By Jeff Fortney
Signature Payments
Looking back over the last year and a half, I can attest that, at the pandemic's onset, we all envisioned a finite date when businesses would reopen and people would leave their homes to shop, dine and enjoy life fully again. But today, with COVID variant cases spiking in several regions, we aren't able yet to put the pandemic and all of its associated restrictions behind us.
However, it is also evident that consumers have changed their buying and dining habits. Merchants are opening with specific precautionary steps to protect against COVID., and they are endeavoring to adapt to today’s consumers.
Any good salesperson wants to sell. In fact, many merchant level salespeople (MLSs) are in the field now trying to talk with merchants, asking for statements, and doing what they have always done. This applies to many ISOs as well. And they are finding that road to be much rougher than in the past.
I hear their frustration often, especially when they talk about prospects who just won’t sign. Many agents tell me that they've demonstrated they can save merchants money and give them better service, but merchants won't move forward. In response, I invariably suggest they might not be offering what merchants need. You see, right now many merchants are just trying to survive, and even cost savings doesn't guarantee that.
Over the past few months, I've been approached by several ISOs and MLSs who have faced this issue and want to know what I recommend for restarting their sales efforts. Whenever I'm asked for this type of advice, I go back to the five basic tenets for successful sales plans that I have used myself and when training others.
I don’t normally spill my candy, but at a times like these, and our new normal, I thought this time I would make an exception, so here goes:
Although the tenets remain constant, today’s new normal has changed the definitions and how they apply. In this article, I will cover the first—and maybe the most important—tenet: identify your targets.
A scattershot approach, which relies solely on one message fitting all, has never been an effective method of selling to merchants. It is even more ineffective today. Identifying targets helps to provide focus when selling; in our industry, it begins with classifying merchant types.
For example, adding restaurants to your target group is common. However, in this group you have fine dining, fast casual, sit-down dining (or basic restaurant), and fast food. The lockdowns and subsequent new normal have impacted each differently.
Sit-down dining and fast casual changed course through the lockdown. They added or improved their online presence (including adding an online ordering component and offering curbside pick-up). As these changes added additional ways to generate sales, they are retaining those options—even if they are able to provide inside dining again.
In contrast, fine dining found little success with online ordering or curbside pick-up. Their offering includes an “experience” component, and their dishes were often highly specialized. Without inside seating they were extremely limited.
These differences don’t necessarily disqualify a subcategory. But they do change how you approach them, and can help you identify unique needs a subgroup may have today. You can complete this process with retail and its subset as well.
Before identifying specific targets, it is prudent to understand the changes wrought by the pandemic. This will directly impact your decision on whether to invest time in a merchant group, as well as help you set expectations.
Merchants who were once 100 percent face to face may have added an online channel. The risk consideration is greater with online sales. They now face questions about delivery timelines after sale and refund policy reviews. In some cases, financial or banking information will be requested.
I spoke with several underwriters regarding the lockdown's impact on underwriting requirements. I received similar responses from them, so I'll paraphrase what they said. One key point: the hospitality industry (defined as travel, lodging and excursions) was most impacted by the lockdown. At the beginning, travel restrictions created larger future delivery exposure. This led to banks and processors re-evaluating their exposure models. Thus, many merchants found reserves being held, or a reserve requirement posted to keep their accounts open.
Along with increased reserves, refund and cancellation policies were scrutinized. The financial stability of the business owner was also closely monitored. In short, this group found what used to be classified as low to mid risk was reclassified to high risk. In many cases, a high-risk classification put them in the prohibited list for a processor.
Excursions (defined as group or class trips as well as in-person camps or events) were normally identified as mid risk, but became classified as high risk. This effectively eliminated them as potential targets for many ISOs and agents.
Merchants with future delivery (like furniture stores and appliances) were finding delivery times closely monitored. Ecommerce merchants found an increased demand and higher volumes, while at the same time, supply chain issues delayed deliveries. The subsequent increase in refunds and chargebacks resulted in their reclassification into high risk. As a result, they had to show greater financial liquidity and inventory to meet processors' demands.
This doesn't necessarily mean you should eliminate these merchant types from your target list. Just carefully consider the time necessary to document and gain approval for these types of merchants, and whether you want to invest that time into the sale. After examination, you may find that these merchants are more willing to talk and are interested in what you have to say. You must set proper expectations on timelines and on required documentation. If a merchant isn’t prepared for those requirements, your selling efforts may be in vain.
Identifying your targets encompasses more than grabbing a phone book or googling to get a list of restaurants if you're going after that vertical. You must do your homework on each merchant. Your time is too valuable to waste pursuing unlikely prospects you could easily eliminate through research, most of which can be done online during your non-sales time. Research will enable you to better manage your sales efforts and concentrate on targets with a higher likelihood of closing.
Time is a non-replenishable asset. Use it wisely. Identifying your targets is that important. This one step makes the sales process far more effective. Stay tuned for discussion of the next tenets, which will help you close the prospects you've identified. 
Jeff Fortney is vice president ISO relations for Signature Payments. A long-time payments industry executive and mentor, Jeff is focused on strengthening and developing partnerships and evaluating new business opportunities. He can be reached at 214-458-1379.
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