[Zach]

If you don't position it well, then yes. It's key to know the merchant's other options before the negotiation phase.

To me the greater risk is all of the money left on the table by merchants that would have been willing to pay more.

One 12-point deal for 100K is worth the same as three 4-point deals.

Plus, you can always back down on rate or fees (unless you push too hard).

[AndyYSCISOdept]

If you don't position it well, then yes. It's key to know the merchant's other options before the negotiation phase.

To me the greater risk is all of the money left on the table by merchants that would have been willing to pay more.

One 12-point deal for 100K is worth the same as three 4-point deals.

Plus, you can always back down on rate or fees (unless you push too hard).

Okay, here are two issues I see.
1. Knowing the merchants other options - Someone told me a long time ago two things are guaranteed merchants lie and brokers lie to merchants.
2. Backing down on the fee or the rate - I have found that a lot of times going to high off the bat never allows you to get to the point of "backing down" because, and this is from the merchants I have spoken with about this issue, they feel like the broker tried to take them to the cleaners instead of giving them the best option possible upfront.

[Zach]

Okay, here are two issues I see.
1. Knowing the merchants other options - Someone told me a long time ago two things are guaranteed merchants lie and brokers lie to merchants.
2. Backing down on the fee or the rate - I have found that a lot of times going to high off the bat never allows you to get to the point of "backing down" because, and this is from the merchants I have spoken with about this issue, they feel like the broker tried to take them to the cleaners instead of giving them the best option possible upfront.

#1: Check the credit report for competitor pulls and ask the client about them. Say that you need to know what offer they presented so you can be as effective as possible for them. Ask them why they didn't move forward on that offer.

#2: It is certain that you will lose some deals by employing this strategy. However, the deals that close will be much higher revenue, which will cover any deals you may have lost (and leave you with a net gain).

[Chambo]

One 12-point deal for 100K is worth the same as three 4-point deals..

That's rookie BS. three deals are far more valuable, as you now have three potential renewals, which will net you more money down the road.

Who's a better ball player? The one who hits .225, but hits 35-40 HR's, or the guy who only hits 6-10 HR's, but bats .350?

[Zach]

That's rookie BS. three deals are far more valuable, as you now have three potential renewals, which will net you more money down the road.

Who's a better ball player? The one who hits .225, but hits 35-40 HR's, or the guy who only hits 6-10 HR's, but bats .350?

Interesting comparison. Why would 3 renewals at 4 points be more valuable than 1 renewal at 12? I understand for a syndication portfolio it is more valuable to have diversified risk, but why would it make any difference for a broker, seeing how it is the exact same revenue with less work?

[Chambo]

Interesting comparison. Why would 3 renewals at 4 points be more valuable than 1 renewal at 12? I understand for a syndication portfolio it is more valuable to have diversified risk, but why would it make any difference for a broker, seeing how it is the exact same revenue with less work?

That's what you get for thinking in the here and now, as opposed to 4-6 months down the line

[Zach]

That's what you get for thinking in the here and now, as opposed to 4-6 months down the line

How do you mean?

Our renewal rate is through the roof because we can just drop points and secure it (since we sold it high, it's easy to come down and win the business again). Not only do we make more on the front, but also on the back. I think my model might be more effective than what you're referring to.

[ridextreme]

How do you mean?

Our renewal rate is through the roof

doesn't wbl owning their assets have anything to do with it?

[Michael I]

Interesting comparison. Why would 3 renewals at 4 points be more valuable than 1 renewal at 12? I understand for a syndication portfolio it is more valuable to have diversified risk, but why would it make any difference for a broker, seeing how it is the exact same revenue with less work?

Zach if your merchant stacks , goes out of business , no longer needs . Chambo is 100 percent correct on this

[MCNetwork]

Zach if your merchant stacks , goes out of business , no longer needs . Chambo is 100 percent correct on this

Exactly. That's why 3 deals at 4 points each is worth more than a single deal at 12 points. Although the upfront revenue is the same, your risk is diversified and you have more income opportunities with 3 merchants versus 1 when it's renewal time. If you lose 1 of the 3 in the future, you can still earn 8 points on the other 2 when they renew. If you lose the 12 point guy down the road, you're screwed.

[AndyYSCISOdept]

Exactly. That's why 3 deals at 4 points each is worth more than a single deal at 12 points. Although the upfront revenue is the same, your risk is diversified and you have more income opportunities with 3 merchants versus 1 when it's renewal time. If you lose 1 of the 3 in the future, you can still earn 8 points on the other 2 when they renew. If you lose the 12 point guy down the road, you're screwed.

I have always thought that the best way to stay in the game is to keep merchants around, they wont stay around if they get bashed over the head. Give me 5 10K deals over a 50K deal every day of the week. If just 1 of those renews 3-4 times that's a solid win for me, my ISOs, my syndication portfolio and my underwriters.