The Green Sheet Online Edition
September 9, 2020 • 20:09:02
Street SmartsSM
You have to keep score
What do I mean by keeping score? Whether you are a merchant level salesperson operating a one-person office or the owner or a large ISO, you must know your numbers: the data pertaining to your business. As W. Edwards Deming said, "In God we trust; all others must being data." You need to develop a scorecard or key performance indicators (KPIs) that drive results and help you manage the business.
What is a KPI? A KPI is a measure that helps you understand how you are doing against your targets or objectives. KPIs are:
- Specific and measurable (no room for interpretation)
- Easy to understand
- Tracked consistently
- Visible
- Used to drive results
There are two important types of KPIs:
- Lagging — measure results
- Leading — measure activities that drive results
Numbers tell the truth; they expose reality. This concept has been around forever, but very few entrepreneurs know their numbers. If you rely on your profit and loss statement to inform your management decisions, you will be too late. It is a lagging indicator. You must be abreast of what is happening in your business today, so you can quickly respond to current market conditions.
Know your metrics
If you are a small sales office, most of your daily and weekly metrics will involve sales. Of course, this can vary widely depending on how you’re running the business. Here are examples of common data points to track:
Daily leading indicators
- New merchant applications
- Approvals/declines/pending applications
- Installs/activations/deployments
- Number of incoming leads
- Number of appointments or presentations
- Pending closes or pipeline management (proposals out, statement analysis, hot prospects, follow-up, etc.)
- Customer service inquiries and call disposition (larger ISOs)
- Technical support issues and call disposition (larger ISOs)
- Risk management review and disposition (larger ISOs)
Weekly lagging indicators
- Closing ratio
- Lead source review
- Pending activations
- Account closures
- Weekly leading indicators
- Appointments/presentations set
- Installs/activations
- Pending merchant applications
- Sales pipeline
Monthly lagging indicators
- Total active merchants versus. year over year (YOY)
- Cost of acquisition (the cost of acquiring a new merchant)
- Total attrition (closed accounts) versus YOY
- Merchant approval rates
- Average income per merchant versus YOY
- Average BPS earned versus YOY
- Total processing volume versus YOY
- Residual income versus YOY
- Total bonus income versus last month versus YOY
- Your profit and loss versus YOY (revenue, cash flow, profit, etc.)
Quarterly review
- 90-day target review and outcomes
- Quarter-over-quarter growth
- New targets set for coming 90 days
KPIs vary by business
Naturally, KPIs will vary based on your business model. If you are running an inside sales team, you will want to track more information on call activity. Maybe you have multiple distribution channels, like direct, partner and inside sales, then you would create KPIs for each channel.
If you are single agent in the field, is this overkill? It might be. Maybe you'll want to focus on three to five core KPIs initially. In any case, if you want to expand the business, you must know these numbers.
If you run a large organization, you certainly want to assign metrics to each department such as sales, operations, risk, marketing, recruiting, accounting, etc.
What gets measured gets done
Each department leader can easily give you three to five metrics each week. That will give you the information you need to take the pulse of the business. Every department has a number, every department can be measured, and every department must be responsible for its individual KPI or scorecard.
Regardless of business size, you have no excuse not to use a CRM. Many affordable CRMs are on the market, for example, Pipedrive, Hubspot, Highrise and Zoho. There are also industry specific CRMs, like IRIS, Instant Quote Tool and Clientvine, that help analyze merchant statements and prepare proposals. An amazing thing happens when you install accountability within an organization. Stuff gets done. Accountability begins with clear communication and expectations. You cannot get any clearer than a number that your team leaders are required to provide daily or weekly. This creates an environment of clarity and commitment throughout the organization.
Your job as the leader is to set the expectations, communicate them and keep people accountable. 
Marc Beauchamp is author of Survive and Thrive in the Merchant Services Industry and founder of Bankcard Life, a community for payments professionals. He is offering a free copy of his book to all payments professionals at www.bankcardlife.com/greensheet. Marc welcomes your comments and feedback at marcb@surviveandthrive.biz.
Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.
Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.
