Loading Dock MIDs
Posted on June 22, 2015
Everybody has that friend of a friend, right? The guy that “knows somebody” who can get a deal on, well, anything. Water heaters to dry ice machines, when the connection is good, the prices are better. So what if nobody knows who this guy is, or why he gets such great deals—it’s a tough economy, and who doesn’t need to save as much as they possibly can? Thousands of full-service agencies have published tens of thousands of rebuttals to dissuade their client base from buying into this concept—don’t go with the connection, you’ll pay for it later! Your business will fail, your dog will die, the apocalypse will occur in your living room! The problem is that, with rare exceptions, that prognostication doesn’t pan out—the deal is still pretty good, even if it’s not everything it was sold as. The perception is that the full-service guys are unwilling to compete with the secret deal on price, and that connection is really worth his weight in cold, hard cash. That said, there are a couple of places where the risk really isn’t worth the reward. Take brake jobs, for example. They’re simple to do, and generally not very expensive. The difference in cost between having a reputable shop do the work, and doing it yourself, is usually less than $50. Even if the job was twice as expensive, the risk of screwing up your brakes just isn’t worth the savings.
For online merchants, another one of those areas is merchant processing. Recently, we had a client that went with the “more is better” approach to acquiring MIDs (which we generally endorse), and got a friend of a friend to open a few accounts for him. The rate was pretty good, too— a half-point or so better than he was getting quotes for on his own. He moved a lot of his volume to the MIDs, carefully managed his chargebacks, kept everything clean, and invested a significant portion of his company’s assets to grow his business based on that MID source. He did everything the right way, and saying he was counting on having that MID volume would be akin to saying that fish count on water. Of course, the MID got shut down, and for reasons beyond his control—the sponsoring bank decided to turn down their risk profile, and closed anything in his vertical as of a certain date. Immediately, he had no processing, and no cash flow, which is when he came to me asking for help. I called around, and talked to a couple of reputable ISOs that used the same sponsor bank—they all said that they’d been given ample notice of the pending shutdown, and had moved their clients to new banks. The process took a couple of weeks, but the sponsoring bank had allowed processing to continue until the clients had been moved over.
Without a representative watching out for him, my client ran headlong into one of the scariest of all possible situations, and ended up losing a lot of time and momentum for his campaign. Forgetting the lost revenue from the transactions he could no longer process, he needed to immediately scale back his media purchases, which lost him his best affiliate marketers. To rub salt in the wound, most of those sources went to competing offers, so not only did he lose the sales he’d made; he lost the sales he could have made, for a long time to come. For an online marketer, that’s a lethal concept, and one you need to consider carefully before signing on with a “connection”. Make sure you’re getting the level of support you need to grow your business, from a reputable source with strong experience, or count on a devastating blow to your business down the line!
– Matt Glick, Director of Business Solutions, Media Funding Corporation