How to Grow Referrals and Run a Sustainable ISO Business
In the aftermath of the global financial crisis, most small businesses have struggled to stay afloat, while many had no other choice but to close their doors for good. To make matters worse, the majority of traditional banks no longer offer small loans that these businesses so desperately need. That's why they turn to independent sales organizations (ISOs), whose services can often make the difference between continuity on the one hand, and foreclosure on the other.
Many ISOs nowadays offer the service known as merchant cash advance (MCA). With it, struggling merchants receive a cash loan, while the providers get a percentage of their future credit card receipts. Unlike classic bank loans, merchants can spend the money on whatever they need to keep their business going. Furthermore, they don't need to have a perfect credit score or provide any form of collateral to receive funding.
However, while they're helping other companies survive, ISO businesses also need to ensure their own financial sustainability. This current model makes it difficult, as MCA is usually a one-time investment. The moment the merchants service their debt, their relationship with the ISO effectively ends.
Because of this, it's important for ISOs to constantly work on securing new clients. At the same time, it's important to keep generating new business from current clients and, whenever possible, retain them for a longer period of time.
Why ISOs Fail to Drive in Repeat Business
As a rule, there are four main reasons that drive merchants to opt for a merchant cash advance:
• Necessity: The need to keep their business afloat.
• Rapidity: The ability to secure the funding they need in a matter of days.
• Rapacity: The desire to expand their business fast and increase their revenue as a result.
• Grief: The pain caused by the impending failure of the business they've worked hard to build.
There is one thing that connects all four of these reasons – urgency. As such, for most merchants, MCA is an emergency measure with no long-term implications, financial of otherwise. So as soon as the crisis is avoided and the MCA has delivered the results they were hoping for, the merchants and the ISO go their separate ways.
Consequently, it's difficult for ISOs to convert merchants into repeat clients. Moreover, it's also difficult to make them a part of their referral network. But a well-functioning referral network is crucial to any ISO's success. It is thus essential for ISO businesses to nurture their relationships with clients and build partnerships that will extend well beyond the terms of their merchant cash advance deal.
Creating Materials for Better Referral Rates
While cold phone calls and plain text emails might have worked as referral tools in the past, they are hardly enough to sustain your ISO business nowadays. As Steve Gordon argues in his book “Unstoppable Referrals: 10x Referrals, Half the Effort,” ISOs need to create comprehensive materials that merchants and other partners they're working with can send to prospective clients.
According to him, cold phone calls can often create a sense of discomfort for both the referrer and the client. Because of this, it's much better to forward an informative eBook or booklet, or perhaps an invite to an online event or a webinar.
But for your materials to do what they're supposed to, you need to create content that will speak to your clients. It's Marketing 101: the members of your audience have particular business needs and goals, and they must recognize you as the perfect partner that will help them see those goals through to fruition. To achieve this, you will benefit from including use cases in your marketing materials.
Use cases are specific scenarios your clients may find themselves in. More importantly, the services you provide can help your clients in any of these situations. That's exactly how you should present them in your marketing materials: explain each use case in great detail and make note of how your MCA services can help your clients achieve success in any possible scenario.
7 Use Cases for ISO Marketing
Merchants opt for MCA services to tackle certain challenges and opportunities and help their businesses grow. While there are dozens of relevant use cases for ISO businesses offering merchant cash advances, here are the seven most common ones you should consider addressing in your marketing materials.
• Dealing with a Sudden Loss
Some things in life are inevitable and death is one of them. As soon as we're born, the only thing that's certain is that we'll eventually come to the end of the road. Businesses are not immune to this and every merchant will have to experience the consequences of death at some point. It could be the death of an employee, a family member, or a key business partner. Death can also be metaphorical, like when merchants have to cease operation in a certain location.
But after one thing ends, another thing begins. In business, death results in a number of unplanned costs merchants must pay to keep the machine going. As such, you need to explain to your clients how an MCA can help them in situations like these.
• Paying Taxes
Come tax day, merchants will have to pay their taxes whether they have the money or not. There's usually very little room to negotiate with the IRS and work out a better deal. But an MCA can help merchants pay off their taxes without emptying their bank account and suffering short-term financial losses. Highlight your role in this process to make your merchant clients understand how they can also use your services in their day-to-day operations and not just for one-off financial aid.
• Taking Advantage of a Business Opportunity
Throughout their lifespan, many businesses will be faced with a major opportunity that can help them grow. It may be a once in a lifetime event that they can capitalize on, or perhaps a chance to lease out premium office space at a big discount. When something like this happens, it's important to act quickly, but most businesses don't have enough money to take advantage of these occasions. This is where you can help them, so make sure to highlight it in your materials, too.
• Fast Recovery
An unfortunate event – be it a natural disaster or criminal activity – can sometimes hurt businesses financially. To continue to operate without interruptions, they need funds to secure a quick recovery. Insurance claims usually take a long time to settle, but in these situations, speed is essential. Make it clear that you can provide quick relief for your clients at times like these. What's more, if there's an announcement of a natural disaster like a hurricane or a tornado, be proactive and tell your merchant clients that you are there to assist them in its aftermath.
• Getting to Grips with Seasonality
At certain times during the year, many merchants will have to deal with seasonality. But while some businesses have enough cash flow throughout the year to survive these dips, many don't. As such, MCA is not just a one-off funding opportunity, but perhaps a seasonal necessity. This is another way how you can secure repeat business from your clients, so make sure to address it in your marketing booklet.
• Embracing New Technology
To remain competitive, businesses have to keep track of recent technological developments and implement them in their regular operations. However, most merchants can't afford to invest in innovations without hurting their financial bottom line. It is therefore your job to let them know that an MCA can help them procure all the equipment and software they need to stay on top of their game.
• Ensuring Lasting Success
Merchants will sometimes feel like everything's going their way. The sales are stronger than ever, new orders are coming in faster than they can process them, and the business is on a steady rise. Usually, however, the cash flow doesn't reflect these positive changes and is in fact preventing them from taking advantage of the situation. A merchant cash advance is just the thing they need to seize the moment.
You have to educate your merchant clients to recognize these spikes in their early stages, so that they have enough time to capitalize on them. Because they are well-connected with other businesses, they can share your materials with their partners and other merchants in their networks.
Sustainability Is Essential to ISOs
Building a lasting relationship with clients is essential for ISO businesses. Thus, you need to create an engaging proposal that addresses the common needs and goals of the merchants who may be interested in the services you offer. In doing so, it's important to look at merchants not only as clients, but also as the best referral partners you can have.
It's crucial to make sure your clients know that an MCA is more than a source of short-term emergency funding they need to keep their business running. Just like your services can provide support in bad times, they can also help them make the most out of good times. These are all things you need to make clear in the materials you send to merchants and other members of your referral network. This will help you achieve stability and sustainability, which is exactly what you need to run a successful ISO business.
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