We do a lot of our engineering work on Linux, an operating system that’s an alternative to Windows. That means most of us use an Apple computer since Linux comes standard. When our Apple computer breaks, we call Apple. Sometimes they can support us over the phone or internet (for free, by the way), sometimes they can’t. If there’s no remote support available, they recommend we take it to the local Apple store.
Several of our teammates don’t have an Apple store nearby. In those cases, we find a local consultant to help with the issue. These consultants can be affiliated with Apple, or they can have nothing more than a good reputation and solid know-how of Apple’s systems.
This begs the question:
Who owns us, the customer?
Is it the local consultant that I turn to last in my troubleshooting efforts? Is it Apple, whose hardware and software I’m using and whose support I turn to first – mostly since it’s free? Does the answer change if the local consultant is constantly helping me with my business and I see them frequently?
We take the “parenting test” to this question to get our answer:
The person that raises you is your parent.
That is, the entity that is trying to help you succeed, and thus knows the most about you as a person, has the strongest claim to the parental relationship.
In years past, this often meant the point of sale (POS) dealer owned the customer. The POS company (ISV) did nothing more than make the hardware and software. They relied on the local dealer to find the merchant, sell the merchant, and install and support the merchant’s systems. Older POS systems were much more clunky, had no methods for remote communication, and thus warranted frequent interaction between the customer and their POS dealer.
Nowadays the internet has completely disrupted the dealer model, just as it has for retail. Pre-internet the only way for consumers to find goods was to pick them up at their local retailer. Presently, consumers can shop online and gain access to more selection at lower prices (thanks, capitalism!). Manufacturers who previously relied on retailers to distribute their products have direct, scalable access to tens of millions of consumers and are finding retailers less important.
We know, we know: buying a shovel is not the same as buying a POS system. The latter needs “more” support and things can go wrong. Yet the internet is giving merchants more reasons to contact their POS provider rather than their dealer. Listen to this logic.
- In the old days merchants needed to contact their dealer for third party integrations since a local piece of software (an agent) was needed to interact with the data. Today, POS is moving to cloud with APIs. Now third parties go straight to the ISV, and we’d wager the vast majority of dealers have no idea how to handle an API – it’s a much more technical skill set than plugging in hardware.
- In the old days the merchant had no relationship with their ISV and would call their dealer for any and all support. Now the ISVs are offering first lines of support with their POS. Many merchants are finding their POS from a direct sales rep, an online search, or from a payments referral that is then kicked over to the ISV’s sales team. Like the Apple example, merchants are being conditioned to first contact their ISV for support. If that doesn’t work, it’s visit a local ISV office or punt to an ad hoc consultant – i.e. the dealer.
- In the old days dealers would deal with software updates and bug fixes. If a system needed to be wiped and installed from scratch a dealer would be on-site for a whole day (talk about expensive). Now software updates can be pushed over the internet in no time. Bugs are constantly being squashed and fixes published. You know how long it takes to stand up a cloud POS system? About 15 minutes. We just did an article on Aldelo’s Express product and they proved it.
- In the old days if your hardware crashed you’d need to pray that your local dealer had a replacement. As the POS market moves towards consumer tablets (which can definitely be an iffy proposition) a merchant can run to their local retailer if a tablet crashes. If not, they can get a replacement piece of hardware in two days from Amazon or their ISV thanks to improved shipping logistics.
All of this is swell but if a dealer really is the trusted business advisor a merchant will continue to find them valuable, despite these inarguable market shifts. But we all know that not to be the case.
Few dealers care to put in the work to keep their merchants successful. They grew accustomed to the margins on conventional hardware and software and never bothered to learn new skills as the market changes around them. Worse, the newer skills they reluctantly learned (ahem, payments residuals!) only benefitted one party: themselves. “You mean I should prioritize the merchant?” This is obviously not all dealers, but it’s an unhealthy 95% of them.
So swings the market pendulum. The in the old days value that was previously captured by dealers is now shifting to ISVs. And the last vestige dealers could turn to, that little piece that was always there no matter how much of their revenue transferred to their ISV, is now shifting to the ISV as well: the role of the trusted advisor.
As ISVs gain access to the merchant’s data (via cloud connectivity) they’re better able to understand what help that merchant needs. Who’s stealing. How to optimize inventory. How to change pricing to be successful. Which marketing campaigns are working and which need to be ceased immediately. How to better staff and what that means to the bottom line. These are objective assessments the ISV can make, and fix, with product or advisory services of their own. Dealers can ask to be involved, though that dealers have made themselves little else than effective taxes on their ISV does not earn them much goodwill.
So back to the argument at-hand. If the merchant is turning to their ISV more and more, it seems clear to us that the dealer has a weaker and weaker claim that they own the account. In fact it won’t be much longer before a “dealer account” is no different than a standard payment agent referral. If the ISV is “raising” the merchant, how can the dealer truthfully claim otherwise?