The low-attrition ISO

Alpha Card Services Inc. founder and Chief Executive Officer Lazaros Kalemis believes good salesmanship in the payments industry has everything to do with offering great services in an open and honest way, and very little to do with the vigorous price competition that so often dominates the sales world.

"You're going to get beat on price every time," Kalemis said. "It's much better to lead your sales call with references to good service or value-added products. A merchant is being sold to 20 to 30 times a month, and they need to know what you can do to build their business."

That is especially true in a difficult economy, in which struggling merchants are desperately seeking ways to grow their businesses and retain customers, Kalemis added. "Merchants care a lot more about their marketing in this economy," he said. "So, what if I can provide you with a product that shows customer spending habits and helps to retain those customers and get them back into the store - at almost zero cost to the merchant? You help your customer grow their business, you have that customer for life."

To prove his point about the benefits of offering first-rate service, Kalemis pointed to a statistic about Alpha Card that he called his proudest accomplishment: an unusually low merchant attrition rate of 9.5 percent. (The industry average is about 22 percent, according to Robert Heinrich, Vice President of Sales at Alpha Card).

Keys to keeping merchants

Huntingdon Valley, Pa.-based Alpha Card was recognized by Inc. magazine as one of the 500 fastest growing companies four years in a row. Additionally, the Philadelphia Business Journal has named it a top 100 Philadelphia-area company every year since 2007.

The reason merchants stay with Alpha Card is that the company aims to give its clients the highest level of service possible, according to Kalemis. Merchants are given instruments to spur growth, as well as provide people-based services that strive to be efficient, attentive and thorough, he said.

A cornerstone of good service is open and honest communication that takes place on a regular basis. To that end, Kalemis said Alpha Card has several key measures in place. The ISO stresses a policy of honesty in dealing with merchants, and agents are trained to provide and discuss all contractual details up front. To ensure that agents are upholding this policy and providing optimal service, the company follows up with merchants to secure feedback.

"When our agents send in deals, we're calling merchants to make sure everything was what they thought it to be," Kalemis said. "We are not afraid to talk to our clients." That level of service doesn't stop after merchants are boarded. The company's merchant contracts "disclose everything,"

Kalemis said. Also, merchants continue to periodically receive both phone calls and mailed satisfaction surveys to make sure they don't feel misled or confused, and are otherwise happy with their service provider. "Do we lose some merchants this way? Yes," Kalemis said. "We can't compete with a lie. ... But in the long run, we benefit because our customers appreciate that we have a right way of doing things."

Keeping agents in the loop

A similar policy of ready communication applies to the company's relationship with its agents. All contractual details are clearly laid out, and representatives are always kept apprised of any developments with their merchants, Kalemis said.

Any relevant information obtained from an existing client - be it about that client's current service agreement or the offer of a new agreement from another company - is immediately recorded in Alpha Card's computer database and then relayed to the merchant's agent via email or text message.

Because every pertinent detail is recorded in the company's database, agents can also log into their accounts on the Alpha Card web portal and review everything in a particular merchant's history, including pricing terms and any previous complaints or feedback. Such access allows agents to better prepare for phone calls addressing particular problems or needs, Kalemis said.

"Any issue, anything that happens with one of our rep's accounts, they're immediately notified," he noted. "The sales rep gets an email or text that there was a certain outcome, and you may have to follow up with your merchant. You don't have to log onto our portal to find out what happened."

Furthermore, Alpha Card's retention department will help agents address more complicated merchant issues if they need outside assistance. For example, if a merchant calls to say he or she received a better service offer from a different company, the retention department will vet the new offer for legitimacy, Heinrich noted.

"Say another sales rep is trying to take our merchant; the merchant processor is pricing interchange at six [basis points], and the sales representative is telling them they can save them $115 in processing," Heinrich said. "Our retention department will show it's impossible to have those kinds of savings."

According to Dennis Thomas, Founder of Texas-based ISO RQS Inc., which has been a partner of Alpha Card since 2004, Alpha Card is distinguished by its quick response times and high-level service provided to both sales representatives and their merchants.

"Other ISOs are good at taking care of their reps but don't do so well with merchants," Thomas said. "Alpha Card provides readily available assistance, and they seem to have found a balance between helping reps and helping merchants. I have agents that are kind of green, and they're able to contact underwriting or technical support with service or technical questions to get the help they need.

"[Alpha Card] works together with us as more of a partner instead of just sending documents. Usually to get something you're giving something away; with Alpha Card that's not necessarily the case."

Upkeep is in the tailoring

By rooting itself in being attentive and responsive to the needs of its sales force and merchants, Alpha Card believes it has built an effective and ever-evolving suite of value-added products tailored to today's market.

Among those products is an all-encompassing POS system - built both for restaurants and for retail outlets that include hair salons, auto body shops and convenience stores - that offers not only card and check acceptance, but also gift and loyalty, bill pay and payroll pieces. "Every terminal is guaranteed for five years," Kalemis said. "If you spill beer on it or a merchant throws it across the room, we'll replace it."

The system's loyalty program can be used to monitor consumer spending habits - it tells a merchant when customers registered in the program have been in the store and what people purchased at various times of each day.

It can also be used to generate advertisements and coupons sent instantly and automatically by text message or email. Such advertisements can be tailored to certain types of customers (those who've bought specific items or food platters, for example) or sent out to every customer in the loyalty program.

"The merchant has access to view all of this data and do whatever they want with it," Heinrich said. "I'm a restaurant that's not getting a whole lot of revenue during dinner, so on the database I create a marketing program where, if customers come between 5 and 7 pm, they get a free appetizer or half-price certain items, and send the message out through text or email. "On top of that, I can then see how many people opened that message, as well as how many people redeemed that coupon. Then I can say either it was a horrible program or it worked really well, and adjust it accordingly."

Kalemis added, "What we can do through the program is see specific habits of one of the cardholders or loyalty members, so if their favorite pizza is pepperoni pizza, we can send them promotions saying, 'Come in Tuesday for specials on pepperoni pizza.' Or, if you always come in for lunch but never eat dinner, we might send them specials for dinner or for weekend dining, so we can bring you in at different times."

Keep on keepin' on

In the coming months, Alpha Card will register its merchants into a global positioning satellite-based service called PayCloud (through gift and loyalty firm SparkBase), causing merchant names to pop up when customers conduct mobile-based searches for certain types of businesses in a particular city or neighborhood.

Other Alpha Card products that can spur business growth include merchant cash advance and zero percent financing for the first year on a rented POS terminal. "With every merchant, you ask a couple questions and target what their hot button needs are," Kalemis said. "It might be that, 'I haven't seen my sales rep in two years,' in which case you home in on that. Or, if it's a mechanic who needs a new machine to diagnose [car-installed] computer stuff, or new tools, maybe the pressing need is a cash advance.

"You can't have one pitch for all merchants, and you have to find each one's particular needs. If I can get three value-added products to the merchant, it's sure going to be hard for them to leave me."

In an era of shrinking margins and businesses struggling to stay afloat, retaining merchants has become as important as boarding them. By making merchant retention a priority, Alpha Card recognizes that if you are going to work hard to get merchants, you better work just as hard to keep them.

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