One of your merchants takes off for a competitor. You immediately lower your prices.
Except, the merchant doesn’t return.
That’s because merchant attrition is not all about pricing. Managing the churn of merchants starts with understanding the nature of the problem at the outset. There are a number of common issues that lead to merchant attrition.
From a lack of automation and reactive support to unclear communications and a lack of billing transparency, diagnosing the causes of merchant attrition is the first step in addressing it. Once you’ve narrowed down the reasons your merchants might be jumping ship, you can take further steps to improve your operations and retain those clients.
With merchant acquirers losing an estimated $2 billion per year (according to Womply Insights and Goldman Sachs) due to merchant attrition and the relative cost of replacing merchants rising, taking steps to curb merchant churn has never been more important.
If you’re thinking of yourself as just another vendor for your merchants, you’ve already lost the battle for their business.
In the ecosystem economy, customer support is a major factor when it comes to reducing merchant churn. The quality of support they provide to their customers and receive themselves makes all the difference.
In other words, you’ve got a unique relationship with your merchants (given your special role in their business), so don’t squander it. As you address the drivers of merchant attrition, here are a few ways to strengthen those relationships and keep merchant churn to a minimum:
People like to know how their money is being spent. It’s a fairly simple principle.
Keep communication clear and frequent with your merchants. You should be able to walk them through each step of your process of working together and have them understand it fully. They should know how and why your work together matters and how it impacts their bottom line.
That’s the basis of any strong business relationship. Without that understanding as the foundation, you’ll be managing more merchant attrition than is healthy for your business.
Focus your relationship on the value you’re providing to merchants, rather than cost.
If the products you deliver to merchants keep them in business longer and demonstrate a tangible return on investment, they will stick around. If you can go a step further and associate both of those aspects with your brand, you can shape a merchant’s perspective on your value to their business.
Consider offering value-based pricing that focuses the merchant on the results you’ll help them achieve. Merchants care about metrics like transaction volume, speed of solutions, and cost per transaction that speak to the success of their business. Assuming you’re hitting agreed-upon targets, a value-based approach help make your business relationship even “stickier.”
There’s a limit to how much MSPs/ISOs can compete on price.
The race to the bottom can only go so far. As e-commerce sales are projected to reach $4.8 billion by 2021, merchant service providers will increasingly need to compete on value.
This means integrating value for merchants to meet their evolving needs. More MSPs will be expected to link to third-party solutions that merchants are looking to utilize. Another example is fraud prevention. MSPs that offer fraud prevention services as part of payment processing can help merchants improve customer experiences while also increasing merchant revenues.
Enhancing the payment processing flow for merchants (by integrating fraud prevention solutions) is one example of how MSPs and ISOs can deepen the value they deliver to merchants and stay competitive in a tight market.
It goes without saying but we have to say it: You have to provide top-notch customer service to stay competitive.
Beyond just helping merchants deliver this for their customers, merchant service providers need to offer great customer service to merchants themselves. This means staffing up your call center and providing your employees with training on conflict management. Make proactive calls to merchants to check in and offer support even when it’s not an emergency.
This sort of relational customer support goes a long way and will keep merchants happy and onboard. Merchants want you to solve their problems and offer benefits that keep them coming back to your business.
Leveraging data is very in fashion these days.
It can be expensive, but if you get it right, you can use it to reduce merchant churn. This means developing data protocols, setting up systems to retain data, and employing analytics to sift through the data for insights. Getting the right system in place takes time.
With the right data system in place, you can learn much more about your merchants and use it to improve the relationship and reduce attrition. It’s not an easy task, but the right process allows you to get ahead of typical challenges that cause merchant attrition.
Make sure you stand out among competitors.
Merchants that know you’re offering a service that is different and higher quality are much less likely to leave for a competitor. Regular communication with merchants about the unique attributes of your services can help cement the relationship.
One way to accomplish this is to integrate services that might not otherwise get bundled together for merchants. This makes it less likely that a merchant will depart because you’re offering them increased convenience and the ease of an all-in-one solution. Merchants come to depend on your services which make switching more of a challenge.
The more embedded you become in their business model, the less attrition becomes an issue.
Merchant retention comes down to a strong relationship grounded in mutual value.
When merchants understand what they’re paying for and the corresponding value for their business, they’re likely to stick around. That demands a healthy level of education and interaction between merchant service providers and merchants. Don’t be afraid to answer merchant questions while digging into remedying any inefficiencies you find together.
Your job is two-sided: you’ve got to deliver great customer service to merchants while also providing valuable support for their clients. Taking some of the steps above, you can manage both sides while reducing merchant attrition in the process.