve missed them....
Why Merchants Cancel – Merchant Services Sales Commission
This is the last episode in the mini-series on merchant services sales commission. Please follow these links below to read/hear the episodes you’ve missed and find the numbers already entered into the calculator. “How Many Merchants Can You Sell” “How To Sell More Than 100 Merchants” “Understanding Up-front Bonuses” “Why Your Residuals Are Not […]
This is the last episode in the mini-series on merchant services sales commission. Please follow these links below to read/hear the episodes you’ve missed and find the numbers already entered into the calculator.
We’ve been using my income calculator in instantquotetool.com. Go to the website and click on “goals.” It’s free; you don’t need to sign in or sign on. Merchant attrition is the most overlooked number in merchant services. To predict the annual attrition percentage rate is very important. In this episode I’ll give you some guidelines.
The default number in the calculator for annual attrition percentage rate is 15%. I’ve never heard a processor talk about that number when recruiting. However, sales people need to know that number! In the first year, it won’t matter at all. But in the second year and onward, the annual attrition makes a great difference. Sales people are trying to build a good portfolio. To spend the first three or four months of every year making up for merchants who cancelled last year will hamper those efforts! The attrition number needs to be monitored.
Here are some tips on getting an accurate number for attrition rate.
#1. Ask your processor, “What is your annual attrition?” Let them know you’re using the income calculator in instantquotetool.com. Be aware that the recruiter will not want to address the topic of attrition. Asking that question is like asking, “Do you have good customer service?” Just because someone answers “yes” to that question doesn’t prove they have good customer service! Your processor DOES know the annual attrition, and that is a very appropriate question to ask. The industry average attrition is about 20%. That means about 20% of merchants cancel their merchant services every year and move to a different company. If your processor’s attrition rate is as high as 27%, that should be cause for concern that customer service issues.
Some sales people are maniacal about customer service. They are always reaching out to their customers, sending them birthday and Christmas cards, taking them candy, etc. Thus, their attrition rate is inching closer and closer to 10%. However, no one will get much below that.
#2. The size of an account greatly impacts attrition. The larger the account, the less likely the merchant is to cancel. This is a big benefit of going after somewhat larger accounts. Be prepared for a slightly higher attrition rate if you are selling the small “mom and pop” shops. If you do a good job of servicing and supporting your own accounts, your attrition will be lower. If you leave that up to the processor, your rate should be near 20% or 22%.
In the income calculator I suggest you change the default 15% to 20%. Since that is the industry average at this time, it will give a better feel for your income potential. Then if your rate is lower because of good customer service, you’ll make more than projected.
Now you will have entered all the numbers and assumptions into the calculator. In the next episode, the last in this series, we will calculate your personal income potential. These questions will be answered:
- How much money can you make?
- What if some of the assumptions change?
- How will changes impact things?
Don’t miss the conclusion of this series on Merchant Services Sales Commission. I hope the information will help you set your goals and move forward in your career. If it does, please comment and share with your social media connections.
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