Consultation always, desperation never
Early in his payments industry career, Rick Tyler, President and Chief Exec-utive Officer of Processing Solutions, opened up the South-eastern United States territory for Universal Savings Bank. When Fifth Third Processing Solutions bought Universal, he was appointed Retail Merchant Sales Director. But when Fifth Third decided to close its "out of footprint" sales offices a few years later, his division was on the chopping block. But Tyler decided the business he had painstakingly built and so thoroughly understood was too important to walk away from.
So he bought it.
He took over the merchant accounts, kept Fifth Third's established offices and hired the employees working in them. In doing so, he created a business model with an extremely high overhead, he noted. But he also created a business model that takes advantage of what he sees as Processing Solutions' greatest strength: the employees' tenure and knowledge base.
"Some of my employees have been with me for eight, nine, even 10 years," he said. "That is an oddity in this industry. But I think it's also a heck of a benefit in our market."
Salaried sales staff
Although Processing Solutions does have a handful of relationships with independent merchant level salespeople (MLSs), Tyler's model mostly calls for what he calls "captive" salespeople: salaried salespeople who represent only Processing Solutions and enjoy benefits and expense accounts.
"I have a high overhead compared to my peers in the industry, but I have better control over the distribution of our product," Tyler said.
He added that having salaried salespeople eliminates sales that are based on greed.
"The reps know they'll get paid, so there is no pressure to sell a merchant something they don't need," he said. "We don't want to undersell, of course, but we don't want to oversell.
"Many of our merchants come to us through our programs with community banks, trade associations and chambers of commerce, and we don't want those partners to have to deal with dissatisfied merchants."
Co-branded community bank programs
Processing Solutions' turnkey, co-branded marketing programs provide sponsoring organizations residuals when members sign up for the company's services - with very little effort required on the sponsor's part.
The organization offers Processing Solutions' marketing materials to its members and occasionally helps identify members who might benefit most from Processing Solutions' products: merchant service accounts, check authorization and guarantee, and gift cards for small to mid-sized businesses.
Processing Solutions primarily uses four processors: Sage Payment Solutions, Priority Payment Systems, Retriever Payment Systems, and Newtek Business Services Inc. "We offer front-end solutions from all of the major processors, so we can tailor the merchant processing to our customers' needs," Tyler said. "We don't force them into one box. We want the experience to be seamless for our merchants; we can mirror anything they had before, so they don't have to learn a new system, for example."
Nontraditional accounts
Although Processing Solutions' end customers have long been small to mid-sized retail businesses, the company has seen a rise in nontraditional accounts such as business-to-business enterprises or manufacturers.
"We've seen a tremendous growth in the nontraditional business this year," Tyler said. "It even surprised me. No one wants to ship on an open invoice; they are looking toward credit card acceptance to speed up their cash flow."
Side-street marketing
Processing Solutions offers monthly training sessions for its agents and sales executives. To take advantage of burgeoning, nontraditional opportunities, the company devoted a recent training session to what Tyler terms "side-street marketing."
"Rather than spending all your time walking up and down Main Street talking to retailers, we're asking our reps to look for side streets: the industrial parks and manufacturing areas that are often overlooked," Tyler said.
Nontraditional accounts and co-branded community bank programs are two things that have fueled Processing Solutions' recent growth. The company moved from a 7,500-square-foot facility to one with over 17,500 square feet. It also increased its sales force by 30 percent. The company now has 40 full time and 24 part time employees in offices located in Atlanta; Pelham, Ga., and Jacksonville, Fla.
The sales force can chose an upfront, one-time commission or an ongoing residual stream as each deal is closed. Tyler said his salespeople generally go for the upfront commission, but he offers both alternatives because "our core philosophy is leeway and flexibility. We stay flexible so we can meet the demands of both our merchants and our agents."
That flexibility goes both ways, Tyler noted. "Our company culture is one of empowerment," he said. "We do not micromanage our account executives or our support staff. We cross-train so we can adapt to the call volume, eliminating the 'that's not my job' mentality."
Sales rewards
Processing Solutions rewards its top sales executive of the year with the use of a car for a year. "We try to match the car to the personality or lifestyle of the person receiving it," Tyler said. "It is functional, of course, but it should be fun, too."
In 2006, Chad Hogan, a new dad, won the use of a four-door 2007 Toyota Camry. In 2007 Dianne DeLoach, who didn't need a car seat and graham-cracker-friendly car, won the use of a 2008 Pontiac Solstice convertible.
Tyler noted that these kinds of awards, along with employee benefits and salaries, aren't common in a margin-compressed industry.
According to Tyler, a steep overhead can be a headache, but the benefits outweigh the stress. However, he concedes that the rate compression in the industry is the biggest challenge facing Processing Solutions, and although this environment challenges everyone in the industry, he may feel the pinch faster than competitors that hire commission reps only. "In today's market it is difficult to just go out and show a merchant how you'll save him large amounts of money," Tyler said.
"A lot of companies are simply doing an interchange pass-through, and equipment is no longer the revenue center it once was. Attracting new merchants is more difficult than it used to be."
National expansion
To maintain growth, Tyler plans to expand beyond his company's Southeastern roots, and he is close to signing deals in both Washington state and Connecticut.
"The community banking industry is pretty fluid," he said. "Executives in a community bank in the Southeast, for example, may well accept a job in the West Coast or somewhere else in the country. And when they do, if they've had a positive experience with our program here, they'll want to take it with them.
"Now we're set up to be able to launch our programs anywhere in the continental United States. Part of our ramping up of our sales force was to be sure we could accommodate customers wherever they may be in the country. But while Tyler would consider adding more nonexclusive MLSs to the mix to help with his U.S. expansion, he thinks his "captive sales force" model works well.
"Ours is a very consultative kind of strategy, not a hard or desperate sales approach," Tyler said. "The way we are structured, our reps have the ability to really listen. They don't feel as though they have to grab the floor and try and sell something."
Tyler believes that since his company's offerings are so comprehensive and flexible, his reps don't have to force merchants into any particular program. "They can take the time to find the right fit for the merchant," he said. "It's an expensive model, but it also happens to play to our strength. I can't imagine changing that."
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