Merchant retention remains a top challenge and major priority for many acquiring organisations, as churn rates can greatly hinder success. In fact, a recent Discover study determined that merchant attrition in the United States is approximately 20 per cent annually, of which 16 per cent switch to an alternate acquirer and 4 per cent go out of business entirely.
Moreover, Discover determined that the costs of attrition to U.S. acquirers is $2.33 billion every year, and acquirers spend almost $1 billion replacing the merchants who left in the previous year, draining valuable resources. By taking the following measures, acquiring organisations have the opportunity to increase satisfaction and ultimately, loyalty among valuable customers.
Ongoing communication plays an important role in developing positive merchant relations as it eliminates the possibility of misunderstandings. A report by the Electronic Transactions Association (ETA) identified that communicating effectively and often with customers is the best way to identify and remove issues that may one day convince a valuable merchant to take their business to a competitor.
ETA stressed that frequent interaction does not always need to be technical or financial in nature. In fact, providing merchants with tailored and relevant content that helps them to improve their business and maximise sales is a great way to maintain contact and build strong relationships.
The ETA noted that industry insiders have commented on an increased amount of smaller merchants “price-hopping,” even for anticipated savings of just a few dollars per month. However, while many acquirers may be tempted to participate in these pricing wars, the source emphasised that low promotional pricing can actually contribute to higher churn rates.
An Aite Group survey of 160 U.S. merchants revealed that while merchants often claim that pricing is of the utmost importance, overall satisfaction with the ISO or merchant acquirer is really the key to merchant retention. Providing added value solutions that address the specific needs of merchants is a great way to improve merchant loyalty.
Merchants who feel their acquirer understands their business and can therefore provide solutions to the issues they have are far less likely to be tempted by lower prices. Acquirers who offer solutions that help merchants to improve their business by reducing costs or increasing sales become valued business partners.
Provide ongoing support
According to the ETA, independent surveys have indicated that more than 70 per cent of merchants say poor service is the reason for breaking ties. Respondents reported negative treatment, indifferent or unappreciated servicing or being simply ignored as feelings that have led them to leave. Furthermore, providing hands on guidance for issues such as PCI can have a positive effect on merchant satisfaction.
Conversely merchants who feel they have been left to go it alone or passed over to a third party often have no loyalty to their provider and will be tempted to move on. It is therefore important that such solutions are presented in a familiar setting, that merchants are communicated with throughout the process and that multiple means of support and assistance are provided where needed.
It’s imperative to stand out among competitors, as merchants may find it more tempting to stray if other organisations offer too-similar services. The ETA pointed out that by differentiating offerings, firms have the opportunity to maintain margins without increasing customer churn.
Making these unique attributes and opportunities apparent to merchants can cement their confidence that they made the right decision in selecting one acquirer over another. Keeping a profitable customer is more effective for boosting the bottom line than finding and onboarding a new one.
With these strategies, acquiring firms have the foundation for building more trusting, long-lasting relationships. However, with limited resources most acquirers often only concentrate on their top merchants. Sysnet Global Solutions offer a range of white labelled solutions that ensure merchant of all size are fully engaged and feel valued by their acquirer.
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