#32: Digital-first in SMB with Leigh Hocker Radtke, Visa

In this episode of Brand the Change we are talking about the importance of automation in in growing the brand of a small and middle-market business. As Generation Z becomes a larger part of the consumer base, the digital first experience has never been more in demand. Leigh Hocker Radtke, Head of North America Product for Visa Commercial Solutions, shares some of the latest automation solution approaches for entrepreneurs, small and middle market companies that are supporting growth, reducing costs and elevating brands.

Leigh Radtke leads the North America Product organization for Visa Commercial Solutions leading a team of product experts who focus on bringing innovative payment products and solutions to life for Visa’s bank clients and technology partners to enable small, medium and large businesses to grow and thrive.


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Bonnie Habyan:
Any of us who’s involved in marketing and branding knows the importance of connecting with your audience. That means listening to them and understanding their pain points. But there is a growing trend and pain point for those smaller and middle market businesses that need to serve their clients effectively and efficiently through automated payment solutions. In effect, raising their brand value and credibility to make their clients’ experiences more seamless. And doing so will certainly strengthen their brand and that client connection. And with me today to talk about a key way to do that is Leigh Hocker-Radke, head of North America Product for Visa Commercial Solutions. We’re going to talk about a lot of things, innovation here, and Leigh has a front row seat in seeing how smaller and emerging and growing companies are integrating payment solutions to help serve their customers better. Welcome, Leigh. It is a pleasure to have you.

Leigh Hocker Radtke: It’s great to be here, Bonnie. Thanks for having me.

Bonnie Habyan: You’re welcome. And for those who, who just have listened for the first time, it’s this kind of a fun story. Lee and I were actually sorority sisters many years ago in the same sorority. So little did we think we’d be crossing our paths here in 2024, but it’s great to have her on. So Lee, let’s talk a little bit about the demographics first. What are the characteristics that you feel define those small and middle market companies that Visa is targeting to help in this automation process?

Leigh Hocker Radtke: It’s a question I get every day. So we see, we define small businesses as businesses that are anywhere from a solo business owner just starting out. with really little to no revenue, all the way up to businesses with $25 million in annual revenue and 100 employees. And that largely follows the same definition that the Small Business Administration uses. Now, middle market, which we’re going to talk about a lot, I think, over the next little while, are companies that are between $10 million and a billion. in annual revenue and anywhere from 10 to 5,000 employees. So I know that’s a big, that’s a large, that’s a large range. And we do, we look at it in terms of lower core and upper middle market. And then there’s also a crossover. Right. I said small businesses go up to 25 million, but middle market can start at 10 million. So there’s also this sort of gray area in the middle. So how do we make sense of all of that? We look at other indicators. beyond size.

Bonnie Habyan: And that’s what I was going to ask, because you think about 10, 20 years ago, people would say, listen, I have to get to a certain threshold or a certain point to be able to calculate my ROI on that and to make it doable. I can’t afford that, or I don’t have enough product to push or enough volume to be able to justify it. It seems like that is narrowing a bit. And you have people, like you said, even a solopreneur, that is able to, I guess, tap into some of Visa’s solutions. So maybe you can talk about that because most people probably don’t think that they would even qualify or consider any sort of automation.

Leigh Hocker Radtke: Yeah, well, so to that point, yes, you could be a business of any size. And if you’re running a business, if you’re opening a flower shop, or you’re a graphic artist and it’s just you, or you’re a creator on TikTok, all of those are examples of where you need digital solutions. including digital payment solutions. You could also be a middle market company, a $200 million manufacturer, or you could be a multi-billion dollar multinational company. In all cases, you need digital solutions to help you run your business and digital solutions to help you make and receive payments.

Bonnie Habyan: Okay, so I have to ask you, the TikTok thing has intrigued me. So you may have an influencer or someone out there that’s selling their product using TikTok, right? So it’s a business to consumer sort of scenario, but this person has a million followers or whatnot. So you’re saying, obviously, we’re talking about their backend, I would imagine, their website or however else they’re connecting to drive their leads to. You do have people from that sort of kind of genre of TikTokers using visa payment solutions. That’s right. Yes. Oh, that’s funny. That’s right. Yeah. Who would have thought, you know, that’s, that’s where I think we’re seeing a little bit of this creativity and the change happening because who would have ever thought that sort of business model would be able to automate so easily and integrate 10, 15 years ago, it just wasn’t there. So let me ask you, what are some of the key reasons that are driving more of these smaller entrepreneurial solopreneur, middle market companies to say, you know what, I need to start paying attention to this, you know, and automate these solutions. What are some of the triggers or the driving forces that is pushing them to realize this is something they need to do for their clients?

Leigh Hocker Radtke: Well, it’s partially generational, you know, as I, as I think about a really, a really good, a really good way to look at this and to sort of bring that generational life that generational point to life is think about so middle market companies are companies that have been around for 20 or 30 years, which means they are well established in 20 or 30 year old processes. including writing checks. So if it’s a say a manufacturing company and they’re creating widgets and they need to buy plastic for their widgets, they’re likely writing a check to go buy that widget. Well, 40% of middle market companies are about to change ownership. So I want your listeners to imagine a conversation with a Gen Z owner who is the new owner of the middle market company.

Bonnie Habyan: They’re rolling their eyes after that conversation.

Leigh Hocker Radtke: Talking to the accounting team about writing a check. Would they even write? So would they even know what a check even was? So you think about millennial and Gen Z are digital first in the way that they’ve grown up. And so that’s a big part of what’s what’s driving. Yeah, of course. I mean, I’ve been in the payment space for a long time, longer than I care to admit, 20 plus years, let’s say. I have never seen so much innovation. Happening in the space.

Bonnie Habyan: Oh, give me a few ideas I mean, I I’d love to hear what you’re seeing that maybe something that has surprised you and I also want to ask You know outside of that. Did the pandemic have any impact on on some of this quicker innovation?

Leigh Hocker Radtke: the pandemic had a huge impact we heard stories of companies that were pulling their check production equipment into their home garages during COVID. Now, if anything is going to cause you to start to look for a more automated way to do things, it’s having to deal with a printer, a check printer running out of your garage. One of my favorite stories from COVID is about a restaurant operator in Ohio who went from $325 million in revenue in March of 2020 to zero in April. Zero. Zero revenue in April, and by May, they had stood up a mobile app So their customers could order takeout on the mobile app. And they had nearly all of their restaurants up and running like that. That is immediate change. That’s adaptability. And that’s, you know, that’s what a lot of companies had to do during COVID.

Bonnie Habyan: I agree. I think it probably pushed most industries five, 10 years ahead of what they probably would have achieved or had looked to achieve or look to have changed during that time. So there are definitely some good things that came out of it. And I love that story because you think about someone being able to say, this is not good. I need to figure out something very quickly to be able to leverage this situation. And it sounds like they did. Was that something you helped with or Visa helped with, or is that a story that you just heard about kind of from the automation perspective?

Leigh Hocker Radtke: It’s a story that came to us through one of our partners who called National Center for the Middle Market, who really champions middle market companies. And that’s what this restaurant operator is, is a middle market company.

Bonnie Habyan: What else are you seeing from an innovation perspective with respect to payment solutions? Are you seeing anything else? I mean, listen, I know with AI, you’ve got the facial recognition going on that, you know, thumbprints, different things that from a security standpoint, but anything else you’re seeing that’s going to make things easier for businesses that isn’t even hitting the market yet?

Leigh Hocker Radtke: There are some things that are in the earlier stages. So if you think about how, from a consumer perspective, which by the way, that’s what businesses want. It doesn’t matter if they’re small, medium size, or large. We all want our business experience to look a lot like what we have in our personal lives, right? What our consumer experience is. So think about our personal lives, how we can take our physical credit card and we can put it in an Apple wallet, let’s say, right? And now we can tap to pay for something at the point of sale. Really convenient. That is starting to, and we would, you know, I suppose the industry term for that is a virtual card, okay? So we’re starting to see that show up. in business payments from a couple of perspectives. One is a business who might have employees who are traveling. To be able to take a business card and push out virtual credentials to those employees and then wrap a set of controls around that, that card. So Bonnie, if I’m going to push a virtual, if I’m going to create a virtual card for you and I’m going to push it into your mobile app because you’re going to take a business trip, I can actually set some controls to say, Bonnie can use this card for one week. She can’t exceed $2,000 on it and she can’t, you know, use it outside of a set of type of merchants.

Bonnie Habyan: And you know what, I would love that to be, if they could also make sure that that would sync with some sort of an expense system, so you no longer have to worry about receipts and it goes right. I mean, I’m just thinking that the synergies that could be created from that is very exciting.

Leigh Hocker Radtke: Well, you’re just teeing it up for me here. That’s exactly what’s happening is those business transactions are coming directly into an expense solution for a company. So let’s take the flip side of that coin for your listeners. Let’s say you’re running a business and you don’t have any of that. Here’s what the experience is. You have a sales team that’s out seeing your customers. They take a customer to dinner, they come back to the office, and you have somebody on the accounting team, and you might not even have an accounting team, you might have one accounting person, and they need to go around to all of those salespeople and ask for the receipt so that it could be key entered into an Excel spreadsheet. It sounds horrible, doesn’t it?

Bonnie Habyan: It’s terrible. It is. It’s what I call time sucker. That is a time sucker, right? If you can figure out how to make it more efficient for everybody, it also becomes, like you said, you wrap compliance around it. You wrap you know, security around it, you wrap accuracy around it, you’re able to take the data and now see trends. I mean, there’s just endless amount of things that you can see that those types of solutions could make You could also probably wrap some AI around that as well and understand exactly what is it that next year they’re going to be spending because based on the habits, you know, it’s just, it’s endless. And that’s very exciting. Let me ask you, one of the things I’ve started to see, I thought I had this great invention, like I’ve got this great invention. We should be able to tip people from an app or tip people from some way that we don’t have to carry cash anymore. What are you seeing with that?

Leigh Hocker Radtke: Okay, well, first of all, we should have put our heads together about 12 years ago because I had the exact same idea. Like, if I could just touch my phone to the valet, I would never have to ever, ever carry cash again. Which, you know, you think about cash, like it’s dirty, it’s filthy. It is. You don’t know what’s, you know, what’s on it. You have to worry about it, you know? That’s right. And those types of applications, yes, are starting to enter the market where different companies can accept payments through tap-to-phones.

Bonnie Habyan: So yeah, I, I, I see so much of that. And I think eventually, I mean, it’s, I, I think that it’s more of an exception that I carry cash than it used to be the norm. So, which is very interesting because you know, you’re just seeing so many platforms being able to automate and integrate. Let me ask you, and I’m sure when you’re speaking with different, however it is businesses or, or your team that is talking to businesses. What do you see from a marketing and branding standpoint, where should they prioritize this in their, I would say, realm of, you know what, we’ve got five or 10 operational goals we need to do this year to make sure that we are staying competitive. Where are you seeing this whole automation solution kind of fall in the realm of small business planning and how strong should it be of a priority for smaller businesses?

Leigh Hocker Radtke: Well, payments are critical for a business of any size. And there’s a foundational component that we really haven’t talked about. So the foundational component, like I talked about the convenience of receiving a virtual card, but let’s just talk about the convenience factor, the foundation of that. card product. And think about virtual card as just a digital version of the physical card a business would have. It’s what we would in the industry call a form factor. You have a physical form factor, you have a virtual form factor. What’s underlying that is credit being extended by your bank. There are debit cards as well, but let’s just stick to credit. So whether or not you’re a flower shop, who’s a small business, or you’re a middle market manufacturer, or you’re a large global multinational who has a huge sales force with cards that they’re using to pay for travel, it doesn’t matter what size business, if it’s a credit card, that means your bank is Floating cash, right? Allowing you to float cash. It means that you can make a payment on your card, just like we can in our consumer lives. You can make a payment on your card, but you don’t have to pay the statement until the statement comes due based on whatever terms you have with your bank. Think about that now in terms of, I mean, all businesses need to buy goods, services and supplies to keep, you know, to keep their business afloat. So now if you can take a card product and pay for those services with the card product, that just became a cash flow and a working capital tool. And by the way, the interest rates are high right now, which means card products, whether they’re physical or virtual, are the most efficient working capital tool right now.

Bonnie Habyan: So, so how does it nothing changes with that then right from a from a business perspective, it’s it’s it’s almost like advancing cash, but at the same time you still have those fees out there right if you if you don’t pay that card back in a timely manner, or does that whole structure kind of change.

Leigh Hocker Radtke: Yeah, it changes a little bit depending on, I mean, business cards, meaning cards for smaller businesses that are typically offered out of the retail side of the bank. You could walk into a bank branch and get a business card. And then commercial cards that are really out of the treasury side of the bank. are architected a little bit differently, and then each bank decides on terms. Typically, commercial cards are pay in full. They’re a little bit like a charge card, but you get to float the cash for you know, 30, 45, sometimes 60 days or longer. On the business side, there may be interest associated with it, but there are also rewards associated with business cards.

Bonnie Habyan: That’s right. I love my rewards. Definitely. But so let me ask you, this is kind of a, you’re going to have to probably spitball this a little bit and kind of guess, What percentage are you saying of these smaller businesses, middle market businesses, proactively coming for the solution as opposed to those who say, I have to do it because this Gen Z group is buying my business and they’re not going to buy it unless I get things automated? How much proactive versus reactive are you seeing and is that changing?

Leigh Hocker Radtke: Well, it depends on what we’re talking about, right? My guess is that The majority of businesses are using a card of some sort to pay for, say, plane tickets, right? If they’re paying for travel. Now, there’s some distinction there because sometimes a business will let their employees use their personal cards. to make that plane ticket purchase, which is maybe good for the employee’s own rewards, but it’s bad for the business for the reason you brought up before, which is you’re not going to get any of that payment data coming back into your business system. They’ll go around and collect. Right. So there’s that dynamic going on where we see the biggest opportunity to drop hard products into the process to help a business grow. is in, we could call it centralized purchasing. You could call it buying from strategic suppliers. What that means is when a business has to, let’s go back to the flower shop example. The flower shop needs to reorder new tulips from a wholesaler. That flower shop, if they’re using a card product to reorder those tulips, that virtual card is going to be more secure than if they wrote a check. It’s going to be more convenient than if they sent that payment via ACH. They’re going to get better data and they’re going to get rewards on that. And that is true as you go up market in terms of business size. So the middle market, let’s say the wholesaler is a middle market company, and they’re going to turn around and buy even more tulips from the wholesaler or from the distributor rather. And they put that on a virtual card. All of those same benefits apply to that wholesaler. That is the biggest area of education an opportunity right now in the business world.

Bonnie Habyan: So are these virtual cards mainstream? Are you beta testing or they’re available?

Leigh Hocker Radtke: They’re available. They’re mainstream. They’re nascent, I would say, a bit nascent in terms of being fully ubiquitous for a variety of reasons. They’ve been around for many, many, many years and mostly adopted by larger companies. And now they’re moving downstream, becoming more available for middle market and small business companies. The other key trend, though, is there’s this buzzword, buzz term, embedded finance or embedded payments. So what does that mean? banking services and components and capabilities like payments can show up in non-financial systems, which makes it really convenient. So what is an example? An example might be a small business going into their QuickBooks application, and now they can make a payment from within QuickBooks using a Visa virtual card.

Bonnie Habyan: Wow. Wow. What are, what are some of the objections that you may hear from the smaller or middle market businesses in kind of adopting or assimilating to these new technologies? Everybody’s afraid of technology. So I’m just curious, you know, at first it’s a little daunting. How, how do I do this? If you would say overall, just maybe across all of Visa’s solutions, where do you find the greatest hesitation?

Leigh Hocker Radtke: It’s education, it’s… when I talk to small businesses, the first thing they say is, I don’t know where to go. Where do I go? How do I find… what is the stuff and how do I find the stuff? And we direct a business to their bank. I mean, banks… Banks have a lot of fantastic technology, and banks really know and understand their clients’ businesses. So we’re providing our solutions to banks, and banks are providing their solutions to businesses of all sizes.

Bonnie Habyan: You talk about education, I think that’s very important. And we’ve never lived in a world that has so many different channels for education, right? We were both communication majors. We didn’t have what is maybe a little bit of advertising back there. We didn’t even have cable TV during that time. But now you have so many different ways to educate businesses. What do you find, A, number one, is the best way to educate clients or small businesses on these changes? And number two, where would you tell people other than a bank to go to become educated on these various types of solutions? So it’s a two-parter. Where do you as Visa, how are you focusing on educating the masses about these products? Because you’re educating me today. I have these ideas that all these things are coming, but I honestly didn’t realize that they’re available to this extent.

Leigh Hocker Radtke: They are available. So we have actually a lot of great information on Visa.com. There’s a whole set of business-specific resources. There’s a resource called the Small Business Hub, where businesses can go and figure out not only what payment products to use, but beyond that, things like how do they create a website? How do they find funding? All of the things that you would wrap around a business in order to operate can be found on Visa.com. And then we have partners. We partner from a middle market perspective. I mentioned National Center for the Middle Market. They have some fantastic resources. We also just launched for middle market companies a working capital index. where say a middle market CFO can look at what the best practices are. And then we launched a working capital calculator where they can actually go, something that middle market companies love to do is they love to benchmark their performance against their peers. So they can go into this calculator and they can see how the working capital tools that they’re using stack up to what their peers are using. And then we do a lot of work with the Small Business Administration as well, which also has a lot of great resources on their website. And then finally, I would say you know, they’re a bank, right? When a business is talking with their bank, banks have fantastic educational resources about how to start, run, and grow a business.

Bonnie Habyan: So of course, 2023, 2024, artificial intelligence is become just as, I guess, mainstream as a household, as Kleenex these days. Any insights that you can give on how artificial intelligence will support business and payment solutions going forward, even if it’s generically one or two things that you may see as a corporation?

Leigh Hocker Radtke: Yeah, we’ve polled small businesses and middle market companies. Both cohorts say they’re looking to integrate AI into their businesses. I agree with you. It’s a big term. It’s a general term. It’s a bit of a buzzword. What does it really mean? It could be anything from chat GPT, which is merely, you know, asking a question, asking for stats or data or recommendations or advice and, you know, typically getting some pretty good results back on that.

Bonnie Habyan: I got to tell you something funny. The other night, you know, I was playing around with it because I do, I use it all the time. But I asked, Hey, I love, you know, I love crime series based on true crimes. Do you have any recommendations? Sure. It gave me like 10 great recommendations. And I wrote, thank you very much. And it says, you’re very welcome. If you would like to, you know, need anything else further, let me know, but sit back and relax and have a good night of watching your shows. I just started to laugh because A, I was surprised that it gave me such great shows, probably most of them I’ve seen. But B, it was just funny. I’m like, is this where we’re headed to where they’re going to become my friend at some point, you know? But you’re right. So people think of majority artificial intelligence, a lot of it is chat GBT. But go ahead, you continue, because I know there are a ton of different ways that artificial intelligence will come into this realm.

Leigh Hocker Radtke: That’s right. Well, we work with a lot of fintechs. I’ve talked a lot about our bank partners or bank clients. We also have clients that are fintechs. What is a fintech? Financial technology company. Your listeners should think about it as a tech startup. that is focused in the financial space. And we’re seeing AI show up in some of these fintech platforms in all sorts of ways. I mean, my one example, just to go back to the earlier part of our conversation, AI is showing up to help a business figure out how to pay their suppliers, right? Which supplier should I pay? On what timetable should I pay my suppliers? And that’s just one example, but the sky is sort of the limit in terms of where AI can show up.

Bonnie Habyan: You’re right. And the savings I would imagine that it’s going to be able to help businesses with, whether it’s something to the effect that you said, which should be the supplier based on my cashflow? Am I smartest to pay at what point during the year or the month? I think you’re right. There’s going to be so much that we can actually use that to help save and to do things quicker and to make decisions. So, okay, this goes back to a little bit more of marketing and branding. How do you think these businesses can use this virtual sort of payment, these solutions, to position themselves to grow their audience? I mean, the example you gave me about the restaurant who pivoted, figured out, you know, listen, I lost all of this money in April, but I turned around and figured out how to best communicate with my customers to allow them to access my product. It’s a similar thing with payment solutions. You know, can you brand it? Can you, can you brand anything virtually? Can you use that as a way to have another touch point or to connect with a client? So anything innovative you’re seeing in that, that respect that helps position them a little bit stronger?

Leigh Hocker Radtke: Well, there’s one very practical and probably even tactical. tactical point, which is many businesses use digital payments to pay for their digital advertising. So if they’re advertising on social media platforms, for instance, they could be paying for that with a digital payment. Another way that we see businesses using payment solutions is co-branding. I mean, I think your listeners would all be familiar with cards. I certainly have cards in my wallet that have not only the Visa brand on it, of course, but also the brand of an actual merchant.

Bonnie Habyan: Absolutely. Yeah. So co-branding would be, yeah, even you can do that virtually as well.

Leigh Hocker Radtke: You could do it virtually as well. Yes.

Bonnie Habyan: You could do it virtually as well. Yep. Interesting. So yeah. And I think as well, just having these solutions that may be easier, I would imagine someone would prefer to work with a vendor or a supplier or some sort of a business that has an easy way as opposed to a check. I mean, sometimes I’m like, I don’t check. What kind of a business is that? Right? So, I mean, it does give you a little bit of an edge as being, I would think, a little bit more progressive.

Leigh Hocker Radtke: Here’s the other example I would use, and I’m going to go back to my flower shop. And by the way, there’s a video on our website that goes through that. We literally call it the flower shop video. And earlier in our conversation, I had talked about the flower shop paying for two ups for the wholesaler and the wholesaler paying the distributor. But that whole story starts with a consumer going to the flower shop’s website to order those tulips. So that is the consumer making a digital payment to that flower shop for those tulips, and then the flower shop needs to put the tulips into a delivery driver’s car to get to the consumer that just bought the flowers. Well, the business is then paying the delivery driver through a digital, we would call it a disbursement, a digital disbursement, like a P2P payment almost, right? They’re paying the delivery driver for that. And so how is that good for the business in terms of marketing and branding? Well, if they didn’t have the ability to accept payments online, they wouldn’t be able to sell online. And that’s critical, right? E-commerce. Absolutely. And then the fact that they can put those flowers in a car to be delivered to their consumer, and now they can pay their delivery driver. And by the way, they can push that money to that delivery driver immediately, which means that, you know, they may be providing better and quicker service for their customer. Because now that delivery driver knows they’re getting paid.

Bonnie Habyan: Right. That’s very interesting. And I think that you’re going to see more and more and more of that. So that’s a very good example of the tulips in the flower shop. So one final question for you. I always like to leave our audience with three tips. So I think in this case, I’d say let’s consider our audience as business owners, entrepreneurs, people that are looking to grow their business, what are three pieces of advice you may want to give to businesses listening to help leverage this whole movement in payment solutions and automation?

Leigh Hocker Radtke: I would say digital first, launch or grow your business with a digital first mindset and educate yourself about what that means and what your capabilities are, and then make sure your teams are educated as well, your staff is educated as well.