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At a recent board meeting for a non-profit I am a director of, the executive director asked board members to identify the attributes of successful organizations. Lots of ideas went flying around, and several were quite interesting, so I’m going to make these attributes the topic of today’s blog post, as well as upcoming posts.
A SUCCESSFUL COMPANY MAKES IT EASY FOR CUSTOMERS TO DO BUSINESS WITH IT
An example of this is Square, the credit card payment processing company. Square identified two key pain points that retailers, and especially smaller retailers, suffer when dealing with their credit card processor. The first pain point is that there is no transparency as to rates. The typical credit card processor can have dozens of rates, depending on the kind of card, rewards programs, affinity programs, whether the card is swiped or the number is keyed in, etc. So the average small business has no idea what rate they will be paying on any given transaction. It also makes it very difficult for the average retailer to compare one processor against another.
How did Square solve this problem? The solution is actually pretty simple: two rates. Square charges 2.75% on every swiped transaction or online store transaction, and 3.5% plus $0.15 on every keyed transaction (which are much less common). Those rates apply whether the card is a Mastercard, Visa, Discover, or Amex. If you have ever run a retail business, you know that Amex rates are usually higher than Mastercard or Visa, which is the primary reason many small businesses don’t accept Amex. By using the same rate for each major card, Square takes away any excuse retailers have for not accepting Amex, which in turn makes it easier for people to do business with those retailers, too. See how it works? There are no special rates for travel rewards cards, or university alumni cards, or any nonsense like that. The rates are disclosed right on the Square website, in easy-to-read language. Interestingly, Square isn’t competing by having the lowest prices, because its rates aren’t really low. They are average, at best. The key is the transparency.
The second pain point is that many small businesses don’t want to invest in expensive card-swiping machines, and in particular, there are a lot of mobile businesses that need some kind of card-processing technology for when they take payments at flea markets, craft fairs, customer home visits, etc. Square’s solution to this is pretty simple, too. It provides a very small credit card reader that plugs into the headphones jack of any tablet or smartphone, and works on both the Android and iOS platforms. The thing is about the size of a postage stamp, where the conventional card readers are more like the size of a ladies size 5 shoe. Because it is mobile, you don’t need to have it hard-wired to a fax or phone line. Here’s the best part of it – it’s FREE. The average card-swiping machine can cost several hundred dollars, by contrast.
To summarize, Square identified a discrete market segment (small retailers) that was frustrated by their credit card processing options. Square identified two very common frustrations that segment experiences on a regular basis, and completely eliminated those frustrations with pretty obvious solutions. Your processor charges a bewildering array of rates that could confuse a mathematician? We’ll simplify things down to two rates, and tell you upfront. You don’t want to invest in expensive equipment that limits your mobility? We’ll provide an easy device to free you from your phone line, and we’ll make it free.
So if you want to be successful, follow Square’s example and make it really easy for your customers to do business with you.
Follow me on Twitter @PaulHSpitz
