How to Make 2016 the Year of Profit

Over the past few years the chief complaint throughout the industry has been margin compression. Many people feel that they can’t make money because merchants are priced so low.

Every time I hear that complaint I explain the falsities in this statement. I explain that not all pass through fees are truly passed through, meaning that many payment processing companies are padding fees. I explain that in order to understand a merchant’s true profitability you have to look at all costs, not just the line items.

I have decided that 2016 will be “The Year of Profit.” In that vein, it’s time we reduce the effects of margin compression, which means we have to stop selling on price.

When I hear that suggestion it reminds me of the joke of the man who went to the doctor and said, “Doctor, it hurts when I do this.” And the Doctor replied, “Well, stop doing it!” It’s the symptom, not the problem.

Ask yourself why price seems to be what merchants zero in on. The answer may be in the mirror. Do you lead with cost savings? Do you bring up cost and price too early in the conversation?

If the answer is yes to either of these questions then it truly is possible to change a merchant’s mindset. It begins with refusing to talk cost and price until it’s the appropriate time, which means that you have to first uncover the merchant’s pain points.

It can be said that if there is no pain, there is no sale. Your goal should be to identify the pain that a merchant feels with their current payment processing company. The first step after your introduction shouldn’t be you telling them how you do things differently. Rather it should be a simple, “So, tell me about your payment processing, and your current credit card processing provider. What do you like and not like? What would you change?”

If they immediately jump to cost as the biggest issue with most payment processing companies, ask follow up questions like, “Have you never had funds held?” or “You haven’t needed your money earlier?” One very good follow up question when they move to price too quickly is to say, “Before we get to price, can you tell me how comfortable you are with your merchant statement?”

Notice that contrary to common training, there are times when a yes or no question is beneficial. The key, however, lies in the follow up statement, which should be the same for every question, “Tell me more.”

This may be the most important part of the process. Let the merchant talk and really listen to what they are saying. If they hesitate at any time, and you feel there is more to learn, try asking a simple follow up question such as, “What have you done to fix/address the problem?”

Don’t give in to the urge to jump in with a solution to the first thing you hear. Instead, if you want to be the best credit card processing company out there, make sure that you have the complete picture. Before you jump in with your solution, wait for the merchant to finish and then repeat what you heard and understood as being the merchant’s top pain points.

If the merchant answered your initial questions with multiple pains, be sure to touch on them all. Start with, “I may have a solution for you, but you also said X. Tell me more about that.”

Go through the same process with each pain point until you have a complete picture. If you have a solution for each of their concerns, the next step is easy. Ask the merchant, “If I could address each of these concerns at no additional cost, would that interest you?”

There is a good chance you will have to address cost at some point, but it doesn’t necessarily mean that you have to give the merchant a lower rate. You may find they are willing to pay to solve their pain. You may also find that once you truly analyze their costs that you can match what they have today because of all of the added fees charged by other payment processing companies.

As you can see, this approach can help you slow margin compression and make 2016 a year of profit.

About Author

Jeff Fortney

Jeff Fortney

VP, ISO Channel Management

Jeff Fortney has 25 years of experience in payments, with a focus on helping ISOs and agents grow their portfolio. His experience encompasses all forms of payments. He has served on various industry committees and boards and is also an author in various trade publications. He and his wife of 40 years live in Plano, TX.

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11 Questions to Ask Merchants