Magazine Article | May 16, 2015

Payments: Driving An ISV's Growth

By Matt Pillar, chief editor

As SaaS-provider MINDBODY continues its focused approach to a growing market, becoming an ISO has helped drive its revenue growth.

“The compelling feature of the SaaS delivery model is that there’s no big up-front cost. For these small businesses, a monthly access fee is perfect,” says Greg Wookey, Sr. VP of the Payments Division, MINDBODY

Photos by Barry Goyette

Rick Stollmeyer’s story isn’t that of your typical Naval Academy graduate. Upon leaving the Academy with a degree in political science and Russian language, he spent six years underwater, serving as an officer on a nuclear-powered attack submarine. Then he left the Navy and landed a lucrative corporate engineering gig. He soon toyed with opening his own engineering services firm. It’s all pretty standard stuff for a Naval Academy grad — lots of intelligence, lots of world travel and adventure, followed by lots of business opportunity.

Then, in 2001, Stollmeyer’s career path changed. As launch plans came together for his engineering services business, Stollmeyer stumbled into — and fell in love with — an opportunity in the yoga business. Perhaps to his own surprise, he founded a software company dedicated to serving it. While it’s a sharp turn from attack submarines and corporate engineering, it’s one that Stollmeyer has made work — and work very, very well. Today, MINDBODY is the leading global online wellness marketplace that employs over 1,100 employees. The company’s Web and mobile software solutions drive business for over 42,000 local business subscribers in more than 124 countries and territories.

We sat down with Greg Wookey, Sr. VP of the Payments Division at MINDBODY, to learn about the company’s growth strategy. He told us the success strategy is rooted in focus and dedication to the customer at every level of the organization, from software development to payments integration to sales and service.

Of course, lots of service companies say that. We asked for details, and Wookey was happy to share them.

SaaS When SaaS Wasn’t Cool
The first evidence of the customer-centric culture at MINDBODY can be traced back to 2004 when a new partner and a corporate decision led to its biggest turning point to date. Bob Murphy, proprietor of a successful Yoga studio chain in NYC and a MINDBODY software customer, went allin on the company. He and Stollmeyer set out to reengineer both the software and its delivery mechanism. “The software went from desktop to a completely web-based, subscription model, and things really took off,” says Wookey. “Our typical customer is the small business owner with two or three employees.” That, says Wookey, is partly how MINDBODY found success with SaaS (Software as a Service) before anybody even knew what SaaS was. “The compelling feature of the SaaS delivery model is that there’s no big up-front cost. For these small businesses, a monthly access fee is perfect.”

A receptive market embraced the model, providing customer-centricity exhibit 1: cross-channel product delivery isn’t just for omni-channel consumers. With the advent of SaaS, businesses are omni-channel buyers, and digital delivery serves B2B customers, as well.

Get In The Trenches: Become An ISO
Around the same time MINDBODY moved over to the cloud, another decision was made that demonstrated continued focus on customers. “Rick was dissatisfied with the cumbersome approach our customers endured to take payments,” says Wookey. “We became determined to help customers accept payments more seamlessly within the software rather than through a separate terminal.” So, about ten years ago, MNDBODY entered the payments market. The move enabled a seamless and efficient payment experience for MINDBODY subscribers (and their clients). And, about five years ago, the company became an ISO of Wells Fargo Bank via Transfirst.

“It’s a bit of a food chain in the payments industry,” says Wookey. “In some ways, it’s like several different companies fighting hard over $2.00. That’s a zero-sum game.” By becoming an ISO, Wookey acknowledges that MINDBODY took on a bit more risk through its involvement in the acquiring and sales functions, but he says it demonstrates a vested interest in how well its merchant customers perform. “As an ISO, we own more of the customer experience, which is central to our business model. It’s better than an agent/ referral arrangement,” he says. Payments are also an important source of revenue for MINDBODY. “Anything we can do to reduce the number of third parties that our customers have to contract with enables a smoother experience.”

This ownership of the customer experience parallels MINDBODY’s direct sales model, which is designed to be able to acquire 99 percent of its subscribers through its own sales force, comprised of representatives in New York, California, London, and Sydney, Australia

This brings us to customer-centricity exhibit 2: seek more mindshare with and “ownership” of your customers by offering more of the services they need — even if that requires a significant effort, like becoming an ISO.

Accommodate Variable Software NeedsSubscribe to Business Solutions magazine
While a majority of business locations that MINDBODY serves are relatively small, the global market it serves is substantial. According to the Small Business Development Center, the U.S. boasts some 86,000 hair care salons, more than 30,000 health clubs, gyms, and fitness studios, and 230,000+ personal trainers, which only account for a selection of the businesses the company serves. “With so many different types of businesses offering wellness-related services, we find that software needs vary significantly. From memberships to appointments to product sales, our subscribers are all managing things differently,” says Wookey.

For example, some business subscribers don’t operate out of physical locations and rely heavily on mobile management. Others require unique booking capabilities, as in booking multiple services in a single time slot, at different rates. “One salon practitioner can offer hair and facial treatments, for instance, during the same 45-minute appointment. That’s antithetical to the standard appointments-based model, but the ability to facilitate multiple bookings enables maximized efficiency for that business.”

To accommodate a wide range of variables — which translate to variables within the software — Wookey says MINDBODY developers look within. “We’ve been focused exclusively on health, wellness, and beauty for 15 years. These industries are reflected in our company culture. Many of our team members are wellness instructors themselves and/or use health and wellness services regularly,” he explains. Because wellness permeates the company culture, he says many of their most successful development efforts are hatched within the four walls. “The wellness industry is rapidly evolving, and because we’re so immersed in it at every level of the organization, we’re able to ensure that the latest terminologies and services are built into our offerings.” Where a customer requests something outside of the MINDBODY wheelhouse, it turns to partnerships, such as its integration of the Listen360 consumer feedback platform and third-party email campaign applications like Constant Contact.

Therein lies customer-centricity exhibit 3: listen to, understand, and deliver on your customers’ service and software feature requests.



“In some ways, it’s like several different companies fighting hard over $2.00. That’s a zero-sum game.

Greg Wookey,
Sr. VP of the Payments Division, MINDBODY

 

 

Don’t Fear The Competition
The biggest competitive solution that MINDBODY’s business management program faces is still pen and paper, Wookey says. On the payments side, MINDBODY competes with customer interest in POS/payment “lite” applications like those offered by Square and Intuit. “There’s growing interest in easy-touse, stand-alone payment platforms, but it’s easy to demonstrate the value of our more comprehensive solution,” says Wookey. MINDBODY’s platform includes scheduling, CRM, POS, reporting, analytics and a suite of powerful marketing tools, all designed to help subscribers run, market, and build their businesses. Along with a myriad of apps, addons and technology partners that leverage this platform, subscribers can list their businesses on MINDBODY Connect, the consumer- facing mobile application that allows users to find, book, and pay for wellness services worldwide. “This gives our subscribers the advantage of having an expanded avenue for exposure and for capturing new clients,” he says.

MINDBODY’s management tools are also available to its subscribers in mobile fashion via MINDBODY Express. The mobile app allows subscribers to carry out business operations and reporting from anywhere at any time. Wookey says it’s proven particularly popular for single-service providers and solo practitioners who don’t necessarily operate brick-and-mortar facilities.

Exhibit 4 of MINDBODY’s customer-centric philosophy follows closely on the heels of exhibit 3: where featurerich and responsive applications are found, sales confidence soon follows