Estimates vary, but commerce is slowly moving online. That’s because consumers demand more convenience and online merchants (think Amazon) are just better at using data to optimize the customer experience.
Online is consuming the physical world.
There will probably a limit to this trend, however, as humans still need physical-world retail. Still, this trend is scary if you sell to the offline world.
POS resellers should view this trend as their opportunity. Wait, a shrinking market is something a reseller should be rooting for?
Yep.
New-age POS companies are all about payments and SaaS multiples. Often this comes with locked-in processing agreements where the POS company rides the merchant into bankruptcy. When the merchant goes out of business, the POS company needs to find new victims customers.
Revisiting existing customers is not something the POS company really cares to do. That’s because services businesses only garner a 1x revenue multiple while payments and SaaS get a 4x and 8x respectively. Long story short, it’s not a good use of the POS company’s time to build a relationship with the merchant and help them succeed.
This is where the dealer needs to see the silver lining.
Merchants are stuck with their POS provider for years under these new locked-in processing agreements. That, combined with a shrinking market, means there will be fewer merchants on the market for any new POS system to chase. Earning more money therefore means selling more to each merchant. But can you sell more to a merchant without understanding their business? The answer should be no, and that’s where many POS companies are going to have trouble. So who’s going to do it?
Merchants have never been and will never be technologists. They get into business to be entertainers or artists (or because they’re otherwise unemployable), not to use the latest data analytics tools to optimize marketing spend and drive ROI, for example. But these merchants probably should be using the latest software tools if they’re shelling out 4% effective processing rates to their POS company.
Dealers need to change their thinking and recognize the opportunity. Instead of chasing new accounts maybe you should revisit your existing customers. When was the last time they heard from you? When was the last time you looked at your customers’ business and found ways to help them perform better?
We’d like to see resellers establish monthly touch points with their account. “Oh but I don’t have the time!” First off, you do. You just don’t do it because you’re not getting paid. And you’re not getting paid because you’re too dumb to add value worth paying for.
As we’ve said before, there’s a lot of value merchants could be getting from dealers that know how to use POS data. These monthly touch points can be turned into a business advisory service with a recurring revenue stream. Every time a dealer visits a merchant they can uncover other solutions that would help their merchant – here’s a list of a recurring revenue services Jim Roddy has put together for resellers.
Don’t be a lazy sack of crap. There’s plenty of opportunity but you have to be willing to work.
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