Everybody Wins Big!

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How Heartland Created 84 Millionaires.

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<ul><li> 1. Everybody Wins BIG!How 84 HeartlandPayment Systemsemployees becamemillionaires overnightBy Lisa Gschwandtner Photography by Jeff Weinerto authorize. When purchasing is thatfast and easy , its no wonder SELLING POWER JUNE 2008</li></ul> <p> 2. A PIECE OF THE PIE ing. Its a very complicated system, CarrThe banks and credit card companies take SEEKING BEST IDEASsays. We fully disclose the way the systemtheir share of each transaction, of course.works, we fully disclose how much money Through Heartlands Best Idea Award,But theres also the telephone company were making, and we disclose how much employees send in ideas, which Carrthat transported the call to authorize the money is going to these credit cards and personally vets.purchase. And the gateway company that the banks that issued the cards. We get a lot of input from our employ-hooked up the merchant to the telephone Even salespeople may not fully grasp ees through that mechanism, he says.system. Sometimes an independent sales the intricacies of the system before they Our employees are pretty open. I thinkorganization (ISO) takes a cut. Sometimesstart hitting the pavement. they trust us enough that they can tellISOs work with independent contractorsI tell people that they can learn enough us the bad news without getting firedthat charge their own fees. Oh, and thein a week to go out and do a decent job of because they are telling us somethingcompany that sold the computer systemmaking a sales call if they have any sales we dont want to hear.the merchant used to process the payment experience whatsoever, says HeartlandsThere is no fear of retribution if theyalso makes a little off the deal.chief sales officer, Sanford Brown. But come to Bob or to me or to our CFO According to the experts at Heartland its so complex that, 10 years from now, and say, Hey, this doesnt seem right.Payment Systems, an electronics process- they wont know everything there is to Will you help me understand it better?ing company based in Princeton, NJ, up toknow. They could continue to find new says Brown. And thats created aa dozen companies can be involved in col-verticals, nuances, and niches to follow. culture, I think, where people act onlecting funds related to a single credit card Heartland puts so much faith in trans- information much quicker when it istransaction. Thats a lot of hands compet- parency that the company has created a brought to their attention than theying for a slice of the payments pie. Merchant Bill of Rights, which is posted would in a lot of organizations. on the companys Website at merchant-Some of the simplest ideas haveA C U LT U R E O F S A L E S billofrights.com. made the best and biggest impacts inHeartland doesnt use ISOs or indepen-On the site, customers can watch a the company. Carr relates, Somebodydent contractors or agents. Why? As thevideo titled, How to Tell If Your Rights just today asked if we could pleasecompanys name might suggest, Heart- Are Being Violated. Among the questions truncate the merchant number on theland Payment Systems defines value asposed: When Visa and MasterCard fees receipt. I mean, everybody else in themore than dollars and cents. go up, does your processor add markups world prints the merchant number on We have a culture of sales in our com- that raise your rates even higher? the receipt. That means a smart crookpany, says Heartland CEO and founder, can take your merchant number, key itBob Carr, who is proud to proclaim thatWA L K I N G T H E TA L K into a terminal, buy a terminal on eBay,Heartlands commission-only sales struc- The markup question isnt just rhetorical. and process a bunch of fraudulentture has held steady since the companys In 2003, when VISA and MasterCard lost transactions. Ive been in this businessfounding in 1997.a hefty lawsuit with the Department of Jus- 20 years, and it never occurred to me. We have a sales team that believes itstice, they decreased their rates. Some pro-going to be treated right, just as its cus-cessing companies simply pocketed thetomers are going to be treated right. The only about five that also perform the pro- money, but Heartland took the opportuni-customers are the people the team mem-cessing itself. Heartland is unique amongty to pass the savings on to its customers.bers go to church with, the people whoits competitors for both selling a paymentOur agreement with our customers islive next door, their family members, and processing plan and performing it. It also that we are going to tell you what we aretheir friends. They can confidently go outoffers merchant customers payroll ser- going to charge you. Were not going toto sell to those people and know that their vices, gift and incentive programs, andchange the rules in the middle. If our costspromises are going to be kept. point-of-sale devices and supplies.go up because VISA or MasterCard raises its This philosophy has made Heartland theManaging these services can get veryrates, youll have to pay that extra. But if theysixth largest player in its industry. Withcomplex, very quickly. Too often, Carr go down, were going to give you a discount.2,900 employees, Heartland operates satel-says, the electronic payment system oper- Our board members thought we hadelectronic payment processors funnel $3 trillionthrough theirlite offices in North Olmsted,OH; Frisco,TX;ates at the expense of customers who lost our minds, says Carr, But we did it.and Phoenix. Its service center in Jefferson- must rely on processing services to stay And it just sort of validated both to ourville, IN, provides 24-hour customer sup- competitive in their markets.customers and to our salespeople that,port and technical service. Last year theThe hidden charges, markups, and one- hey, these guys really mean it.company processed 1.2 billion transactions, size-fits-all service can be the death knellHeartlands business practices haventworking through VISA and MasterCard,for the small to midsize businesses (most- made them too popular among competitors.and earned $1.3 billion in gross revenue. ly retail stores, hotels, and restaurants)They say that were taking the profitthat make up Heartlands customer base.out of the industry for them, says Carr.FULL DISCLOSUREOur main advantage is that we explainAnd I think thats a good thing. I thinkAlthough several thousand organizations how the system works to the business thats what capitalism is all about havingsell payment processing plans, there areowner, and they appreciate understand- a better mousetrap.JUNE 2008 SELLING POWER 3. MAKING MILLIONAIRESOne group thats not complaining Heart-REAL-TIME REWARDSlands sales force, and not just because Among thousands of organizations selling processing services, Heartland has brokentheyre selling services they truly believehistoric ground in the industry by reaping billions in revenues through organic growth. Carrin. Last year, about 14 of its 1,600 repsattributes this growth to Heartlands relatively young platform, which offers Main Street,made more money than Carr himself, America merchants the latest technology. By contrast, many Heartland competitorsthanks in part to Heartlands commission-operate with systems built in the 1970s and 80s.only sales compensation structure, dubbed We built our platforms starting about five or six years ago. So were using client serverthe signing bonus approach, which hastechnology instead of mainframes, and that allows us to be cheaper and faster thannot changed in 14 years. our competition. Other companies may have been in business for 30 or 40 years, but our The salespeople get paid an upfrontsalespeople are out with the lowest price. So our salespeople like that.cash signing bonus on the Friday after theHeartland offers customers real-time reporting, which makes catching mistakes a moreinstallation, he explains. Then they get efficient process. Recently, when a Wendys clerk accidentally keyed in an $11.11paid a percentage of the profitability every purchase as $1,111.00, a Heartland controller spied the error and corrected it immediately.single month, beginning on the first daySometimes employees will put through credits or returns, defrauding the business,of processing, through the life of that rela-says Carr. So, again, the business owner can look at those before they get processed.tionship. So they are incentivized to give So we have the only real-time system, we have the only client-server system in thegood service to our customers.industry, and those are competitive advantages. In 1998, Carr vowed to create 100 mil-lionaires out of his sales team. Since thecompany went public, hes added 84 We now have salespeople who are Some of my favorite stories are of thenames to the high-rollers list. becoming millionaires just based on thetop sales performers in our company whovalue of their monthly residuals, which is used to own their own restaurants or dryvery exciting to me. We measure sales by cleaning stores, he adds. Or they were FIGHTING CHALLENGES WITH INNOVATIONthe margin added per month. It used to bemanagers of restaurants or hotels working Heartland has not escaped unscathedthat $10,000 was considered to be a great80 hours a week. What predicts sales suc- from the recent economic downturn. sales month. Last month, our top sales-cess in our company is not sales-based, The company missed its fourth-quarterperson did $80,000. its behavioral. earnings forecast, and its stock dipped That means their commission paymentThis may sound a little hokey, but a to about 59 percent of its initial value.plan has become an expensive proposition.lot of people who come work for us areLike any great competitor, however, We dont make any money whatsoeverlooking for the American dream. They Heartland has responded to challenge until the fourteenth month of a relation-want an opportunity to be able to do some- with innovation. Were trying to find ship. So if a merchant leaves us six monthsthing financially rewarding for an organi- ways to make our offering unique. Oneafter they start, it is not a good thing for us. zation that they can feel good about. And is a product we call Express Funds, But that doesnt happen often. We have they want to do so in a way that they are says Carr. This is a product with which been in business long enough now and contributing something meaningful and businesses can scan their checks and we have enough merchants that have beenthat over time they can look at it and say, allow us to overnight-deposit thosewith us for more than 14 months that our Boy, I see my mark on it. funds to any bank in the country. It profitability continues to grow. Heartlands approach to sales makes allows us to sell to a much larger groupCan newly hired salespeople becomeit unique in an industry that often treats of businesses than just card payments. millionaires in the company? Yes, says its sales forces as an afterthought. I That speeds up cash flow and saves Carr, but only after many years of hardthink a lot of CEOs think their company [merchants] a trip to the bank. work and successes to get to the upper exists because of their great name, CarrAnother product is Heartlandsechelons of the sales force. He admits thatsays. Maybe thats true for some com- Campus Card Solution, which allows the bar has been raised since the companypanies, but when you are providing college students to pay for purchaseswent public. After all, you can only takefinancial services to small-business peo- using their cell phones. Whats your shares from 30 cents to $25 once. ple, they want to do business with some- great about it is that students alwaysAt the same time, we have a more com-body they can rely on, who gives good have their cell phones, whereas they petitive product, he says. We can go after service and gives them a good value for might not have their wallet or purse, bigger customers. We have more products. their money. We think we have a very Carr explains. The reason the And so we just have some salespeople who competitive product that way. community likes it is because we are doing extremely, extremely well.FEEDBACK: GSCHWANDTNER@ charge the merchant less to take this SELLINGPOWER.COM card than to take a VISA or MasterCard.ENTREPRENEURIAL SALESPEOPLE MORE ON THIS TOPIC The merchants pay less, and theWhat kind of reps perform best at Heart- Visit our Web address below and click under money they do pay goes back into the land? The common thread is an entrepre-Everyone Wins Big for your Bonus Articles: community, to nonprofit organizationsneurial spirit. Within the Heartland team, 1. Retention Perfections 2. Just Hang On to What You Got 3. Seven Success Essentials as well as to the cardholder, whochief sales officer Sanford Brown esti-(Available through 9-1-08) gets a cash-back component. mates that perhaps 20 percent are first- www.sellingpower.com/june08generation immigrants.JUNE 2008 SELLING POWER</p>