Page 38 - GS170602
P. 38
Education
StreetSmarts SM
“Setting up your ISO for success”
WITH
AARON NASSEH
Finding profitability in a
competitive market
By Aaron Nasseh is free, so this only increased our cost of acquisition
Finical Inc. while lowering our margins. This may have seemed
like a good solution as it enabled agents to sign up
here is no question that the merchant services more accounts, but it had a direct negative impact
industry has become more competitive with industry wide on margins and attrition.
each passing year. Noticeable margin compres- • High upfront bonuses: Upfront bonuses have
T sion has occurred as a result. Unfortunately, played a much larger role in lowering margins than
many sales professionals are struggling with this and most people think. High upfront bonuses invited
have been unable to adapt to the changing market. countless untrained sales agents into our industry,
However, this doesn't have to be the case, because very who were only interested in the quick buck provided
lucrative opportunities are still available in the merchant by upfront bonuses.
services industry.
This further drove profitability down because the
How we got here agents had neither the necessary sales skills nor
the incentive to negotiate favorable terms with
Before I suggest solutions that may enhance the merchants. Instead, they lowered pricing as much
profitability of your business, I'll review some of the as necessary to close deals and receive upfront
reasons that got us here: bonuses. This cycle continued when the next agent
• Price war: I believe most of us have been guilty of visited the same merchant and cut pricing even
having a pricing-focused sales approach. When this further.
occurs industry-wide it inevitably leads to lower • Lack of sales training: As the industry became
margins and higher attrition. Furthermore, while increasingly competitive and free terminals and
we were busy undercutting each other's prices, upfront bonuses dominated the industry, many
merchants learned the game and further increased smaller ISOs changed their business model from
the speed of margin compression by actively quality sales agents, to recruiting and deploying as
soliciting lower bids and demanding better pricing. many bodies in the field as possible.
• Free terminals: As if selling on price alone weren't They started recruiting inexperienced agents who
bad enough, we sweetened the pot by offering were lured in by the prospect of high upfront
merchants free terminals as well. Of course, nothing bonuses and free terminals, and when pricing is not
38
