3. Everybody Wins BIG!
How 84 Heartland
Payment Systems
employees became
millionaires overnight
By Lisa Gschwandtner • Photography by Jeff Weiner
to authorize. When purchasing is that fast and easy , it’s no wonder
SELLING POWER JUNE 2008

4. A PIECE OF THE PIE ing. It’s a very complicated system,” Carr
The banks and credit card companies take SEEKING ‘BEST IDEAS’ says. “We fully disclose the way the system
their share of each transaction, of course. works, we fully disclose how much money
Through Heartland’s Best Idea Award,
But there’s also the telephone company we’re making, and we disclose how much
employees send in ideas, which Carr
that transported the call to authorize the money is going to these credit cards and
personally 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 grasp
ees through that mechanism,” he says.
system. Sometimes an independent sales the intricacies of the system before they
“Our employees are pretty open. I think
organization (ISO) takes a cut. Sometimes start hitting the pavement.
they trust us enough that they can tell
ISOs work with independent contractors “I tell people that they can learn enough
us the bad news without getting fired
that charge their own fees. Oh, and the in a week to go out and do a decent job of
because they are telling us something
company that sold the computer system making a sales call if they have any sales
we don’t want to hear.”
the merchant used to process the payment experience whatsoever,” says Heartland’s
“There is no fear of retribution if they
also makes a little off the deal. chief sales officer, Sanford Brown. “But
come to Bob or to me or to our CFO
According to the experts at Heartland it’s so complex that, 10 years from now,
and say, ‘Hey, this doesn’t seem right.
Payment Systems, an electronics process- they won’t know everything there is to
Will you help me understand it better?’”
ing company based in Princeton, NJ, up to know. They could continue to find new
says Brown. “And that’s 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. That’s a lot of hands compet- parency that the company has created a
brought to their attention than they
ing for a slice of the payments pie. Merchant Bill of Rights, which is posted
would in a lot of organizations.”
on the company’s 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 doesn’t use ISOs or indepen- On the site, customers can watch a
the company. Carr relates, “Somebody
dent contractors or agents. Why? As the video titled, “How to Tell If Your Rights
just today asked if we could please
company’s name might suggest, Heart- Are Being Violated.” Among the questions
truncate the merchant number on the
land Payment Systems defines value as posed: “When Visa and MasterCard fees
receipt. I mean, everybody else in the
more than dollars and cents. go up, does your processor add markups
world prints the merchant number on
“We 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 that WA L K I N G T H E TA L K
into a terminal, buy a terminal on eBay,
Heartland’s commission-only sales struc- The markup question isn’t just rhetorical.
and process a bunch of fraudulent
ture has held steady since the company’s In 2003, when VISA and MasterCard lost
transactions. I’ve 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 it’s tice, 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 among ty to pass the savings on to its customers.
bers go to church with, the people who its competitors for both selling a payment “Our 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 out offers merchant customers payroll ser- going to charge you. We’re not going to
to sell to those people and know that their vices, gift and incentive programs, and change 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 its
This philosophy has made Heartland the Managing these services can get very rates, you’ll have to pay that extra. But if they
sixth largest player in its industry. With complex, very quickly. Too often, Carr go down, we’re going to give you a discount.”
2,900 employees, Heartland operates satel- says, the electronic payment system oper- “Our board members thought we had
electronic payment processors funnel $3 trillion through 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 the The 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 knell Heartland’s business practices haven’t
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 we’re taking the profit
that make up Heartland’s customer base. out of the industry for them,” says Carr.
FULL DISCLOSURE “Our main advantage is that we explain “And I think that’s a good thing. I think
Although several thousand organizations how the system works to the business that’s what capitalism is all about – having
sell payment processing plans, there are owner, and they appreciate understand- a better mousetrap.”
JUNE 2008 SELLING POWER

6. MAKING MILLIONAIRES
One group that’s not complaining – Heart- REAL-TIME REWARDS
land’s sales force, and not just because Among thousands of organizations selling processing services, Heartland has broken
they’re selling services they truly believe historic ground in the industry by reaping billions in revenues through organic growth. Carr
in. Last year, about 14 of its 1,600 reps attributes this growth to Heartland’s 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 Heartland’s 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 we’re using client server
the “signing bonus approach,” which has technology 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 our
“The salespeople get paid an upfront salespeople are out with the lowest price. So our salespeople like that.”
cash signing bonus on the Friday after the Heartland offers customers real-time reporting, which makes catching mistakes a more
installation,” he explains. “Then they get efficient process. Recently, when a Wendy’s 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 day “Sometimes 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, he’s 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 the top 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 were
FIGHTING CHALLENGES WITH INNOVATION the margin added per month. It used to be managers of restaurants or hotels working
Heartland has not escaped unscathed that $10,000 was considered to be a great 80 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-quarter person did $80,000.” it’s behavioral.
earnings forecast, and its stock dipped That means their commission payment “This may sound a little hokey, but a
to 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 don’t make any money whatsoever looking for the American dream. They
Heartland has responded to challenge until the fourteenth month of a relation- want an opportunity to be able to do some-
with innovation. “We’re trying to find ship. So if a merchant leaves us six months thing financially rewarding for an organi-
ways to make our offering unique. One after they start, it is not a good thing for us. zation that they can feel good about. And
is a product we call ‘Express Funds,’” But that doesn’t happen often. We have they want to do so in a way that they are
says Carr. “This is a product with which been in business long enough now and contributing something meaningful and
businesses can scan their checks and we have enough merchants that have been that over time they can look at it and say,
allow us to overnight-deposit those with us for more than 14 months that our ‘Boy, I see my mark on it.’”
funds to any bank in the country. It profitability continues to grow.” Heartland’s approach to sales makes
allows us to sell to a much larger group Can newly hired salespeople become it unique in an industry that often treats
of businesses than just card payments. millionaires in the company? Yes, says its sales forces as an afterthought. “I
That speeds up cash flow and saves Carr, but only after many years of hard think a lot of CEOs think their company
[merchants] a trip to the bank.” work and successes to get to the upper exists because of their great name,” Carr
Another product is Heartland’s echelons of the sales force. He admits that says. “Maybe that’s true for some com-
“Campus Card Solution,” which allows the bar has been raised since the company panies, but when you are providing
college students to pay for purchases went public. After all, you can only take financial services to small-business peo-
using their cell phones. “What’s your shares from 30 cents to $25 once. ple, they want to do business with some-
great about it is that students always “At the same time, we have a more com- body they can rely on, who gives good
have their cell phones, whereas they petitive product,” he says. “We can go after service and gives them a good value for
might not have their wallet or purse,” bigger customers. We have more products. their money. We think we have a very
Carr explains. “The reason the And so we just have some salespeople who competitive product that way.”
community likes it is because we are doing extremely, extremely well.” FEEDBACK: GSCHWANDTNER@
charge the merchant less to take this SELLINGPOWER.COM
card than to take a VISA or MasterCard. ENTREPRENEURIAL SALESPEOPLE MORE ON THIS TOPIC
The merchants pay less, and the What kind of reps perform best at Heart- Visit our Web address below and click under
money they do pay goes back into the land? The common thread is an entrepre- “Everyone Wins Big” for your Bonus Articles:
community, to nonprofit organizations neurial spirit. Within the Heartland team, 1. Retention Perfections 2. Just Hang On to
What You Got 3. Seven Success Essentials
as well as to the cardholder, who chief sales officer Sanford Brown esti- (Available through 9-1-08)
gets a cash-back component.” mates that perhaps 20 percent are first- www.sellingpower.com/june08
generation immigrants.
JUNE 2008 SELLING POWER