This document summarizes an article about Heartland Payment Systems, a payment processing company. Some key points: - Heartland has a unique commission-only sales structure that has created many millionaires within its salesforce. Its transparency and customer-first approach has led to significant growth. - Where many competitors operate outdated systems, Heartland has invested in new technology platforms, allowing it to offer lower prices and more services to customers. - The company's CEO, Bob Carr, attributes their success to a "culture of sales" and treating customers and salespeople well. Heartland's compensation plan incentivizes salespeople to focus on customer service and retention.

1. Bob Carr
CEO and founder
BIG!
Everybody Wins
How 84 Heartland
Payment Systems
salespeople became
millionaires overnight
By Lisa Gschwandtner • Photography by Jeff Weiner
credit card fast and easy,
The average transaction takes fewer than 10 seconds to authorize. When purchasing is that it’s no wonder
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SELLING POWER JUNE 2008

2. ing. It’s a very complicated system,” Carr
A PIECE OF THE PIE
The banks and credit card companies take says. “We fully disclose the way the system
SEEKING ‘BEST IDEAS’
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 SUCCESS PAYOUTS
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.” To succeed, Brown says, you must first
“We get a lot of input from our employ-
hooked up the merchant to the telephone Even salespeople may not fully grasp help others succeed. “Like Zig Ziglar said,
ees through that mechanism,” he says.
system. Sometimes an independent sales the intricacies of the system before they ‘You can get anything you want providing
“Our employees are pretty open. I think
organization (ISO) takes a cut. Sometimes start hitting the pavement. you help enough other people get what
they trust us enough that they can tell
ISOs work with independent contractors “I tell people that they can learn enough they want. Help enough people meet their
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 dreams, and you’ll meet your dream.’”
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 cul-
a dozen companies can be involved in col- verticals, nuances, and niches to follow.”
ture, I think, where people act on infor-
lecting funds related to a single credit card Heartland puts so much faith in trans-
mation much quicker when it is brought
transaction. That’s a lot of hands compet- parency that the company has created a
to their attention than it does in a lot of
ing for a slice of the payments pie. Merchant Bill of Rights, which is posted
organizations.” on the company’s Website at merchant-
Some of the simplest ideas have billofrights.com.
A ‘ C U LT U R E O F S A L E S ’
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
funnel $3 trillion has its price.
electronic payment processors through their payment systems each year. Convenience, however,
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 Sanford Brown
that make up Heartland’s customer base. out of the industry for them,” says Carr. Chief Sales Officer
“Our main advantage is that we explain “And I think that’s a good thing. I think
FULL DISCLOSURE
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.”
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3. 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
that $10,000 was considered to be a great 80 hours a week. What predicts sales suc-
Heartland has not escaped unscathed
sales month. Last month, our top sales- cess in our company is not sales-based,
from the recent economic downturn.
person did $80,000.” it’s behavioral.
The company missed its fourth-quarter
That means their commission payment “This may sound a little hokey, but a
earnings forecast, and its stock dipped
plan has become an expensive proposition. lot of people who come work for us are
to about 59% of its initial value.
“We don’t make any money whatsoever looking for the American dream. They
Like any great competitor, however,
until the fourteenth month of a relation- want an opportunity to be able to do some-
Heartland has responded to challenge
ship. So if a merchant leaves us six months thing financially rewarding for an organi-
with innovation. “We’re trying to find
after they start, it is not a good thing for us. zation that they can feel good about. And
ways to make our offering unique. One
But that doesn’t happen often. We have they want to do so in a way that they are
is a product we call ‘Express Funds,’”
been in business long enough now and contributing something meaningful and
says Carr. “This is a product with which
we have enough merchants that have been that over time they can look at it and say,
businesses can scan their checks and
with us for more than 14 months that our ‘Boy, I see my mark on it.’”
allow us to overnight-deposit those
profitability continues to grow.” Heartland’s approach to sales makes
funds to any bank in the country. It
Can newly hired salespeople become it unique in an industry that often treats
allows us to sell to a much larger group
millionaires in the company? Yes, says its sales forces as an afterthought. “I
of businesses than just card payments.
Carr, but only after many years of hard think a lot of CEOs think their company
That speeds up cash flow and saves
work and successes to get to the upper exists because of their great name,” Carr
[merchants] a trip to the bank.”
echelons of the sales force. He admits that says. “Maybe that’s true for some com-
Another product is Heartland’s
the bar has been raised since the company panies, but when you are providing
‘Campus Card Solution,” which allows
went public. After all, you can only take financial services to small-business peo-
college students to pay for purchases
your shares from 30 cents to $25 once. ple, they want to do business with some-
using their cell phones. “What’s
“At the same time, we have a more com- body they can rely on who gives good
great about it is that students always
petitive product,” he says. “We can go after service and gives them a good value for
have their cell phones, whereas they
bigger customers. We have more products. their money. We think we have a very
might not have their wallet or purse,”
And so we just have some salespeople who competitive product that way.”
Carr explains. “The reason the
are doing extremely, extremely well.” FEEDBACK: GSCHWANDTNER@
community likes it is because we
SELLINGPOWER.COM
charge the merchant less to take this
ENTREPRENEURIAL SALESPEOPLE
card than to take a VISA or MasterCard. MORE ON THIS TOPIC
What kind of reps perform best at Heart-
The merchants pay less, and the Visit our Web address below and click under
land? The common thread is an entrepre-
money they do pay goes back into the “Everyone Wins Big” for your Bonus Articles:
neurial spirit. Within the Heartland team, 1. Retention Perfections 2. Just Hang On to
community, to nonprofit organizations
What You Got 3. Seven Success Essentials
chief sales officer Sanford Brown esti-
as well as to the cardholder, who (Available through 9-1-08)
mates that perhaps 20 percent are first-
gets a ‘cash-back’ component.” www.sellingpower.com/june08
generation immigrants.
56 JUNE 2008 SELLING POWER