Merchant Acquiring

It's 'Crazy Out There' for ISOs as Tech Impairs Their Relevance

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MOUNT SNOW, Vt. — Technology is moving so quickly that independent sales organizations are finding it difficult to remain relevant, a speaker warned Jan. 30 at the Northeast Acquirers Association's annual conference.

"Guys, it is really crazy out there," Stephanie Lusher, Vantiv senior vice president of merchant sales, told a packed conference room in the day's first presentation.

Describing children who sit silently with electronic devices on long car rides and teenagers who text each other across a restaurant table, Lusher cautioned that America's producing a generation without social skills.

And she offered a quotation from Albert Einstein: "I fear the day that technology will surpass our human interaction. The world will have a generation of idiots."

"We're there," she said of the physicist's prophecy.

The decline of society aside, Lusher summed up one effect of the technological vortex on business as a switch from merchant control to consumer control.

That transition is affecting many industries, so ISOs need not feel alone in having to deal with it, she notes.

Drawing on the contacts she's made living in Nashville, Tenn., Lusher told of a friend who heads a record label and voices complaints that would sound familiar at any gathering of ISOs.

Disruptors suddenly invaded the recording business, the record executive laments. Technology has made it so easy to download music — through legal means such as iTunes and through illegal ones such as file-sharing — that even the most active music fans never have to talk face-to-face to a record store employee.

One change in the music business may soon be mirrored in the acquiring industry, Lusher predicted, is consolidation.

But many of the disruptors in acquiring may also fade away because of unsustainable business models, she says.

Change is also shaking up the movie business, Luster says, again noting the experience of a friend.

Low-budget films appear likely to prevail, and her friend admitted that these days no one can afford to rope off a block in Harlem the way they did to shoot scenes from The Godfather.

In construction, cheap tract housing is prevailing, taking business from traditional contractors who have resorted to remodeling or customization of the new look-alike units, Lusher says.

That adaptation could serve as an example for ISOs that need to rethink their approach to business, she continues, noting that cold calling multitudes of merchants just doesn't work anymore.

Some ISOs are making their fortunes these days by specializing in vertical markets.

In one example, a friend of Lusher's devoted all his time to signing up hotels for merchant services. He wasn't a great salesman but he succeeded because he became an expert and won the customers' trust and respect for advice on payment for hotels.

Others would do well to find a niche, she urged.

"What can you do to set yourself apart?" Lusher asked.

Citing Scott Stratten's book, "Unmarketing," she encouraged ISO to become "awesome."

FedEx achieved awesomeness by responding generously to compensate a wronged customer when a video camera recorded a driver throwing a package over a fence, Lusher said.

A New Orleans hotel redeemed itself to her by providing a free stay and thousands of rewards points after a bathroom ceiling fell in on the first night of her visit and the hot water went off the next morning, she said.

"What are you doing that's unique and different?" she asked of the attendees.

But it's not just about responding in an unusual way, Lusher said. It's also about responding well.

A friend of hers who spent three-and-a-half weeks videotaping Taylor Swift's visits to 72 radio stations came away totally impressed with the singer's work ethic and her concern for every member of the crew.

The album Swift was promoting made its debut on the charts at No. 1, possibly because of all that work, Lusher said.

But nobody has to work alone, she says, noting that finding partners can promote success for everyone involved. ISOs could work with banks, accountants, sign companies, medical products salespeople – anyone with contacts in a vertical market, she said.

Finally, ISOs should exercise common sense, which the industry may be failing to do with mobile wallets, Lusher said. Right now, 168 mobile wallets have crowded into the payments industry, but none are "fast, clean and easy" enough to win a large number of converts.

The industry plunges ahead with wallets, but ISOs don’t even use them. In fact, only a handful of attendees in the crowded room raised their hands when Lusher asked if they use mobile wallets.

If people in the business don't use them, nobody else will, she said.

Still, with the right approach ISOs can stay relevant, Lusher said. "The key to the success of this industry is you because innovation comes from small companies," she said.

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