POS panache for restaurateurs

Positive Feedback Software LLC develops and sells restaurant POS software at a price so low that it's almost free. In business since 2001, the company took more than two years to bring its restaurant software solution, FreePOS, to market.

The product includes more than a million lines of code, which was written almost entirely by Todd Norvell, the company's President and founder.

The price is right

Norvell said if he had used a team of programmers to develop FreePOS, he would have incurred millions of dollars in research and development costs. "That [savings] is one of the things that make our product untouchable," he said. "Functions that FreePOS offers for $99 other vendors are selling for $1,000 per station."

According to Norvell, many of his competitors use programming teams, but "if you can have software developed by an individual versus a group, a lot of times it is more efficient, and the design decisions are made decisively."

He noted that when a programmer quits or advances to a new position, the time and money spent on that individual's programming efforts are often lost.

And when a new programmer enters a project, the code has to be recreated, sometimes from scratch, because one programmer may have a difficult time picking up where another programmer left off.

"In the final analysis, what sells a product is price and performance," Norvell said. "Sure, you can get a product to market faster by implementing a team programming infrastructure, but if no one can afford the resultant product, it was all for nothing in the end."

While FreePOS is affordable, it is neither basic nor bare-boned, Norvell said. FreePOS is robust and suitable to diverse restaurant models. It can:

• Remind server staff to check back with tables
• Provide picture-based menu ordering screens that automatically change depending on the meal being served
• Run on wireless table-side devices for order-at-the-table functionality
• Run a wireless messaging center that includes up to 1,000 wireless pagers, guest coasters and staff pagers.

POS pulse

Before launching Positive Feedback, Norvell extensively researched and installed other brands of POS software. "If you go into the POS business without an understanding of what your competition is able to accomplish, it is difficult to justify the financial risk that the R&D cycle requires," he said.

Norvell observed a weakness among his competitors: "I think many POS software companies hire arrogant technical support staff that doesn't care about their customers," he said. "Support is a huge issue in an industry driven by referrals.

"If you are snobby and look down on your customers, you aren't going to succeed in the POS business."

Norvell said he is not above running a load of dishes for a customer on a busy night. "So few technical people are willing to be on the same level as people who are working for a living," he said. "All a restaurant owner wants is for any problems to get solved without attitude.

"Until you've worked behind a bar on a busy Friday night, you can't really appreciate what a restaurant owner does."

Norvell also observed that many merchant level salespeople (MLSs) promote the added features of a product when, in reality, the customer doesn't need them. "Many customers just want to print checks and run credit cards," he said. "It's great fun to watch a fingerprint scan but does that make the restaurant any extra money?"

Follow the money

Positive Feedback's revenue stream includes lead distribution, financing, hardware and software sales, and service plans. It also refers out credit card processing.

Norvell said a compensation structure based on buy rates and residuals is "tired and insecure. We have built a program which allows an MLS to earn large lump sums to supplement their existing residual portfolio."

Positive Feedback uses three sales channels: resellers, alliance partners and agents.

Resellers

Positive Feedback's resellers are technically trained individuals and organizations. They understand how restaurants work, and they handle all their own support.

Norvell noted that most of his resellers have established relationships with restaurants; many have worked for cash register or POS product companies previously. "Often a reseller for another POS company will come to us after losing a price war," he said.

Norvell does not require that resellers have college degrees or formal education.

"The one thing we look for is restaurant experience and an incredible work ethic," he said. "I'll take the guy who wants a chance to make a better life for his family over the established reseller who will massage an existing sales channel until it dries up."

Alliance partners

Typically, Positive Feedback's alliance partners are ISOs with at least a dozen agents. Alliance partners identify clients who potentially need POS systems and determine what they need in general terms.

Partners pass that information on to Norvell and his team who then contact potential customers and help identify specific solutions.

Positive Feedback also gathers merchant account leads through its Web site, which attracts 10,000 visitors a month, according to the company. Positive Feedback matches leads with local providers in an effort to connect them with payment processing services.

"The agreement is we earn 50% of the residual collected by the ISO if we referred the sales lead," Norvell said. "Most deals are just signing them up. It's not making a sale, it's taking an order."

Positive Feedback has procedures that help identify professionals who will work best with the company. And it tests new relationships before giving out the best sales leads.

"We have our new partners call hard leads first that are seeded with a couple of established contacts," he said. "We find out how professionally the lead was handled. We have to do this for quality control.

"We can't have great leads going to undermotivated, unprofessional sales reps. Many times, we learn about the work ethic during this process, too."

The company gives alliance partners a buy price for an entire project. "Anything over the buy price they may keep," Norvell said. "We do put a limit of 50% on the negotiation."

Independent agents

Norvell said being an independent agent is the easiest way to earn revenue with Positive Feedback. It does not require POS system knowledge, and MLSs need only refer clients.

Agents earn bonuses of $500 or more each time they refer a client who closes an account. For a multilocation account, MLSs receive $500 for each FreePOS system installed. Typically, each location uses one system.

"We will be your partner," Norvell said. "Every restaurant is going to get a POS system someday, but the other POS companies don't 'play nice' with the credit card industry."

While some ISOs opt for the Alliance Partner program, Norvell said that many times, ISOs would do better to use the referral program option.

"They may think they will make more money as an Alliance Partner, but they don't take into account that without POS knowledge, it can be difficult to sell," he said.

MLSs receive sales leads from Positive Feedback. And, FreePOS provides an additional solution to offer merchants. "Often, our FreePOS product converts a cold call into an appointment," he said. "Our products are that powerful."

Perks for the pros

According to Norvell, FreePOS is a tool that helps make customers dependent on MLSs. "When the MLS sells a merchant credit cards, gift cards, POS, remote support, equipment loaner programs and a financing solution, he owns the account," he said. "Attrition occurs when replacement is painless."

FreePOS merchants wishing to switch processors must call Positive Feedback and request a change. The company alerts alliance processors, providing them an opportunity to save the account.

According to Norvell, merchants appreciate this because it gives them a chance to save the costs a processing switch would incur. "We hold up the account switch for 36 hours at most. After that, we must honor the merchant's request."

Customers can finance FreePOS through Positive Feedback or purchase it outright. "We try to emphasize the financing solution since it generates a larger sale size for the agent and higher profits for Positive Feedback Software," Norvell said.

Another benefit for alliance partners is Positive Feedback's Shark School, a two-hour, high-energy motivational class.

The class costs $1,500, but the company offers a discount to each person who attends: $125 multiplied by the number of attendees. If a class includes 12 people, it is free. The company will also fly a trainer to alliance partner locations.

Positive Feedback handles all follow-up service issues. This allows ISOs and MLSs more time for selling. It also offers 24/7 hardware and operating system support if the merchant purchases a service contract.

In addition, it provides per-incident support seven days a week from 9 a.m. to 8 p.m. Eastern time for all FreePOS users.

Envisioning a profitable future

FreePOS is sold worldwide and supported by a network of 20 reseller corporations. "Over 240 businesses trade sales data with us, and that number is growing fast," Norvell said. "Our projected profits for 2007 _ 2008 are expected to be sufficient to begin consolidating partner companies.

"Positive Feedback has become successful for one very simple reason: We leave a lot of value on the table for our customers." Norvell's ultimate goal is to take the entity public. "The money spent nationally on POS products is nothing short of staggering," he added.

Positive Feedback values its sales channels: "We are probably the only POS company in North America that will come to your office, show you how the POS business works, and get you started selling with no initial cost," Norvell said. "We couldn't do that if we didn't make a lot of sales as a result."

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