Guest Analysis – Changing Core Beliefs in Acquiring

Scott Calliham  

A Conversation with Guy Harris, President of North America, Elavon

What are some of the beliefs you believe are in the market, and how are you trying to change these beliefs? 

So I have this theory that the acquiring market has managed to build up a language that it uses to express and explain its market, and in that, what’s gotten lost is the fact that we’ve renamed the customer a “merchant.”  So if you are a coffee house, you don’t see yourself as a “merchant” because you run your coffee shop.  However, the industry categorizes these businesses as “merchants,” and they each have a “MID” and a “TID” – irrelevant and very non-customer-like terminology for any business.  At Elavon, we’re not calling merchants “merchants,” we are calling them “customers.”

So it starts with that simple terminology, but actually it also has to do with how the industry treats its customers.  What I saw in Europe and I see in the U.S. is an acquiring business that, generally, isn’t customer-centric.  I believe this originates from a lot of acquirers’ banking backgrounds. And generally, what we were trained to think of as bankers is to first think about risk and compliance.  That is the first thing we as an industry believe we need to be clear on.  The second is, “Oh and yes, by the way, we need to think about our customers.”   But until we’ve secured ourselves, we don’t want to think about the customers too much because we need to manage the risk, we need to manage the portfolio, the position, the fraud, the compliance, and those kind of things without necessarily thinking what impact does that have on the customer.  And that reflects in the way we communicate, whether it be titles or the way we use the term “merchant” or how we communicate with customers.

Let me give you the simplest example – when the industry re-prices a customer, what goes out, generally, is a pretty severe letter.  Furthermore, the letter attempts to deflect and blame somebody else for the re-pricing event.  It’s just an awful customer experience.  Whereas my cable TV in the U.K. writes to me every year with a lovely, glossy thing with pictures of the programs, and it says, “Great to have you as a customer.  This year we’ve introduced six new channels, twenty-two new films, the sports, rugby, etc.”  And at the bottom is says, “Your monthly fee has gone up by £2.”  So as a customer, I get to that point, and I say, “Oh yeah, okay, it’s gone up by £2, but look what I’ve got.”  Acquirers in the U.S. do it the other way around, which is, “We have to inform you that in one month’s time we’re raising your rates, but it is not our fault, it is because of other 3rd parties.”  Furthermore, it’s not simple or straight forward.  The customer can’t make out what the real impact is on its business.

Yet another example is when we monitor for fraud. As an industry the first policy is usually to suspend settlement for that transaction, and we tend not to communicate greatly about what we’ve done because we’ll always take the position that we had to do what we did because we were securing our position.  From the customer’s perspective, if you are not involved in fraud and this happened to you, we don’t say, “Look, sorry, you need to understand this is what happened, we just needed to check with you, we apologize.”   It is a very frustrating situation for most small businesses.

So it’s a financial transaction that’s driving acquirers’ interaction with the customer, but I think that’s a banking thing. So as the banking industry changes in the way that it looks after its current account holders, how it looks after its credit card customers, the acquiring industry should follow suit.  The customer has the choice, and they will ultimately go somewhere else if they are not looked after properly.

What other core misperceptions you believe exist in the market today?

Another one of my very clear views of acquiring is that this is a value-based proposition, not a commodity.  But to a certain extent, the industry has allowed it to become too commoditized.  We’ll say, “How much are you paying… whatever it is and so-and-so?”  I go back to if I’m a customer and I own a coffee shop, I care about how much I pay for something in the sense of whether it’s disproportionate for the service I get, but I’m not obsessed with needing to get it down to a 0.5% to get a service.  What I’m most interested in actually starts when you first meet the sales person and if the sales person is focused on selling what the customer experience is about.  There are certain fundamental questions related to the customer experience that often are not commodities, such as

• “Is my money paid on time?”
• “Is the acquirer able to understand what my business is and what I am doing?”
• “Am I dealing with a company that’s friendly and helpful”
• “Are they easy to do business with?”
• “Can I get a hold of them when I have an issue?”
• “Are my statements clear so I know what I’m paying every month?”

These may seem like commodities in today’s world, but they actually are not.  These are absolutely value-based services if executed upon successfully on a day-to-day basis.  Furthermore, it is often not about pricing, although there are certainly exception to this.  I think we always have to remember that the people we’re dealing with actually are running a business, not running a payments processing business.

Even though pricing per se does not play a heavy factor in many customer’s decision to change providers, is there an aspect of your core beliefs that impact how you go to market related to pricing?

This philosophy and approach impact every part of the business, including the approach to pricing.  RFPs are an example of this.  In the past, nine times out of ten, we responded to an RFP with having hardly ever met or done any real, what I call discovery work about the customer’s pain point.  We’ll get some direction on where the price should be, put a price in, and then go back to the company and say, “Here’s the price!”  We will not respond to RFPs now unless we understand exactly what would make the customer change, other than what price they would seem to accept.  We have a very clear strategy now that we only respond if we’re genuinely engaged with a customer.

On the smaller customers, it’s really about managing their expectations.  If I’m a customer and an acquirer tells me it is going to cost me $80, and it’s now costing me $120 a month, then I feel as though they’ve lost my trust.  And so if we say it’s going to be approximately a certain amount, and it isn’t, whether that’s intentional or not, you still lose that trust with the customer.  I think acquiring, generally, because of the way pricing smaller customers is, has a way of trying to not be as precise as it needs to be.  There are a lot of reasons for this, whether it is chargeback fees, downgrades, or others.  If an acquirer is able to do anything that takes complexity away and allows the customer to be able to sign something and feel comfortable and feel they’ve done a fair deal, that goes hand in hand with having a great customer experience.  Additionally, if you set off on the right foot with a customer, then I think the likelihood of keeping that customer increases over a period of time.  This is where, in positive ways, Square and the disrupters have brought a real focus to the industry that is forcing acquirers to think about how they engage and interact with their customers as new customers.

What other legacy industry perceptions are you trying to overcome?

I think our industry suffers from far too high attrition and that the industry believes there is not much to solve for in this challenge.  This is really driven out of the things I’ve been describing, that, as acquirers, we spend more time winning customers than we do keeping those customers.  You just look at how the acquiring organizations are set up.  So now Elavon has a leadership team that includes someone that focuses on customer experience and whose job is to manage our customers.

When we look at our customer base we are truly tackling the questions of who are the ones likely to leave and what do we put in place to try to talk to them and stop it.  Before, we used to wait until the customer was leaving.  We had what’s called a BRU-Business Retention Unit.  The unit was very reactive. I believe in reaching out to our customers on a regular basis, talk to them.  I’ve heard from many in the industry that this is an unsound policy- there are a lot of people that say, “Don’t wake them up, don’t wake the customers up, if they’re transacting, leave them.”  I don’t believe in that approach.  So we’re putting in place a team of customer account managers that now will look after all our customers.  So every single one of our customers will have contact at Elavon – every single one.

So looking after our customers, keeping the length of every single customer longer, making it easier for them to do business with us, are all things that will drive growth within my business as opposed to just chasing after loads and loads more customers.  Although we cannot ignore new sales and it will remain a very important part of the business, we need to be better than that. I think this change in philosophy is just the start, and it’s making Elavon relevant and exciting in the marketplace.  I think we have been seen by some as a sleeping giant—a large organization with capability that it hasn’t executed on.  We are changing dramatically, we have largely a new management team, and we are going to be very relevant in the market for a very long time to come.

As President of North America at Elavon, Guy Harris has direct responsibility for the leadership of Elavon in North America, where he oversees strategy, profit and loss and growth.

Prior to taking on his current role, Guy served as Executive Vice President and Managing Director for Elavon’s Western, Central and Southern European regions. In this role, Guy successfully grew revenue by 15 percent, per annum, through the employment of a value-based, customer-focused approach.

Before joining Elavon, Guy was Vice President of Global Sales for Misys, a leading global supplier of IT solutions to the banking industry. He also served as Sales Director at CR2, a leading multichannel, global, banking software provider, where he played a key role in increasing sales by 35% compound growth per annum, and as Managing Director at Banctec, a business process outsourcing company. Guy holds an Ordinary National Diploma in Business Studies from Kingston College.

The views expressed in the posts and comments of this blog do not necessarily reflect those of ETA.