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  • 1. Everybody Wins BIG! How 84 Heartland Payment Systems employees became millionaires overnight By Lisa Gschwandtner Photography by Jeff Weiner to authorize. When purchasing is thatfast and easy , its no wonderSELLING POWER JUNE 2008

2. A PIECE OF THE PIE ing. Its a very complicated system, Carr The banks and credit card companies take SEEKING BEST IDEASsays. We fully disclose the way the system their share of each transaction, of course.works, we fully disclose how much moneyThrough Heartlands Best Idea Award, But theres also the telephone company were making, and we disclose how muchemployees send in ideas, which Carr that transported the call to authorize the money is going to these credit cards andpersonally 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 graspees through that mechanism, he says. system. Sometimes an independent sales the intricacies of the system before theyOur employees are pretty open. I think organization (ISO) takes a cut. Sometimesstart hitting the pavement.they trust us enough that they can tell ISOs work with independent contractorsI tell people that they can learn enoughus the bad news without getting fired that charge their own fees. Oh, and thein a week to go out and do a decent job ofbecause they are telling us something company that sold the computer systemmaking a sales call if they have any saleswe dont want to hear. the merchant used to process the payment experience whatsoever, says Heartlands There is no fear of retribution if they also makes a little off the deal.chief sales officer, Sanford Brown. Butcome to Bob or to me or to our CFOAccording 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 toWill you help me understand it better? ing company based in Princeton, NJ, up toknow. They could continue to find newsays Brown. And thats created a a dozen companies can be involved in col-verticals, nuances, and niches to follow.culture, I think, where people act on lecting funds related to a single credit card Heartland puts so much faith in trans-information much quicker when it is transaction. Thats a lot of hands compet- parency that the company has created abrought to their attention than they ing for a slice of the payments pie. Merchant Bill of Rights, which is postedwould in a lot of organizations.on the companys Website at merchant- Some of the simplest ideas have A C U LT U R E O F S A L E S billofrights.com.made the best and biggest impacts in Heartland doesnt use ISOs or indepen-On the site, customers can watch athe company. Carr relates, Somebody dent contractors or agents. Why? As thevideo titled, How to Tell If Your Rightsjust today asked if we could please companys name might suggest, Heart- Are Being Violated. Among the questionstruncate the merchant number on the land Payment Systems defines value asposed: When Visa and MasterCard feesreceipt. I mean, everybody else in the more than dollars and cents. go up, does your processor add markupsworld prints the merchant number onWe have a culture of sales in our com- that raise your rates even higher?the receipt. That means a smart crook pany, says Heartland CEO and founder,can take your merchant number, key it Bob Carr, who is proud to proclaim thatWA L K I N G T H E TA L Kinto a terminal, buy a terminal on eBay, Heartlands commission-only sales struc- The markup question isnt just rhetorical.and process a bunch of fraudulent ture has held steady since the companys In 2003, when VISA and MasterCard losttransactions. Ive been in this business founding 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 the tomers 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 is live next door, their family members, and processing plan and performing it. It also that we are going to tell you what we are their friends. They can confidently go outoffers merchant customers payroll ser- going to charge you. Were not going to to sell to those people and know that their vices, gift and incentive programs, andchange the rules in the middle. If our costs promises are going to be kept. point-of-sale devices and supplies.go up because VISA or MasterCard raises itsThis philosophy has made Heartland theManaging these services can get veryrates, youll have to pay that extra. But if they sixth 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 their lite 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 our ville, 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 havent working 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 profit that 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 think Although several thousand organizations how the system works to the business thats what capitalism is all about having sell payment processing plans, there areowner, and they appreciate understand- a better mousetrap.JUNE 2008 SELLING POWER 3. MAKING MILLIONAIRES One group thats not complaining Heart-REAL-TIME REWARDS lands sales force, and not just because Among thousands of organizations selling processing services, Heartland has broken theyre selling services they truly believehistoric ground in the industry by reaping billions in revenues through organic growth. Carr in. 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 competitors thanks 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 server the signing bonus approach, which hastechnology instead of mainframes, and that allows us to be cheaper and faster than not changed in 14 years. our competition. Other companies may have been in business for 30 or 40 years, but ourThe 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 more installation, he explains. Then they get efficient process. Recently, when a Wendys clerk accidentally keyed in an $11.11 paid 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 the good 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 the company went public, hes added 84 We now have salespeople who are Some of my favorite stories are of the names to the high-rollers list. becoming millionaires just based on thetop sales performers in our company who value of their monthly residuals, which is used to own their own restaurants or dry very exciting to me. We measure sales by cleaning stores, he adds. Or they wereFIGHTING CHALLENGES WITH INNOVATIONthe margin added per month. It used to bemanagers of restaurants or hotels workingHeartland 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 ato about 59 percent of its initial value.plan has become an expensive proposition.lot of people who come work for us are Like any great competitor, however, We dont make any money whatsoeverlooking for the American dream. TheyHeartland 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 monthsthin