If you’ve worked in the point of sale channel longer than 15 minutes, you’ve worried about keeping your merchants. All that fretting isn’t going to make your merchant relationships any stickier, so you’ve got to take action … but what’s your smartest move?
Relax – I’ve got the answers for you.
A Vantiv/Worldpay reseller recently reached out to me seeking detailed information on merchant retention best practices. This reseller said his retention had been strong historically and he felt like he was still “on top of his game,” but lately he had been losing merchants at a much higher rate. So I went to work gathering data for him from my network of POS VARs. Nine Vantiv/Worldpay reseller partners responded in detail to these two questions I posed: How are you solving retention issues in a financially feasible way today? What’s worked best for you historically, and what’s working well for you today?
The feedback I received totaled over 3,000 words, enabling me to create an 8-page document titled “Merchant Retention Best Practices for POS Resellers.” For some highlights of what these resellers recommended, keep reading; if you’re a Vantiv/Worldpay partner and you’d like the full report or would like to discuss these best practices, contact me and I’ll be happy to help you out. The following are excerpts from reseller emails to me with 21 key points highlighted:
In the past we have had a dedicated Account Rep, and their job was solely to work on customer support renewals, supplies, talk about what’s new, etc. That has worked well for us for many years seeing consistent growth in our reoccurring revenue. That position certainly negotiates rates, etc., anything relating to customer satisfaction. We’ve found over the last couple years that demand for new product is greater than before (cloud vs. legacy), so our reps are busier than before. So this year, we’ve added reps and split account management specifically between two reps to ensure better coverage, as I felt like we didn’t have time to get in front of all our customers annually, much less every 6 months. We too have seen a higher rate of attrition than in years past, but I believe that’s a product of the landscape today as much as it is a specific dealer’s actions … we’ve brought on more new business in the past couple years than any previous two years as well.
The more you can offer, the better retention you have … all those products and services that were listed at RSPA Inspire, we have our hands in many of them. The customers that we do see churn in, we seem to have very little with them aside from POS, so it’s much easier for them to move on.
The most important aspect of retention is your relationship with the customer. The stronger that is the less likely someone is to leave. Therefore, looking at your internal turnover is a factor because the longer your employees are with your organization, the more likely they will create strong bonds with your clients. I’ve put a ton of my personal effort into employee satisfaction over the last 12 months!
Today, we are much more focused on retention since we’ve moved to more SaaS-type systems as well as credit card processing deals. Controlling all aspects of the point of sale means we are more in touch with our customers than ever before. We call these customers “partners,” because that’s what they really are. Companywide we really have changed our mindset and it has brought a new level of caring and understanding for us internally, and it’s making the difference in customer satisfaction and retention. For these “partners,” we go the extra mile in support by either offering free support or giving a large discount in their service contract fees. In addition to this, we are much more engaged in their business and are always looking for new ways to help them improve, sometimes in ways we’ve never even considered doing before. We are making ourselves an invaluable part of their business by forging a long-term partnership.
Here are just a few things we’ve started doing for our partners:
- Free or discounted support. This is a major change for us.
- Monthly credit card statement analysis. If there are paying more than what they should, we issue a refund check and fix their rates. We provide solutions and advice based on our findings. For example: high numbers of chargebacks due to lack of EMV equipment – we’ll recommend upgrading to EMV readers. Or perhaps they aren’t utilizing debit transactions as often as they should.
- Website assistance. Sometimes we’ve even created a new site for them!
- Editing photos of their online menu.
(Our Account Executive) many times tells the customer that once we install credit card processing, other reps will be calling and stopping by daily to switch them and promise them the world. We share these bullet points:
- Can you call your credit card rep when there is a problem with someone not adding a tip, or will you be calling an outsourced call center?
- We can always handle support better if we handle your processing. There is never a finger-pointing scenario if we do the processing. Outside credit card reps will almost always say, “Call your POS dealer” when there is a problem – it is never their fault.
- They will need to generally pay additional software fees, in our case EDC (electronic data capture). [Account Executive name] asks, “Is your bank or processor willing to pay the software cost to switch upgrades that might be needed? Are they willing to pay additional EDC costs?”
Be honest that you make money on your processing and build in a higher support rate if they do not process with you. In our case, we charge the low, low rate of $65/month if they process with us and $130/month if they do not. (We need to make a living!) Customers will respect you knowing you are not trying to hide that you make money on the credit cards. We also tell customers that processing with us is our way of saving them money. We can charge less for service if we can make it on the processing. We actually tell them how our business operates and that we rely on processing.
The best thing you can do is always take care of the customer – make them a Raving Fan. I know people will disagree that business is not personal, but in my opinion it is okay to let the customer know you are taking it personally if they want to switch processors.
Be up front about the fact you’re making money on credit cards in order to discount their monthly support service rate by half. Also let them know this practice allows for the best service and that it benefits their time and overall profit.
Reiterate your practices verbally, in your quote, and in your service contract. "Keep it consistent."
Build your quote around service and processing. "Sacrifice upfront profits for long term residual profit."
In the setup section of the quote where you put the description, tell the customer you will apply a large discount to the setup with a merchant agreement in place. This is a big one!
The best way to solve an unruly customer or a bad POS system is to eliminate yours from being the problem in the first place (though this can't obviously help the reseller at this point, if he is trying to be a one-size-fits-all solution, he could change strategy and this would help down the road). It’s hard to turn money away, but there is no point in creating headaches and trying to just shove your product into an environment where it won’t be a satisfactory fit (from my experience this is a lesson/rule many resellers do not follow).
It is important to think of retention proactively around the relationship you have with customers … anything you can do on an ongoing basis to enhance your relationship with your existing customers is valuable … everything from basic e-mail newsletters to having sales staff stop by on a periodic basis.
At the beginning of a retention event, we quantify the value-add we offer for customers that process on our preferred provider. In many cases the dollar value of our value-add exceeds the savings a competitor is providing, and the task of the call is just to re-educate the customer about our value proposition.
Embrace new technologies even if they at first seem to threaten your margins and your current way of doing things. When the new lighter-weight and seemingly cheaper tablet-based systems were coming out they seemed to be a threat to our existing legacy technologies. We are getting involved and find that with some creative strategies we are able to sell/implement these systems and still drive good recurring revenues with decent margins. Your existing customers are going to be intrigued by these new technologies. If you are involved they will come to you for advice and direction. If you are not, they will rely on others for advice and you may lose them.