What is the true cost to your business of a missed call?
Anne Batty
Telephone Answering, Bookings, Appointments straight into your CRM system, Live Chat, Order Fulfillment and Client Care. Tel: 01246 418181
Introduction
In this article I have tried to pull together as much statistical data as I can find to answer a simple question: What is the true cost to a business of a missed call?
Not only is this a simple question to ask (not so simple to answer!), but it is also an important question. After all, if there are no negative implications to missing a call, then Paperclip’s business model is based on a false premiss.
Wherever possible I have looked at the source and validity of the data referenced in this article. The primary data sources used to compile this article are listed in the references section at the end of the article.
Trends in UK phone usage
In 2010, the number of call minutes on mobile devices in the UK outstripped fixed-line telephone minutes for the first time1. By 2020, over 80% of call minutes came from mobiles1.
Over the last decade and more, a large number of alternative communication options to phone calls have appeared: Messenger, WhatsApp, email, SMS and video conferencing to name just a few. It is unsurprising, therefore, that there was a decline in the volume of phone call minutes over the period 2010-2019. What is probably more surprising is how gradual this decline was and how important the phone call remains as a means of communication.
In 2020, the year Covid became a part of everyone’s lives, phone call minutes increased by 17% to reach almost 235 billion; this was the highest level since 2012. Whilst total call minutes have reduced slightly since then, they remain well above 220 billion.
Why are calls missed?
This topic has been covered in detail in other Paperclip blogs. For the purposes of this article, it is suffice to say that the three most common reasons given for missing calls are that the ‘call arrived outside ‘office hours’, ‘we were too busy to answer’, and ‘we let calls go to voicemail’.
Furthermore, missed calls are hugely under recorded. According to research undertaken by AT&T, 70% of business calls are placed on hold (i.e. the call was ‘answered’ and placed in a queue). However, of those placed on hold around 60% eventually hung up.
What happens to a missed call?
Voicemail
In a previous Paperclip blog – Voicemail; the pros and cons of ‘…leaving a message after the tone’ – we discussed how voicemail was becoming increasingly redundant. According to research by Forbes, 80% of callers directed to voicemail don’t leave a message. Those readers with children under the age of 35 will recognise the truth of this statistic!
With the exception of ‘out of hours’ call, people don’t like or trust voicemail. This is because, in general, the management of voicemail messages is handled extremely poorly. There is a lack of focus and urgency; it’s just another job to add to the to-do list.
When a business’ reception is covered by voicemail, it rarely includes direct dials. Direct dial voicemails will get to their intended target, but place a huge burden on that individual to deal with them effectively. A Paperclip prospect quoted that a member of their team had received 140 voicemails from external callers over a two-week holiday period.
Voicemail, even when managed well, is a time-consuming drain on admin resource. It often requires multiple calls and emails to re-establish contact. When contact is re-established, the caller may have moved on and placed their business elsewhere.
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Call back
‘We don’t worry about missed calls, we know they will call back’. This may be true if you are the HMRC or GP practice, but for most organisations it is a dangerous approach to take. Research by BT Business found that callers will, on average, only try to call a company twice before taking their business elsewhere.
In some sectors where the caller’s need is urgent – treatment by a physiotherapist for a new ailment; property valuation by an estate agent; many legal scenarios – the caller only rings once. AT&T’s research indicated that 30% of callers placed on hold never call back again.
Why are missed calls important?
Excluding e-commerce, research has shown that around 90% of customer purchase interactions still take place over the phone; even in today’s digital age. Further research by Loyalty360 found that people still greatly prefer human-to-human interactions compared to self-service or automated alternatives, such as chatbots.
The phone remains a critical tool for winning new customers (client acquisition), retaining existing customers (client retention), and building a brand (brand equity). Here are just a selection of research findings to make you stop and think:
Client acquisition
Research by The Brevet Group found that, depending on sector, 30-50% of sales went to the business that responded first.
Client retention
PEGA in its 2019 publication, ‘Global Customer Service Insights’, reported that 35% of business leaders they contacted believed that their organisation lost customers ‘all of the time’ or ‘regularly’ due to poor customer service. Accenture determined that 66% of customers switch suppliers because of poor customer service.
Brand building
As a commentator in one article put it, when you share your phone number with the world the implication is that you can be reached on that number and that you will answer. Failure to do so is, in effect, a breach of trust.
Calculating the cost of a missed call
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At the macro level, IntroducerTODAY calculated that ￡30bn was ‘lost’ by businesses in the UK due to missed calls; that’s around ￡5,500 per business.
Whilst some of this business may have truly been ‘lost’, in most cases the missed call effectively created a customer for the competition. Missing a call, therefore, has not only an immediate financial cost to a business, it also has a marketing or reputational cost as it bolsters the competition.
Calculating the cost of a missed call at the level of an individual business is extremely challenging and will be impacted by a huge range of variables such as market structure, dominant position, product or service provided, availability of substitute products or services and so on.
However, whilst it may be challenging, it is well worth taking the time to arrive at an educated estimate.
Here are just some of the data points worth collecting to help you in this task. We have focussed on the month as the time period:
Phone calls:
·????????On average, how many calls a month does your business receive?
·????????On average, how many calls a month do you miss?
o??Be honest. Bear in mind the comments above about ‘answering a call’ and then losing the caller when they are placed on hold. These are missed calls.
o??Be honest. Count all calls to voicemail as missed calls.
·????????On average, of the calls you receive, how many are opportunities to win new business or opportunities to retain existing customers.
From this dataset you will be able to estimate how many sales opportunities you miss in a month.
Sales success ratio:
·????????What percentage of sales opportunities do you succeed in turning into an order? (Closing the sale)
Multiply the ‘sales opportunity’ figure calculated from your phone call data, by your sales success ratio, and you will arrive at the number of ‘lost’ new customers each month.
Client lifetime value:
·????????What is the average value of an order in your business?
·????????On average, how many orders does a loyal customer place with your business each year.
·????????On average, how long do you retain customers for? (Missing calls, as shown earlier in this article, has an impact on your customers’ loyalty)
Taking the number of ‘lost’ new customers and multiplying it by the average client lifetime value gives you the monthly cost of missed calls to your business.
Other costs
It is important to recognise that the figure you arrive at by doing the calculations as outlined above is likely to be an underestimate.
For example, missing calls has a reputational cost impact on your business. How many businesses do you never call because you have heard their customer service is poor?
Conclusion
The phone, landline and mobile, remains the most popular communication channel used by prospects and existing customers to contact the majority of businesses.
The cost of missing those calls, as you will see if you run through the calculation outlined above, is often far higher than you would initially imagine.
The solution? Simple. Answer the phone.
?References
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1 年Great article, makes you think of what opportunities you could be missing… ??