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Differentiation Through Specialization |
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Twenty years ago, many ISOs tried to be all things to all merchants. But today, many highly successful agents have scaled back their approach and instead do more for fewer businesses.
That “wholesale mentality” may have been a sound strategy back then, especially for larger ISOs, suggests Greg Cohen, president of Moneris Solutions USA, but today it’s only worthwhile if your strategy is to go out of business. That’s because it’s costing small and medium-sized ISOs a lot more than it used to. “These ISOs used to be able to hire contractors and be profitable from the first or second month with a merchant,” Cohen says. “Today, they pay bounties for bringing in merchants, give away free terminals and share a huge amount of the revenue stream from the merchant with the sales channel.
“It doesn’t take a genius to figure out that the ROI isn’t as good as it used to be for ISOs still using that tactic,” he continues. “In order to succeed in that arena today, you have to have pretty deep pockets just to cover the up-front costs needed to acquire merchants. All of which makes it pretty difficult for small and even medium ISOs to succeed by following the ‘old way.’”
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