The agent today asks James, “What is your opinion of giving written proposals?” Many people in our industry don’t agree with the practice of giving merchants a written proposal. There is always the possibility that a written proposal might be used by prospects for other vendors or to go to their processor for negotiation.
James answers that he does have strong opinions on this issue, and those opinions will probably be very different from others in the industry.
NOT TOO EARLY
I definitely agree that written proposals should not be presented too early in the sales process. Thus, the question becomes, “How early is too early?” Prospects usually want to see in writing what they’ll be saving, so you do need to present a written proposal to make the sale.
Early in my career, I recall immediately emailing a proposal to merchants who offered to meet again after seeing my proposal. Of course, they never kept their appointment. That was stupid on my part.
GET A COMMITMENT
I’m not afraid to give a written proposal. However, first, I want a solid commitment that the merchant IS going to consider it.
IN MY EXPERIENCE…
If salespeople use the right sales process, they will sell all the merchants they can sell.
The following sales techniques are the ones I use. If you do everything as I suggest, but the merchant still stays with his/her own company, there’s nothing you could do to make that sale. Who cares if you gave a written proposal? I don’t worry about it.
Have I helped some merchants along the way who screwed me, saved some money, and stayed with their current company? Yes. Am I upset about that? Not really.
There’s a middle path though. If I’m going down the right path, I don’t mind giving the written proposal. I’ll use all my sales techniques and sell all those I can sell.
I try to have all preliminaries out of the way first. Here is an example. Suppose I’m meeting with a mid-size merchant who does $200,000 per month processing. I could say,
“Obviously, I’m going to save you money on the credit card processing; we both know that. We both know the final conversation comes down to the numbers. But before we get there, I need to know if I can integrate with your POS system. I also need to know if you want cash discounting, surcharging or traditional processing?”
After gathering the preliminary information and in preparation for the final meeting where I plan to close the sale, I bring a written proposal and have one ready to email the prospect. However, I don’t want prospects to see the proposal until I show it to them in person or on a zoom call.
Having a written proposal ready at the time of closing the sale is very important.
Now the problem is what to do when you fail to close the sale – when you don’t get a “yes” or “no”. When the prospect says, “I’ll keep this to look at then get back with you,” that’s a problem!
I handle that problem by auditing my own sales process.
- Where did I fail?
- I thought I was going to close the sale.
- I wouldn’t give that written proposal easily.
There’s a reason I thought I was going to close but didn’t. I must totally understand the rationale involved in this situation.
In many situations I’ve closed merchants 3-4 times; they’re getting frustrated with my persistence. Finally, a merchant may say, “Look, James, we’re going to our current processor to see what they’ll do.” Now that I know the real problem, I can finally rebuttal this objection!
DON’T GIVE UP EASILY!
Although prospects may want to keep the proposal with the cliché, “I’ll get back to you,” that won’t happen without putting up with me for another ten minutes!
I’ll say, “Hold on just a second. I believe I provided all the information you needed to make a decision, and I respect you want to consider it. What part of the proposal are you considering most seriously?”
Then I’ll continue by making it personal, “I can tell you nobody will work harder for your business than I will. I want your business! I want to make sure before I leave today that you clearly understand I am the guy who’s going to work for you and make this happen. I’ll get the integration done smoothly. You have my word on that. If I’m willing to put myself out there like that, are you at least willing to give me a chance?”
I don’t simply let prospects off the hook easily. I’ll make statements such as these for a while. Inevitably, I get to the real reason for hesitation.
There might be a business partner involved. The prospect might say, “I didn’t realize what a big shift cash discounting would be to the way we operate our business and train our employees. This must be discussed with my partner.”
I say, “Of course! I totally understand that. So, does next Thursday at 9 a.m. work better for you or Friday at noon?”
If there’s a legitimate reason for hesitation, I’ll be booking the next meeting from this meeting.
My response to a further hesitation from prospects at this point is probably a bit different than expected. If I still get “no” or “We’ll let you know,” I just call them out by saying,
“You understand my perspective. I’ve had 1,000 people say they’d get back to me. You know how many got back to me so far? I’m still waiting on the first call. You have a real concern. I’m not trying to be pushy or mean; just let me know the problem so I can fix it.”
Eventually, either prospects will admit they’re going to their current company, or I’ll surmise that.
Then I say, “I’ll get out of your hair. Let me just say one more thing. I think we’re on the same page here; let me just verify we’re on the same page about ONE thing. Then I’ll let you go.” Usually they’ll say, “Okay. What is it?”
“I’m going to leave you with this detailed pricing proposal showing that I’ll save you $100 per month [to make the math easy.] How long have you been with your current provider?”
[Prospect answers, “Three years.”]
“Let’s just say, hypothetically – I don’t think this would happen – your current provider agrees to match my figures. Would you agree with me that another way of looking at that would be you’ve been overcharged for the past 36 months? By making that change, your provider would be saying they could’ve given that rate all along. [Prospect usually agrees.] So, let’s make sure we’re on the same page here, then I’ll get out of your hair. Would you agree with me that if they agree to do that, you obviously won’t stay with them unless they refund the $3,600.00 they overcharged you?”
I’ve never had someone say “no” to that. Then I close with, “Okay. Great! I’ll check back with you on…” I set my next appointment.
When I meet for the next appointment, half the time the merchant says, “You were right. We’ll go with you.” However, the other half says, “Well, they offered to match the rates. So, we’ll stay with them.”
My response to that is to play dumb and be very assumptive:
My first response: “That’s great! They refunded the $3600.00 then?”
The merchant: “No, they didn’t agree to do that.”
My next response: “Okay then, I’ll get some paperwork ready. Should I swing by tomorrow about 2:00 o’clock or 4:00? What works better for you? I know you gave me your word on the last meeting; I can tell you’re a person of integrity. You tell me what works best for your schedule.”
I’ve had many people stutter at that point while finally choosing a good time. There are definitely merchants who are not interested, no matter what sales technique I use. They just want to use my proposal to get a lower rate. In that scenario, I just keep the proposal and don’t email one.
AGENT: “I’d like your opinion on a deal which fell apart. The deal was a B2B business. I presented doing cash discounting with ACH. The merchant was thrilled with the savings. However, the software provider balked at the extra admin work needed for the switch. We know the extra is minutes of work. How would you go back into that situation?”
JAMES: I would go directly to the software provider. One of the biggest secrets to my success of making good money in the industry is doing ISV deals like that. Here is my pitch to the software provider:
“Look, I want to work with you on this deal. I don’t think you understand this deal is going to become massively more profitable as a result of helping me implement it. I don’t know what kind of revenue sharing deal you have with your current company. But if you work with me on this deal, I’m going to cut you in here where you’re going to make a lot more money. In addition to that, by you implementing this cash discount program that’s going to be wildly popular with all your clients, we can work together. I have no problem giving you an even bigger split on the ones you send me the leads. Give me all the clients, I’ll sell all of them for you. You’ll make a ton of money.”
There IS definitely some real cost for the software provider, but the changes are minor. There might be $10,000 in developer time. There might be opportunity cost, as in the question of what else they could be doing. Paint a picture for them by saying, “Whether you utilize me a lot or not, making this feature available to your clients will make you a fortune. And it will make the clients much more excited. If you work with me on it, even better. But let’s get this one deal done together as our test pilot to show that it can work. Then you can roll it out to your other clients.”
THE MAGIC PERCENTAGE
I look at things in thirds.
- If you bring the deal to them, as in this case, give them a third of your profit on it.
- If they’re bringing deals to you to sell for them, you get the third while they get two thirds.
- Whoever is making the deal happen or providing the data, gets the two thirds.
Obviously, there is variation, depending on your involvement.
- They say, “Here’s a list of all our clients; good luck. And you can’t use our name.” That’s maybe a 20-25%.
- They say, “Here’s a list of all our people. We’re going to send an email blast recommending you. You can use our name, saying we worked together to create integration.” I’d give half or even two thirds in those cases.
- We’re all capitalists. It’s negotiation. If I can get them for 20%, I’m not going to give them 50%!
AGENT: I’d like your input on another deal with a merchant doing $25 million in annual volume – 15%-20% of that in credit card. Again, I presented cash discounting and ACH. The merchant isn’t quite ready; there’s fear of the push back. Instead, I was asked what kind of rate I could give. I couldn’t have a statement, so I just offered interchange plus with no fees and 20 basis points in profit.
JAMES: I recommend you shift the power structure a little by getting the merchant’s agreement to something.
Suggested response, “I understand where you’re coming from. You don’t want to give me a statement at this point. I’m guessing the valid reason is you don’t want me to see what you’re paying now, so I could give you something slightly less to get your business. You want to get my best offer, right? Tell you what – I’ll make you a deal. If I send you my pricing in writing, will you agree to respond to that by giving me a statement? As you know, this is rather complicated. I’d like to show you what it looks like on your current statement. Is that fair?”
They key is to get the statement. Then you prepare the proposal and come back to the merchant. 15-20 basis points is an industry average for high average ticket size. If there’s a low average ticket, you’ll eat the schedule A costs per transaction. Go a little higher in that scenario, the highest being 20-30. You can always go lower but not higher.
Then come back to the merchant with, “Good news! I found interchange optimization. We split that savings with you. Looks like I can save you another $5,000 [or whatever] per month.”
ONE MORE QUESTION
AGENT: What’s your suggestion for dividing short-sale and long-sale cycle time? Is there an optimal percentage out in the field, day-to-day versus longer odds, bigger pay-off?
JAMES: Each week I allotted two hours to intentionally work on the bigger accounts. Anything I COULD do for a big account, I would do it. In addition, if a CEO of big company reached out offering to meet at a certain time, I cleared my schedule for that time. I usually had 4-5 deals in the works and closed about one per month. So, I spent two hours per week, plus another half day. My entire Tuesday afternoon might be driving 1 ½ hour there and back to close a big deal.