Whenever I begin a marketing engagement with a new client I outline three areas of focus that I believe are crucial for any financial professional. First, we want to win new business from new clients. Second, we want to increase the business we generate from existing clients, often called “increasing share-of-wallet.” And lastly, we want to retain existing clients longer. By looking for opportunities to improve these three areas we set the business up for both near-term and long-term success. But, your business as an ISO is slightly different than that of most other financial professionals.
Most ISO Businesses Are Built On Urgency and Short-Term Need
In the early days of my relationship with Pearl Capital one of the executives on the team described “Need, Speed, Greed, and Pain” as the four reasons why a merchant might be receptive to an MCA. And in my experience interacting with the ISO community I’ve come to appreciate just how good most ISOs are at surfacing one of these four drivers in the merchants they are calling on.
The challenge is most ISOs are operating in a one deal per merchant approach. They spend a lot of energy (and sometimes money) to acquire a deal but miss out on converting the merchant into repeat business or a source of referrals.
One of the reasons why we see such a low rate of repeat business and referrals is that for most merchants the original driver for their MCA deal was rooted in urgency (or maybe emergency is a better term) and short-term need. Merchant Cash Advances are designed to be short-term financial vehicles with fast approval times so it should be no surprise to us that we see them used in this way.
So what can you do to change this dynamic and make the relationship you have with your merchants one that is more long-term in nature and one that produces recurring business?
Educating Merchants on the Use Cases for Merchant Cash Advances
In the webinar titled “How to Create a Steady Flow of Referrals for Your ISO Business” we touched on the concept of making it easy for merchant clients and other referral partners to send you business by creating materials that they could share with their networks on your behalf. The recommendation, based on Steve Gordon’s book “Unstoppable Referrals: 10X Referrals Half the Effort”, works because it removes discomfort from the equation. The logic is that it is much less uncomfortable for people to share an e-book or an invitation to an event or a webinar than it is for them to introduce you via a cold phone call or email.
This concept is great and I want to expand on it here so you have some extra firepower to use in your business. When it comes to providing content to your merchant clients and referral partners with the aim or it leading to new and expanded business nothing works better than sharing use cases that the person can relate to in their own experience. As I’ve covered in our webinars and newsletters, making it easy for your audience to see themselves and their needs in your marketing is key to winning their business.
Below is a list of MCA use cases that you should consider exploring with your existing and past merchant clients as well as your wider referral network:
Carpe Diem – The “seize the day” snippet of Latin made famous by the late Robin Williams in “Dead Poets Society” is a fantastic use case for an MCA. Think of how many times a merchant is presented with an opportunity to buy inventory at a discount or participate in a once in lifetime event or jump at the chance to lease the recently vacated space next to their storefront. Most business owners aren’t sitting on a giant pile of cash to use for these opportunities. That doesn’t mean they should miss out. Make sure people know that you can help and how an MCA can work in these situations.
Death and Taxes – The two things we know for certain that every merchant will have to deal with at some point are death and taxes.
-Death? Yes, death. Whether it is the death of a business partner, a family member, key employee, or the death of a location or business unit every merchant will experience death. Death comes with unexpected costs and disruption to the business. Help merchants understand how an MCA could help them in an unexpected time of need.
-The tax man cometh whether a merchant has the cash to pay or not. Like the Terminator the IRS can’t be bargained with, it can’t be reasoned with, it doesn’t feel pity. Okay, so there is some wiggle room to bargain but that bargain will still result in the merchant needing to pay his taxes. Illustrating how an MCA can be used to pay off a tax-lien or structured agreement is a great way to get merchants and referral partners to expand their thinking for how they might use your services again or refer business your way.
Rapid Recovery – When disaster hits, whether it’s a hurricane like Harvey or Irma or theft or a fire, the need for a rapid infusion of cash is urgent. Merchants don’t always have the luxury of waiting for the insurance company to process their claim. Make sure merchants know that your ISO business is there for rapid response when they need it. In the case of a hurricane, reach out ahead of time to let them know you are ready and waiting for action.
The Winds of Change – All businesses are exposed to change in one form or another. Technology, fashion, fads, economics, regulations, and other forces are constantly forcing merchants to adjust or die. Sadly, few merchants are proactive enough to stay out in front of the changes in their industry. When the need to make some changes to their inventory, infrastructure, or other mission critical elements comes to a head they often lack the flexibility necessary to pursue a traditional bank loan. If your ISO business is focusing on a specific niche you have a unique opportunity to spot trends and changes that will affect a large number of merchants. Jump on it! Reach out proactively to share what you see happening and show them how you can help.
Surviving the Dip – Most merchants experience some level of seasonality. However, the seasonal dip can be severe for some businesses. A merchant’s ability to survive the lean months is directly proportional to his ability to meet cash flow demands. Study up on the seasonality of your merchant clients and share what you’ve learned. You may find that you have recurring MCA deals with the same merchants every year at the same time. If you stagger your book correctly you could have a steady stream of seasonal MCA deals.
Riding the Wave – Every once in awhile a merchant catches lightning in a bottle. Everything is going right! Business is growing, they can’t keep inventory on the shelves, new clients are signing up faster than ever…. There’s just one problem. Cash flow isn’t keeping up and they can’t risk missing this wave. This, of course, is where you come in. The trick is to educate merchants and referral partners on how to recognize the early stages of the wave before it’s too late. This is where being connected to other members of your target merchants’ ecosystem pays dividends. For example, if suppliers recognize business is picking up they should share your content on preparing for the boom times.
There are obviously many more use cases. What I hope you see from the ones above is that an MCA should not be seen as a one-and-done transaction in the eyes of your merchant clients. Remember, just because a merchant came to you with one problem at first it doesn’t mean his business hasn’t developed new challenges or opportunities. Merchants just may need a little help envisioning how your MCA offering fits in with their other needs.
Growing a Sustainable ISO Business
The reason I always begin a marketing engagement by outlining the three pillars of new business from new clients, expanding business from existing clients, and retaining clients longer is that it is much easier to build a sustainable financial business if you aren’t constantly dependent on only new clients (merchants). I want you to view your ISO business through this lens so that it is easier for you to build lasting success.
If you haven’t done so already, spend some time looking over your merchant client roster and your network of referral partners to see what use cases they may have for a merchant cash advance in the near future. Put together a simple article outlining how you think the use cases may affect their business and share it with them via email. Your goal is to inform them about solutions to potential business problems or opportunities (Carpe Diem!) in their future. And of course you want them to keep you in mind as the ISO who is there to help.
As always, let me know if you have any questions about the concepts in this article or marketing in general. If you have questions about Pearl Capital or merchant cash advance details be sure to reach out to the team there.