Understanding Up-front Bonuses – Merchant Services Sales Commission

This is the third episode in a mini-series about Merchant Services Sales Commission.  Please refer to the previous episodes if you’ve missed them.  “How Many Merchants Can You Sell”  “How to Sell More than 100 Merchants”  Your up-front bonus will vary greatly depending on some choices you make.  Let me guide you through some important considerations in this episode.  And please share your perspective in the comments section below.

Right now go to instantquotetool.com so I can update you on the use of my calculator.  (Don’t worry – you don’t have to sign in or sign up.  It’s free.)  Click on “goals” at the top.  This is an easy-to-use calculator I created to help you see what your income is going to be in the merchant services industry.  The figures are based on some assumptions which we’ll address in this mini-series.

Assumptions mentioned thus far composing an average sales rep:

• Walking into twenty businesses a day – where you haven’t spoken to a decision maker.
• You’ve completed some training at instantquotetool.com.
• You know how to close some deals.
• You are a decent sales person.

If you have any questions about those four assumptions, please refer to the previous episodes again.  “How Many Merchants Can You Sell”  “How to Sell More Than 100 Merchants”

We filled in the sales per month for year one on the calculator with the number 12.  Then we filled in the sales per month for year 2 with number 7.  The sales per month in year 3 is the number 5.

Next, look at the average up-front bonus.  In the calculator right now, it’s set at $150.  Let’s discuss how to calculate that and what assumption should be used.  The biggest impact on this particular assumption is whether you’re selling the terminal or giving it away free.

I have published much content on this subject.  In our industry there are two camps.

#1.  The “free terminal camp.”  The goal with this camp is to get as many sales as possible by giving the terminals free.  I strongly encourage all reps to have this option available to you.  Most merchants realize the terminal is not truly free.  Pricing is usually higher; there are many requirements to get it; and there is usually a monthly paper fee.  Several years ago, I sold a local merchant with a “free” terminal.  After having paid higher pricing of $10 or $12 monthly for probably seven years, the merchant switched to another company and was charged $795 for a seven-year-old VX-520.  That was a “free” terminal!  And I paid the $795.  Thus, the “free” terminal should be an available tool, but it is currently not too effective.

#2.  Terminal lease.  Assuming you’re doing a reasonable lease of perhaps $39 a month for 48 months, you will make a bigger up-front bonus of about $700.  If you offer the free terminal, you’ll get about $150 to $200 up-front.  These figures can vary by processor.

There are other important considerations in this process.  Making as much as possible up front is not always the most profitable decision.  Consider whether the processor is providing resources such as leads, training, coaching, structure, people to do installs, etc.  Correct comparison is vital.  Ask these questions:

• How many sales are you going to make?
• How many sales are you going to make after that first 100?
• Is the processor going to support the merchant?

Some processors have reduced their cost by reducing their level of support to the agent and the merchant.  In these cases, the down side to more up-front bonus is losing customer service.  Other processors spend their money to offer you leads, coaching, and very good support.  Because of that, they may not have quite as much to pay in up-front bonuses.  Take these things into consideration before making a decision.

Here are my suggestions for the most accurate number to enter in the average up-front bonus box.

#1.  Let’s assume half your deals are Poynt terminal and cash discounting.  The other half are free terminal where you’re receiving $200 up-front bonus.  In this scenario, change the number from $150 to $450 for our mini-series.

#2.  If you decide never to lease but always offer free terminals, that’s fine.  But there is an impact on your income.  Change the number in the box to $200.

#3.  If you plan to do 90% leases, enter $700 or $800.   

For the purpose of the rest of our mini-series, I am entering $450.  I hope these considerations have helped guide you through understanding up-front bonuses.  If these are helpful to you, please help me by sharing this on your social media!

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How to Sell More Than 100 Merchants – Merchant Services Sales Commission

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