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CoverStory

social media sites. Analyzing unstructured data like so-
cial media comments can be eye opening, and it's doable.
"There are tools available now that leverage the unstruc- Five stages of merchant attrition
tured data that is out there," Kamath said.
Merchants, like consumers of most products, don't just wake up
Prescriptive analytics is the "holy grail" of any analytics one day and decide to switch processors or acquirers. They go
program, Kamath said. By adding prescriptive analyt- through several stages. Most are happy until something irritating
ics to the mix, an acquirer/ISO gains insights not just on happens, consultant Adil Moussa noted. This could be any one
which merchants are likely to defect, but also what steps of dozens of things including unexpected or undisclosed fees, a
are needed to keep them on board. "No organization has
an unlimited retention budget," Kamath said. "They want service that doesn't work as promised, terminal issues, chargebacks
to be able to spend that money on those merchants that are and access to funds.
really likely to leave."
This irritant triggers five predictable stages that a merchant will
All three types of analysis need to be ongoing; no strate- go through and could eventually result in attrition. Intervention is
gies or processes should remain static. "It's a continuous possible during any of these stages, but is best when begun during
process," Kamath said. "There are always advances in the earliest stages.
technology that can help you do more."
The five stages are:
Womply boasts great success leveraging technology to 1. Maintenance – the merchant maintains the status quo with
support ISO and acquirer retention strategies. Capoccia the relationship.
said a recent study of 2,600 merchants using the com-
pany's acquiring partners revealed that partners average 2. Pre-contemplation – the idea of switching acquirers first
savings of $2.5 million annually from improved retention occurs.
and proactive churn predictions the company supplies. 3. Contemplation – the merchant really starts thinking about
"This is huge," Capoccia said. "We're helping them to make finding a new acquirer.
credit card processing fundamentally more profitable."
4. Preparation – the merchant researches and entertains offers
Womply has an offering it calls Insights. It's an intuitive from other providers. This might also include taking to social
technology and data platform that leverages payment, on- media to query other merchants for recommendations.
line review and other structured and unstructured data 5. Action – the merchant signs with another provider.
to support predictive and prescriptive actions to keep
and grow merchant relationships. "We can identify at-
risk merchants and trigger actions to intervene," Capoc-
cia said. Insights also keeps tabs on net promoter scores, a newly created Clearent subsidiary focused on business
which quantify the likelihood of an individual merchant software offerings.
promoting their chosen acquirer to a friend or colleague.
Vertical market plays The deal also means that SPOT can now offer a broader
range of services to its business clients, noted Mark Jones,
As acquirers and their partners invest more in retention SPOT's Director of Operations. "With this acquisition we
strategies, some are being drawn to specific vertical mar- will retain a high level of operational autonomy, which
kets where the tools they have make sense. "ISOs, acquir- means our customers will enjoy the same level of service
ers and processors are really starting to focus more on ver- we offered prior to the sale," Jones said. "At the same time,
tical markets," stated Rick Oglesby, founder and President we'll have an opportunity to enhance our business offer-
of AZ Payments Group LLC. "You need to be a lot more ings through a host of resources that Clearent has to offer."
targeted."
Acquisitions aren't the only way to enter new verticals.
Sometimes, this entails outright purchases of specialty "You can build your own software, although that's prob-
software companies. In January 2018, for example, Clear- ably the highest-cost option," Bernier said. Purchasing a
ent purchased SPOT Business Systems LLC, a Utah-based white-label solution that targets vertical needs is another,
independent software vendor with a strong book of busi- less costly option. "More companies are offering white-
ness in dry cleaning. "We didn't have a presence in the dry label versions of their software," he added. "That provides
cleaning market," Bernier said. "Now we have that as a a lower barrier to entry. The least costly route is to resell
vertical." off-the-shelf technologies."

Clearent CEO Dan Geraty described SPOT as a "leader" in It's clear that while retention remains a significant, ongo-
the dry cleaning sector. SPOT also has an "excellent histo- ing challenge, today's new tools and strategies can address
ry of customer service and retention," he stated in a press it in multiple ways and ultimately make acquiring organi-
release. SPOT is now part of Clearent Software Holdings, zations more profitable.

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