ver the past several months I have written a series of articles in The Green Sheet on the six guiding principles of selling ATMs. These are intended to help you as a merchant level salesperson (MLS) evaluate the advantages of adding ATMs to your product line. Following are some highlights from those articles:

1. Determine if ATMs Complement Your Current Product Line

Consider whether ATMs will add value to your:

Business Before introducing any product, consider the financial return on time and asset investments.

Your goal is to create additional monetary value for you and your clients and strengthen current vendor/client relationships.

Current Customer Base

If you can identify businesses within your portfolio whose customers want convenient access to cash then these businesses would benefit from having an ATM on premise. On-premise ATMs dramatically increase sales by increasing customer spending power. Businesses with an ATM on location attract new customers. ATMs can save your customers money and reduce liability from bad checks.

Future Customer Base

Evaluate the long-term plans for growing your business and expanding your customer base, and assess whether new clients would benefit from having an ATM. Think of an ATM as a venue for providing an ever-increasing menu of products and services demanded by consumers. Suddenly, the opportunity to provide greatly enhanced services and new revenue categories to your clients allows you to multiply exponentially the return on your time and investment.

Also consider whether selling ATMs will detract from your current sales role. I would never encourage MLSs to "grab and go" with a new product at the detriment of their established success. While making a current and future customer base evaluation, honestly assess how well ATMs would integrate into your existing sales toolkit. Also, determine whether adding a technology product would fracture the focus of your core competency. The goal is to make the business more successful not to compromise what you already have.

2. Get Started

Selling ATMs is not an all-or-nothing proposition. There are three different levels of involvement. Each has specific responsibilities, cost structures and potential revenue opportunities. Pick the one that's right for you.

Level One: The Referral Relationship

In this relationship you will incur the least amount of risk in both upfront and ongoing capital investment. Several ATM ISOs and banks (ATM partners) offer referral programs for companies that don't want to actively sell ATMs but have relationships with merchants that could benefit from having an ATM.

A typical referral arrangement works like this: You provide an ATM partner with customer information (a referral). The ATM partner contacts the potential customer (jointly or individually) and develops a program to sell, lease or place an ATM. When they consummate the deal, the ATM partner pays you a one-time fee following installation of the ATM.

Level Two: The ATM Distributor or MLS

This level will require your time and resources for training and ongoing sales efforts but will probably not require upfront capital. You will need to develop industry and product knowledge sufficient for generating sales leads and closing deals.

Most ATM partners will provide initial training to prepare you and support your sales efforts. A top-notch organization will offer ongoing training, marketing materials and field support.

Many organizations provide telephone and/or Internet-based training. Make sure to visit the organization for face-to-face training. This will help you begin building long-term relationships with the people in the organization with whom you will work daily.

Because the typical ATM installation is significantly more labor intensive and often more complicated than a POS terminal installation, the best organizations will also provide turnkey signage and nationwide installation packages. Most will require you to work with a trained technician to install the ATM or become certified prior to involvement in the installation.

An ATM partner should also provide data processing and settlement for ATM transactions; customer service and technical support; monthly and/or real-time statements and reporting; and nationwide service for ATMs from the major manufacturers. A partner should also offer wholesale prices for ATMs.

When choosing a partner, consider leasing opportunities. If a company provides leasing for most credit ratings at reasonable rates, you will have a major advantage over the competition.

As an ATM distributor or MLS, expect to receive equipment pricing that allows you to make some margin on the equipment sale or lease; a profit or fee-based interchange sharing relationship; and the opportunity to generate income from selling maintenance contracts on the ATM.

Pricing and programs vary greatly from one ATM partner to the next, so do your homework. Some additional "value adds" offered by a few ATM ISOs include income from online real-time statements, bank branding, surcharge-free ATM network participation, multiproduct ATMs and, if the organization is qualified, training for service certification.

Level Three: The ATM ISO

The ATM ISO level requires a significantly larger investment in capital and time than the previous two levels described. Before making any commitments, strongly consider the advantages of first entering the business as a distributor or MLS. You will increase your knowledge of the business and make beneficial contacts within the industry. Although this is not the best path for everyone, it might save you money and some sleepless nights.

Regardless of whether you choose to start out as a distributor or MLS, or jump right in and become a full-fledged ISO, create a business plan.

Make sure that you not only understand the capital requirements and risk but also how well you can satisfy those requirements and manage the risk. Then select the best partners for equipment, data processing and third-party service relationships.

After meeting these requirements, make sure that you can provide customer service, technical support, and statement and funds settlement. If not, at least have a reliable outsourcing partner that will provide them. A few ATM ISOs offer wholesale relationships similar to the relationship with your own ISO.

3. Create a Successful Sales Launch for an ATM Offering

All things worth pursuing require time and effort, so perseverance will be one of your greatest allies. If you recognize this and use it to your advantage, the odds of achieving your goals will improve tremendously.

Do Your Homework

The first step to implementing a successful sales effort is to do your homework. Just as you did research to determine at what level you would participate in the ATM market, learn everything you can about your target market and competitors.

You need to know such things as how ATMs will benefit your merchant's business, what objections the business owner might have, and what type of ATM would be best suited for this market. You also need to know everything you can about your competitors including their product offerings, customer support capabilities and special promotions.

Define Your Program

An effective sales program will integrate both the benefits of your ATM offering and the advantages of doing business with your company.

Good partners will add strength to your program and will assist you in creating your own sales offering. While price is important, by itself it will not make a great offering. Creating competitive product offerings requires the combination of product, price, knowledge and support.

Target Customers

After creating your initial product offering and program, determine how to effectively present it to your potential customer base.

Initially, target your existing customers. Since you have an established relationship and a reputation with them, they will most likely be receptive to a new offering. More importantly, they will be more likely to tolerate your learning curve and to tell you how your proposal compares with the competition.

Prioritize your current customer base, and contact those with whom you will have the highest probability of being successful.

A customer with high volume locations can generate as much business as several lower volume customers and will generate significantly greater visibility for your ATM program.

Look for New Customers

When you have mined your existing customer base and have had the opportunity to fine tune your product offering and program, focus on another group: new customers or companies with high potential locations. Start by identifying the high potentials you want to approach in your marketplace.

After you have assembled your target list, create a multifaceted approach for introducing your company and ATM offering.

Use a combination of marketing efforts such as telemarketing, direct mail and cold calls. If you visit the location, leave behind marketing material. This approach puts you in front of the potential customer several times and is more likely to catch their attention.

4. Determine if Advance Functionality ATMs Will Provide an Edge on the Competition

An enormous amount of discussion has occurred over advanced ATM functionality. Our industry would be in the midst of a huge wave of new and well-received ATM applications had they caught on.

The information can get confusing very quickly except for two consistencies. First, no one has found an ATM application that truly lives up to its proposed potential. Second, the only functionality that consumers currently expect from an ATM is what it has always provided: cash-dispensing services.

My experience stems from taking part in building one of the larger ATM networks in the United States, both as a private independent company and now as part of a larger public financial institution.

In our 10-year history as an ATM ISO, we have tried several approaches to what is now called advanced functionality. First we tried multicassette units that dispensed preprinted, prepaid long distance cards and sheets of U.S. postage stamps. While the technology worked, consumer demand was lacking. We ended this initiative due to lack of use and difficulty in managing inventory.

After working several months with manufacturers, potential product and service providers, processors, and other ATM ISOs, we made a second attempt. It was to create a solution that didn't require inventory, could be maintained at the ATM or through the backroom ATM support software, and would enable handling the entire transaction electronically.

With the help of all the aforementioned organizations, we deployed approximately 200 ATMs offering certain services from Western Union and dispensed prepaid wireless minutes from the receipt printer.

From the equipment point of view, these transactions worked. We even had a few customers interested in purchasing these services. We had several problems, however, with delivery of the prepaid product. The processors and networks could not approve the transactions, which dampened the already small number of potential customers.

We experienced a modicum of success with the Western Union transactions. This functionality is now part of our current offering; we include it on approximately 400 ATMs, and it continues to drive a small number of transactions. Even with these less than successful attempts in our back pocket, we continue to work with the parties involved in our industry to create additional ATM functionality. One current project is to enable a low cost, small footprint ATM to accept deposits electronically, using check imaging technology.

The opportunity is that the established current user base already knows how to use a very similar service. They are familiar with the delivery channel, and they will find that additional locations offer quicker access to their funds. Another advantage is the compensation system already in place through ATM networks and financial institutions. This system might make it easier for electronic deposits to catch on as an effective service for both the cardholder and financial institution and as a source of revenue for the ATM owner.

I am still a believer, maybe not in all the products and services, but in the potential for the ATM to be more things to more people. I also know we have some hurdles to overcome to make advanced functionality at the ATM a more integral part of our everyday experience.

We need to provide products and services that consumers want. We also need to have a distribution system that benefits all involved parties. In order to change consumers' current habits, we have to create awareness of the new distribution system and show them the benefits. If a new ATM offering meets these challenges, we will find success with advanced functionality. As with all new things, only time will tell.

5. Look for Trends That Indicate Extensive Opportunities for Financial Growth

Recent trends in the following areas within the off-premise ATM business indicate improved current and future financial opportunities for ISOs and MLSs who choose to enter the ATM marketplace.

Technology

Since the ATM industry's inception, ATM manufacturers have continued to improve performance and features while lowering an ATM's base cost. The expectations are that manufacturers will introduce even more cost-efficient ATMs before the end of 2005.

For those of us looking for opportunities to grow our ATM network, the benefit is obvious: advanced technology at a lower cost. This trend also has an accelerating effect on our ability to deploy additional ATMs because it lowers our base operating cost and makes it easier to achieve profitability on fewer transactions.

Communications

The second trend that continues to sustain the growth opportunity for the off-premise ATM business is related to telecom. While prices for both traditional landlines and wireless service continue to fall, the technical capabilities and opportunities for both continue to grow.

We will probably see a shift to wireless for most, if not all, off-premise deployments in the near future as prices decrease and wireless technical and service capabilities continue to improve.

This will not only reduce the cost of deploying and maintaining the ATM, but it will also make the installation process simpler, more efficient and cost effective. An added benefit is much improved customer transaction times.

Transaction Processing

A trend that we will most likely see continuing into the foreseeable future is the reduction in transaction processing costs. Transaction processing has seen significant changes in the last 10 years. The changes in processing costs are the result of a number of factors, some obvious and some not so obvious. One is the overall growth of the off-premise ATM market accompanied by the growth of this market as a segment of the overall ATM market. This trend may have slowed slightly, but it continues to affect pricing.

Consolidation

Mergers and acquisitions within the industry have left more pricing power in the hands of those remaining in the business. This is another opportunity to reduce operating costs and make more ATM sites potentially profitable with fewer transactions.

All these trends point to a maturing market. Although the off-premise ATM business is becoming more competitive and cost efficient, it still holds immeasurable financial opportunities for ISOs and MLSs who understand the business and can execute well.

6. Identify What Is Really Important for Success

As entrepreneurs we don't always consider our values to be an essential part of our business, especially when we find that our activities are in conflict with them. As we have all experienced, in an increasingly complex world it is much easier to talk the talk than to walk the walk.

I propose that the same values that drive our behavior and the choices in our personal lives also profoundly affect the experience and outcome of our activities in our professional lives.

With this premise in mind, following are some guidelines to use when applying the values that will drive your business endeavor:

• Create a sense of community responsibility.
• Foster a culture encouraging innovation and leadership.
• Consider the experience and outcome.

As you plan for 2006, I wish you all the best of luck and hope that your business plans surpass your wildest dreams.

Tommy Glenn is President of Fort Worth, Texas-based NetBank Payment Systems (NPS). E-mail him at tommyg@netbank.com, or call him at 817-334-8871.