The Fundamental Paradigm Shift Needed To Successfully Acquire Merchants

The one fundamental element that keeps merchant acquirers away from achieving the type of success in their acquisition of small merchants (processing below US$5 million/year) is philosophical in nature.

 When I talk to merchant acquirers, they usually mention that they are in the B2B market. While that can be true and applicable to 10% of merchants they deal with, it is completely erroneous for the rest of the merchant community.

When merchant acquirers finally realize that they are in B2C business, they will save millions of dollars in advertising and branding and result in a more efficient acquisition of merchants whether online or offline.

The Real Difference Between B2B and B2C

 Everybody knows the definition and can tell the difference between the B2B and B2C concepts, but I disagree with it. I disagree with it because not all businesses are equal and not all businesses should be treated as such, especially when it comes to marketing.

In my eyes, and from a marketing perspective, we should make the difference between three different entities:

1) Consumer: individual end-user that is targeted by various entities for consumption of their products or services. The purchasing decision follows a predictable psychological pattern and the prospect can be moved to action by proven and established direct marketing tactics based on triggering emotional responses.

2) Business (Corporate): Large businesses, with an executive structure and collegiate decision making, influenced by stakeholders/shareholders, etc. The decision making involves input from different departments (legal, operations, IT, sales, marketing, etc,.). Making a purchasing decision also involves several people and establishing ROI. The decision is therefore more pragmatic in nature.

3) Small Business: most merchants that acquirers are competing for. The decision making is made by one person or two at most. In this model, we have seen that there is absolutely no difference between the decision making of a small business owner and that of a consumer.

However, most acquirers and all businesses trying to sell their products and services to small and medium enterprises (SMEs) make the mistake of marketing and communicating to SMEs are large corporate entities with the results that we know.

The table below is from the report Acquiring Small Merchants and it sums up how merchants are and how the industry deals with them. A more detailed treatment of the issue is available in the report.

For merchant acquirers to make big strides in signing up merchants en masse and achieve the success that only few companies have managed to do, acquirers need to view and deal with the majority of their prospects as consumers and use the same principles of marketing that would trigger the 6 emotions that merchants needs to go through in order to buy**.

The same principles of direct response marketing that have worked with consumers since Claude Hopkins’ 1923 book Scientific Advertising are still in effect today. These principles were enhanced throughout the decades with more research and new fields such as Evolutionary Psychology and Behavioral Economics, but the principles are still the same because our emotional make up has not changed for a few millenea in spite of all the new technology.

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