Thursday, May 17, 2012

Should Sales Reps Be Trusted? Four Ways To Spot A Lie.

Just for the record, most of the time it is probably not in a merchant's best interest to automatically trust a merchant services sales rep. I'm throwing it out there based on my personal experience interacting with both people within the processing companies and the merchants I've met through daily interaction. This isn't to say that sales reps are mostly untrustworthy, but they should earn a merchant's trust and in this industry that is not always easy.

How to spot a lie from a merchant services agent

To be fair, I honestly believe that many sales reps in the merchant services industry are simply ignorant with regard to what they are selling. I've been on that end of a claim, though not for long. In fact, the first "Team Leader" that I worked with used to tell me that I was too smart to be a salesman because I kept talking business owners out of the deal. My question to him was always the same, "aren't we here to save the merchant money?" And Team Leader's answer was always this: "what's important is that the merchant believes he is saving money. We want happy merchants."

Maybe it's just me, but I am happiest when I know I've been treated with honesty and integrity. I am mighty unhappy when I have the sudden realization of having been "sold a bill of goods." And I never wanted any of the merchants I worked with to feel that way, either. Besides, I wanted to provide services to businesses that I actually patronized, that thrived in my own neighborhood. If I set these places up with bad service agreements it would be plenty difficult to show my face out on the street.

Lie #1: I can't quote you a rate

Whenever a sales rep is in a business establishment, he will be quite anxious to find out the current rates that a business is being assessed. This is the crux of the business pitch. A big gasp will generally ensue upon examining a statement, perhaps even some eye rolling or head slapping. It's simply amazing how high those rates are! But what rate am I offering? Oh, I can't tell you that without examining your processing statements first.


No. That's just a line to get your statement so that a sales rep can figure out the highest rate to quote without being over your current rate. It's that simple. 

Now, giving you a FINAL rate, that may be another story altogether. There are, in fact, many variables that will determine what an appropriate rate is for a particular establishment. And that should be clear in any discussions, but suggesting a rate to a merchant that is both fair and honest is something that can easily be done walking in with only the basic knowledge of what kind of business is being conducted and how cards are being taken. Those bits of information are easily ascertained by a sales rep and a rate, therefore, should be easy to quote.

Yet many processing companies will not allow sales reps to quote rates until after a statement has been faxed in to the home office for analysis. This is how you spot...

Lie #2: I have to fax a statement in to get your rate

Statement analysis is a very important component of a proper sales presentation. If a merchant is considering changing service, it is essential to provide a side-by-side breakdown of how costs will compare. After all, you want to be confident that you are truly going to save a merchant money. And a good sales rep also knows to be cautious about guaranteeing the "best" rate without knowing what kind of cards are coming through the door or how business is being done, because no sales rep will last long writing deals that consistently lose money.

A proper analysis cannot be done in a few minutes and it can never be honestly presented by jotting a few numbers on a piece of paper. If any sales rep tries selling you on their proposed savings by quickly jotting a few comparative rates on a form and then suggesting amazing savings, politely ask them to use the exit. If they offer to come back on another day with a comprehensive spreadsheet, on the other hand, then it may be worth the time for the discussion.

Lie #3: You have to sign up now to get these rates

Rates do change, but usually only in April and October and even then by a mostly negligible margin. Any offer that a processing company makes to a merchant is going to be just as profitable for that processing company one week or one month later, so it is a fair bet that they will still honor the proposal even if the paperwork is not submitted the same day that the sales agent first shows up. And if the sales agent is trying to offer a monetary incentive for immediate sign up, while perhaps nice to receive, it should make the merchant wonder how a company that is processing so cheaply can afford to throw money around like that.

Many processing companies thrive using the hard sell. Phone banks set appointments with merchants who often agree just to get a pesky telemarketer off the phone, then rookie agents are sent scurrying across town to meet these appointments and convince merchants to sign right up. That's exactly how I got started. After a few hours of training via web and teleconference, I was sent to my first appointment and closed my very first deal. It was a decent deal for the merchant, too, though I doubt it really saved him anything over his previous processor. Soon after that, however, I was confronted with the condition that a merchant wanted to "think it over," and get back to me in a week after he had a chance to look over his existing contract. That seemed like a reasonable request to me. It was, after all, the same thing I have said to many sales people who have approached me with one service or another in the past. So I called my Team Leader and said the merchant wanted to set a follow-up meeting and the Team Leader would ask me to pressure the merchant into signing up right then anyway. It was kind of silly. Eventually, I began working with another Team Leader who understood me better and was on board for the kinds of deals I wanted to be writing, but it was too late because the company had left me with such a bad taste in my mouth that I no longer trusted it. 

I knew that a merchant had the right and even the obligation to review any changes in service as long as the merchant deemed appropriate before committing either time or resources to such change. Certainly, before signing any contract, a merchant must be responsible enough to weigh the options and ensure understanding of the service agreement. Never sign up the same day that a sales agent makes first contact unless you really know what you are doing and you really want to do it. A good agent will always come back with a more comprehensive presentation that has been customized to the merchant's needs.

Lie #4: You'll get this great rate and save thousands!

Okay, whether that is a lie kind of depends on how realistic the rate is and what it is based on, but generally if it looks too good to be true...

My favorite rate comparison that was shared with me by a merchant had been scrawled across a form which broke out the merchant's current rates and sales totals in simplistic terms. Basically, the merchant's rates were mediocre; it was a dentist's office, so the ticket totals were largely around $150 and up into the range of $1500. Many of the charges were coming through as mid-qualified with a few non-qualified charges. The agent had done his comparison to show a savings of something like $3,000 a month by putting everything through as a lower-cost check/debit card transaction. This was completely misleading, of course, because clearly the cards on the statement that he had broken down were predominantly not check/debit cards. The best savings that dentist would have been able to see may have been in the $200 per month range, but probably less. Frankly, even though his office manager did want to switch to save that money, the dentist himself could not be bothered with the paperwork and said he would just as well stick with his higher rates. At least I got a good laugh out of the situation.

The moral here is that a hypothetical savings based on magically reinventing the actual card types used in an analysis is tantamount to a lie. It bares no resemblance to the reality of the merchant's processing. 

On rare occasions, I do find a merchant who is dramatically overpaying or who has lots of additional fees that are just padding the processor's profits. These are easy sales, by and large, and the merchant may be quite grateful to have been approached. But if the deal seems to be extra good, make sure the sales rep is able to back up the reasons why.

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