A thriving payments business stands on three foundational legs:
- Strong Sales (Client Acquisition) How are you persuading merchants to process with you? Are you winning with lower prices than your competition? Better product more suited to the merchant’s operations? More thoughtful and attentive customer service? Understanding the market you are intending to sell into and what wants/needs drive the decision-making of the merchants in the market is critical to sales success.
- Efficient Operations Efficient back-offices are greatly underappreciated in the success of merchant services businesses. Ensuring that sales people in the field are backed by the proper customer support, hardware acquisition, fulfillment and technical support is essential. As is ensuring their residuals are calculated and paid properly. Efficient operations typically manifest themselves with a healthy balance of meaningful growth, high retention, and respectable profit margins.
- High Retention (Client Loyalty) Having a compelling reason for a merchant to process with you is only half the battle in today’s competitive landscape. To truly have success, ISOs need to have compelling reasons for merchants to keep processing with you. It’s better to do this with ‘carrots’ rather than ‘sticks’, i.e. holding merchants captive to extended terms and prohibitive cancellation fees. Items mentioned in #1 above lend themselves to the carrot side of the equation. Additional carrots include merchant check-ins to see who might require upgraded equipment, transitions to new pricing schemes, and adept and reliable servicing.
Bottom line:
A payments business built on just one or two legs won’t stand for long, nor will it create long-term value compared to other assets in the market. Focus on building up all three…it will pay dividends for you.
