By Aaron Nasseh
Finical Inc.
In "Which sales model is right for you? - Part 2," The Green Sheet, March 24, 2014, issue 14:03:02, I discussed the pros and cons of recruiting experienced agents and ISOs. In this article, I will focus on the direct sales channel. With experienced agents receiving higher revenue splits than ever before, and with our industry's increased margin compression, the door has opened for ISOs to seek alternative ways to generate merchant accounts, namely a direct sales channel.
Most large ISOs have already recognized this need and have established a direct sales channel. For the purposes of this article, a direct sales channel is a team of internal sales employees who make outbound sales calls to merchants, receive in-bound leads or both.
You do not have to be a large ISO to employ this model. You can start with one or two sales professionals and gradually hire more people as your budget and workload warrant it. However, if you are on a limited budget with a small team, it's critical to ensure you have the right sales team in place, otherwise the cost of payroll and marketing will quickly run up.
For this model to be effective, a great sales manager should handle your recruiting, training, managing and, if necessary, termination of the less motivated individuals. If you are starting out with this model, don't have the budget to hire a manager, but have the requisite experience, you could be the sales manager.
Many sales managers mistakenly assume that just because someone is a good outside salesperson, the individual will also be a good inside salesperson. That could not be further from the truth. Both of those positions are distinct and require different sets of skills.
An internal sales team is similar to a sports team because one bad player or one bad coach can drastically affect the performance of the entire team. You need a group of like-minded individuals who thrive on friendly competition and who get excited about hitting goals. You also need a manager who can understand and appreciate how mentally tough phone sales are - and has the necessary skills to motivate the team day after day.
Depending on your budget, you can make outbound cold calls to merchants, which is the least expensive way to begin direct sales, but it is also the least effective. Conversely, you can invest in various marketing methods such as pay-per-click marketing, voice broadcast campaigns, mailer programs, or other methods to generate inbound calls.
These models aren't inexpensive. If you don't know what you are doing, you will quickly get into financial trouble. But if executed correctly, this type of marketing will produce the best conversion ratio for your ISO.
So unless you are an established ISO with a lot of capital for marketing, start small, and as you master the marketing methods, gradually expand.
This model can be profitable for ISOs since merchant level salespeople (MLSs) are replaced with employees who receive an hourly wage and a small commission for each closed account. Consequently, this model enables ISOs to retain most, if not all, of the residuals, since independent MLSs who would normally receive most of the residuals are no longer in the picture. Equally important, this enables ISOs to have full control of sales agent training, which can improve efficiency. Additionally, ISOs are able to target certain markets, for example, they may choose to run a marketing campaign for a particular business type or volume of sales. This model also enables ISOs to train their sales teams to sell additional products and services to current merchant accounts. These include gift or loyalty cards, electronic checks, business loans, the latest POS systems, and much more. All of these make this model very desirable, and great for the bottom line.
With any model, you will have some drawbacks; the direct sales channel is no different. To start, this model requires more upfront capital to cover payroll for sales employees, marketing, training, office space, insurance, and many more expenses associated with running and managing a fully staffed office.
My least favorite drawback with this model is that you are now also competing with your independent MLSs who are on the streets going door to door. However, while a few years ago this was frowned upon, it has become a widely accepted industry practice.
I believe the pros of running a direct sales channel outweigh the cons, so if you have the capital, I strongly advise you to incorporate a direct sales channel into your model. As I have stated previously, pick a couple of different models that work best for you. This model, much like all others, is not going to be a good fit for everyone. It is ultimately up to you to determine if this is right for your business. Best of luck. 
Aaron Nasseh is the founder and Chief Executive Officer at Finical Inc., formerly known as Prudential Payment Systems Inc. His extensive sales and management experience includes having previously served as the General Manager of CardPayment Solutions and Vice President of Sales at iPayment Inc. He may be reached at anasseh@payments-inc.com or at 818-330-4055.
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