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Successful Sales Leads

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	by Phil Britt

SALES ARE THE CRUX OF THE ISO'S BUSINESS. But ISO A can spend several thousands of dollars and man-hours to make just a few sales, while ISO B may spend far less time and less money, with much better results. The difference in their success rates is often due to differences in their sales lead generation techniques.
   In developing a sales lead strategy, it's also important to remember that all sales leads are not the same. Two salespeople can have the same sales approaches and products, but one is likely to close a higher percentage of sales than the other due to the comparative quality of their sales leads.
   "It's just basic blocking and tackling," according to Harold Montgomery, president of Checktronic, Dallas, TX, pointing out that the sale that closes today can be from a phone call, mail piece, "leave behind" or initial visit from several months earlier. Often, it's not just the initial contact, but a series of contacts over time that result in the eventual sale. Therefore, any method for generating sales leads should not be viewed as the entire effort, but, instead, as part of an overall campaign.
   For example, several marketing studies show that the response rate can be doubled if direct mail is combined with telemarketing, compared to doing either one separately. Referrals from current customers, and even from prospects who haven't bought from you, the Internet and Yellow Pages are other parts of many successful sales lead generation campaigns. See the accompanying sidebar for some of the benefits - and drawbacks - of different types of sales lead generation efforts.
   There are some methods that even young, cash-strapped ISOs can use, though they will want to expand their efforts over time if they want to maintain and grow their merchant base. Building long-term relationships results in recurring revenues, which are critical for an ISO to be successful.
   ISOs should consider that many of their sales lead generation efforts are "brand building" that result in the merchant knowing to call a particular company when he's ready to buy a particular product or service.
   For example, there are about 35,000 merchants in the Dallas area, about 10 percent of which could be looking for a new ISO relationship at any given time - 8 to 10 percent establish new ISO relationships every year, according to Montgomery.
   Sales leads, like any other part of the business, are best built through a long-term strategy.
   Salespeople have notoriously short-lived careers, with the turnover rate about 200 percent annually. Much of the reason is that the salespeople, and many times the ISOs that hire them, are short-term in their thinking - looking to close a deal as quickly as possible, even if the quality of the sale is poor, or even if taking the time to build customer relationships leads to more closed deals over time, but not immediately.
   While "leave behinds," direct mail, telemarketing, etc., can help distinguish between a cold lead and one that's warm - somewhat predisposed to buying the product or service - closing the sale often depends on the salesperson's ability to relate to the merchant on an individual level. This is why follow-up communications are important after the sale is completed.
   In building relationships, it often helps to have a salesperson concentrate on a particular type of business, adds Phil Green, an industry veteran who recently started American Bankcard Systems, an Austin, TX-based ISO. For example, some salespeople may have developed a proficiency for the restaurant business - a key target market - either from selling to that industry before (representing an ISO or another firm that caters to the industry) or may have experience working inside that industry. In such an instance, the salesperson can "speak the language," providing not only initial rapport with prospects, but also knowledge of their current and ongoing needs. That enables the salesperson to promote products and services that genuinely benefit the merchant - helping build lasting relationships and generating recurring revenue.
   Green adds that ISOs should consider seasonality in generating sales leads. For example, if you were to attempt to solicit a heating, venting and air conditioning contractor's business once it gets hot in the summer or cold in the winter, don't expect a return call. The contractor is too busy selling, installing and repairing air conditioners and furnaces, respectively, during these times. However, if you contact this type of business right before and again, right after their busy seasons, these business owners are likely to be aware of their need for payment systems and other ISO products and services. Even if they have systems already, they may be looking for improvements, or their relationship with their current provider may have soured. Similarly, you'll want to stay away from any business' daily rush times (e.g., breakfast, lunch and dinner for restaurants).
   With all of the information available via the Internet and a very competitive market, there's not a lot of difference in pricing between companies. So concentrate on promoting benefits, not the products and services themselves. "Sell the sizzle, not the steak," as some marketing books put it.
   For ISOs in the bankcard industry, this means promoting how the product or service can lead to better profits or less work for the merchant, rather than the specific features of the product itself. The merchant doesn't care about the exact transmission speed of a terminal, but what that transmission speed means to him in the ability to handle customers more quickly and keep them happy and returning to his business.

Building Blocks of Effective Marketing

There are several separate types of marketing efforts, each with their own unique costs, uses, response rates and effectiveness. Below is a look at the strengths and weaknesses of these methods.

Direct mail

Lists of new businesses (those two to eight weeks old) can be obtained from county courthouses or other places where new companies need to register, typically for 30 to 50 cents per name. With postcards, the mailing and name acquisition costs are low, but so is the response rate, typically, .5 to 1 percent.
   Accessing state government sites via the Internet can generate much of the same information about new business registrations, liquor licenses and other information, but doing such research may be a little more time-consuming than obtaining the physical lists, according to Phil Green, an industry veteran who recently started his own ISO, American Bankcard Systems in Austin, TX.
   For a young ISO that is just starting out, like American Bankcard Systems, starting with such low-cost lists is the first step in developing a comprehensive direct mail campaign enroute to an encompassing sales lead generation effort.
   Brochures, newsletters, etc., are more costly than postcards, but may generate a slightly higher response rate, so the higher cost may be worthwhile.
   Odd-sized mail is another way that can result in an increased response rate, though it is also more expensive than postcards.
   For example, one ISO is just starting a direct mail effort that involves a reply card on one side and colorful graphics on the other. It's more expensive than a typical mailer, but the company hopes that an increased response rate will justify the higher cost.
   Whatever type of mailing is used needs to be done quickly. The typical merchant services company has anywhere from five to 15 competitors that will also send off direct mail literature or use another manner to contact new businesses. So the race often goes to the swift, according to Mike Hill, owner of Cardmaster Merchant Services, an independent company based in Collinsville, IL, that offers various merchant services.

"Leave Behinds"

While some salespeople leave a brochure with a merchant, then call back later to assess interest, this type of material tends to get thrown out, buried or otherwise ignored, if not immediately, then shortly thereafter.
Also called "trash and trinkets," leave behinds include items like pens, magnets, etc. If using this type of item, leave behind an item that will be used by the merchant, like a letter opener, rather than something that will be easily ignored or lost. Just having the name in front of the merchant may be enough to generate a call when the merchant needs the ISO's services in the future.

Referrals

Even though referrals are perhaps the oldest form of marketing, dating back before the telephone or even the U.S. Postal Service, this method still results in some of the best quality leads. The merchant that declines to buy from you may not want your products at this time or may be locked into a contract with one of your competitors. However, he may be more than happy to refer you to others who are good prospects.
   To entice the merchant to provide those referrals, offer something of value in return. After all, good referrals lead to sales, which lead to profits. Rather than a typical leave behind, provide something like a coin counter that the merchant can genuinely use and appreciate in return for a certain number of referrals.
   An item like a coin counter may work better than a cash payment (upon close of the deal), because the merchant may question "making money" from other merchants in this manner. So they are much more likely to accept a referral gift.
   Green says that referrals have worked quite well for his firm.

Site Visits

While meeting someone face-to-face may be necessary before closing many deals, to start this way means a high rejection rate. When entering a business, make sure that you're talking to the decision maker, rather than a clerk, receptionist, etc.
Many ISOs use this method because they rely on commissioned salespeople, who don't want to wait several weeks or month for a deal to close. However, in 40 cold call merchant visits, the salesperson will typically generate only eight meetings with decision makers, leading to four sales presentations. Some markets may require 60 cold call visits to generate the same results. Since sales presentations last 30 minutes or more apiece, this means that the 40 merchants need to be clustered close together geographically in the interest of time. So some smaller pockets of merchants may be ignored using this method.

Telemarketing

Typically, the ISO will need to make 100 telemarketing calls in order to generate 10 appointments, leading to one closed deal, according to industry experts.
"A lot of it is just a numbers game," Green agrees. "If you make 200 telemarketing calls in a day and make four sales, it's not a bad day's work."
There's no right or wrong way to make a telemarketing call, Green adds. Different sales people are more comfortable and more successful with different methods.

The Internet

While online marketing may have some value in generating leads in some other businesses, there's too much expense and too little value for ISOs to put much value in this type of marketing effort.
   Internet "mailing" lists aren't refined to the point yet that an ISO can obtain a good list of potential customers. Also, setting up the online template alone can cost more than $10,000.
   However, with additional time investment to use the Internet to access government information, you will find that the Internet provides a wealth of "free" (there are dial-up and access charges) research capabilities to help develop telemarketing and print mailing lists. However, as with researching DBA and other information, it can be very time-consuming, not just due to the wealth of information available, but also because that information is often poorly packaged - so it can often take a long time to find the information you want, even once you reach the desired home page(s).
   Additionally, it's important to remember that, like other mailing lists, some Internet lists are more up-to-date than others. So you'll want to determine when the lists are updated and how often records are "scrubbed" to eliminate bad names, addresses, etc. Spend the time with the most accurate records for the best results.

Yellow Pages

This form of sales lead generation provides many ISOs with good, warm leads in that the prospect has used the listing to look up the company's name and has actually called you. However, these ads are costly, so this method usually isn't effective for start-up ISOs.
Green expects to eventually add Yellow pages marketing on a region-by-region basis as his company expands in Texas, then outside the Lone Star state. This method has worked well for ISOs with national scopes, Green adds.


Phil Britt is president of S&P; Enterprises, Inc. Mr. Britt is a regular contributor to Transaction World Magazine and has been published in various banking and financial publications. www.xtracash.com.

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