Merchant Retention Issues Are Cyclical
Merchant retention rate is one of the single-most important metrics in merchant acquiring. Because merchant attrition is a cyclical event, most ISOs and acquirers will face it eventually. Those that are not facing it today will face it tomorrow because of the constant relevance changes in the market: new competitors, new technology and new paradigms. Apart from chaining your merchants physically, here are three methods to increase your merchant retention rate.
Boost Your Merchant Retention
1) Voice Analysis Technology: Most large ISOs and acquirers use some type of IVR software in their calling center but very few actually know that some of this software comes with a voice analysis feature that would allow them to score their customer service calls based on certain elements that are computed to predict attrition: length of call, words used, silence between the words, intonation and inflection, etc.
A score is assigned at the end of each call. If the call scores low in terms of threat of attrition, it is ignored. Otherwise, the call is flagged and queued for a supervisor that can listen to the call and make a follow up call to address any concerns or questions the merchant has.
This technology is used successfully by the telecom industry that has one of the most acute issues with retention. The drawback is that it takes a few months to acquire the information and develop the model and a couple of months to calibrate the answers. Once this is done, the follow up with an angry merchant and offering a compromise is perceived positively by the merchant and shows quality customer service.
2) Predictive Analysis Model: The most disregarded aspect in merchant retention is data. While all firms talk about big data as the panacea to all problems, most of them don’t even collect or use the little data they have access to analyze it to identify patterns leading to merchant attrition.
Most acquirers respond to attrition in a reactive way: merchants calling with specific questions about their rate or requesting their statements, merchants having a sudden drop in their processing volume, merchants requesting their credit report, etc.
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However, collecting monetary and non-monetary data and analyzing them, ISOs and acquirers can see trends: frequency of calls, nature of calls, length of time to resolve the call, access to website, types of information or page visited in Website (looking at penalties for contract breach) etc.
3) Perception Awareness & Management: perception is also related to data, qualitative data. There is this feeling of resignation on behalf of the industry about how merchant acquiring has become commoditized almost as a way to rationalize not doing anything innovative to change things.
If there is any feeling of commoditization, it is certainly not the merchant’s fault but that of the industry that is not providing ways to engage merchants.
About 50% of merchants don’t even call to let you know that they are leaving. The rest that calls doesn’t really articulate the reason behind their leaving. So how can one possibly capture data about what makes them leave?
The only way possible to by doing a root cause analysis and who better to ask than the merchants that have left you in an anonymous way that encourages sharing and venting.
The attrition root cause analysis is a study of merchants that have left you in order to identify the reasons they have left you. It focuses on showing problems that are invisible to the naked eye. For example, who do your merchants go to after they leave and why? The answer to this simple question allowed a client of mine to realize that a specific segment of their merchants leaves them because they believed the acquirer didn’t have one particular solution.
The solution to this problem was to simply focus on communicating to that segment (through their Website, e-mail, and customer service) that a similar solution is available. That alone increased their retention rate… and that was only one of the 10 findings the root cause analysis provided that they would have never realized had we not asked specific questions.
In Conclusion
It is true that solving retention is issues is a tricky business because the reasons are never similar from one acquirer to the other. So, finding a one-solution-fits-all is not the right method. Instead, ISOs and acquirers can use voice-analysis technology, build an ongoing information data base and take a snap shot of their current situation in order to solve this cyclical problem that is constantly draining you revenues.