If you want to grow your business by 5%, 10% or even 20%, get American Express. Interested? Keep reading…
Before we get to American Express though, let me first talk about cards in general. A lot of business owners out there still refuse to accept payment by credit. This, in my opinion, is a big mistake. Why? Well let me share the following story with you.
Pretty much every day, my family and I go to a local cafe for breakfast. There’s one that we really like, so we go there a couple of times a week. The food is great, the service is good, but they don’t accept credit – which for me is really annoying.
One day I bailed up the owner and said, “Hey, Des… why don’t you take payments by card?”
His answer was, “Bloody fees mate, they’re a killer. Besides we’re always busy, so I’ve never bothered.”
To this I had to shake my head. “I get it Des, but you gotta stop focusing on the fees.”
“What do you mean?”
“Every time I come here, the first thing I do is sit down and check my wallet. If it has been raided the night before, I might only have $50 or sometimes even $20 left. So I ensure my kids get their customary mini banana smoothie and scrambled eggs on toast and for me, well I just order a coffee. Then when I get to the office, I’ll have a piece of fruit, which pretty much tides me over until lunch. However, if I am cashed up, I will order what I like, which is normally a long black, the big brekkie wrap and freshly squeezed veggie juice.”
Response…silence.
I went on to say, “Now, there are probably 50 people like me every day, so by not offering credit you are probably kissing goodbye 20% extra revenue, which makes the 2% fee insignificant. Plus, I take your point about always being busy, but growing your business is not always about serving more customers. It’s about maximising the output of the ones you’ve already got.”
“So accept credit, which will shoot up your average dollar sale. Then enjoy the extra profit. Or if you are sick of working, close on Monday and go surfing and you’ll still be making the same money you are now.”
After a prolonged pause, Des finally replied and sounding somewhat dejected he said, “Oh… thanks mate… I’ve never thought of it that way.”
“Don’t be depressed, this is a good thing,” I enthused.
He said “Nah, I’ve been running this business for seven years, now I’m thinking about how much money I’ve lost…”
This story would be funny if it was a one off, but it’s not. Tens of thousands of Australian businesses still operate ever year and only accept cash. If you’re one of them (and you’re not laundering money) please fix this immediately! Call your bank and get them to set up EFTPOS, Visa and MasterCard.
Once you’ve hung up the phone, pick it up again and call American Express (Amex).
When I ask business owners, “Why don’t you take Amex?” They say – again – “Argh, their fees are too high.”
From what, 2% to a whopping 3%?! They also say, “If I tell people I don’t take Amex, they just pull out another card.”
This is not the right approach to this situation and it’s costing you big time.
First of all, in regards to the fees, I know they suck (remember I’m a business owner too). Instead of being resentful of them though, suck it up and focus on the $100 you just made instead of the $3 you just lost. Or as one of my mentors, Roy McDonald, used to say, “Stop majoring in the minors.”
Furthermore, Amex have done some interesting research; the data from which can be found on their website. They say, “The average American Express Card member spends 64% more on credit cards per month than other cardholders and has a personal income 26% higher than that of non-American Express cardholders.”
So focusing on Amex’s extra 1% is completely stupid. The reality is, Amex cardholders spend a lot more than everyone else.
So focusing on Amex’s extra 1% is completely stupid. The reality is, Amex cardholders spend a lot more than everyone else.
Now on to the second point, that, ‘people just pull out another card’. You may not realise this, but many big companies only give their employees an Amex card to use for their company expenses. If they had to, they could use their personal Visa or MasterCard, but then they’d have to put in an expense claim and wait possibly up to a month to get their own money back. Who’s going to want to do that?
So maybe you’re not losing any sales at the register, but you’re losing a whole bunch from the people that aren’t even coming in the front door. If you accept American Express and you put their sticker in your window, you’re effectively saying to tens of thousands of people, “If you come into my store, I’ll help you to spend your company’s money.”
And whatever you do, don’t surcharge, on any card, ever! It’s like saying to the customer, “The banks are screwing me, so because of that, I get to screw you.” Remember that old saying your mother told you, ‘Two wrong’s don’t make a right’? Well that applies here. So again, don’t surcharge. All it does is put a sour taste in a customers mouth, at the exact moment when they should be feeling elated about their latest purchase.
Now there are a bunch of other facts I could tell you about and stats I could quote, but I think I’ve made my point.
Bottom line: If you are a business and you want to make more money, make the decision now to accept all cards and never surcharge. Then spend the rest of your time and energy growing your business.
