In the second part of our series on opportunity costs, we’ll be discussing some of the many different ways that a missed call can negatively impact your business. Make sure to check out part one for a breakdown of what ‘opportunity cost’ means, and how it plays a part in your profits.
Now, let’s dive into missed sales, wasted marketing efforts, the importance of image, and the effect that calls have on your productivity!
Missed calls equal missed opportunities, and as you’ve probably guessed, the opportunity cost of missing a call begins with sales. Every business, no matter how successful, will fail to answer the phone every once and awhile, but this is no case for complacency. The more calls that go unanswered, the more potential sales you’re losing.
Let’s say the fictional John’s Sports Apparel sells custom NFL jerseys and t-shirts, and all stock sells at $80 an item. If the company owner, John, misses three calls a day, that translates to 15 calls per week; 60 per month; 720 per year. If only 20% of John’s inbound calls lead to conversions, then he would be missing roughly 144 sales throughout the year.
That’s $11,520 in potential revenue lost, simply because the phone wasn’t answered. Translate these same rough estimates to your own industry, and consider how much revenue you could be losing without round-the-clock phone answering, follow-up calls, and appointment booking.
As you can see, the cost quickly begins to add up. There’s an easy way to solve the dilemma: partner with a 24/7 live answering service. Letting professional call agents handle your inbound calls, or even just your overflow and after-hours inquiries, can expand your opportunities.
That said, the negative effect of missing calls isn’t limited to sales. Unanswered calls are also a waste of valuable investment.
Chances are you’ve put in a lot of hard work to learn everything you can about Search Engine Optimization. You’ve maybe even hired a professional to take care of it for you. A good SEO strategy is the key to staying relevant, maintaining a strong digital presence, and keeping up with the competition.
And if you’ve approached SEO correctly, then you’ll see a high percentage of traffic coming to your website. But, could things be more effective?
If you’ve done all the hard work to get a potential customer to your site, only for them to make a call and be transferred to voicemail, then a portion of your marketing budget has been wasted. It’s logical to say that if you’ve put resources into making it easy for customers to find you, then you should also focus on making it easier for them to contact you too. Why pay cost-per-click if you’re unable to turn those clicks into sales?
Let’s play another scenario.
If a business spends $5,000 a month on SEO tactics and receives 250 calls from that campaign, they’re essentially paying $20 per call.
Using John’s Sports Apparel again, we’ll say that John misses roughly 60 calls per month. On average, 20% of the calls to John’s business turn into sales (which translates to about $4,000 in profit). By missing 60 calls per month, John is running the risk of losing even more than $4,000 worth of sales, which means he’s wasting his marketing budget.
Providing great customer service is critical for any thriving business. Happy customers usually means repeat business. But, as we discussed before, when a caller is sent to voicemail, they may feel that your business does not value them.
According to Helpscout’s customer service analysis. 75% of customers feel that it takes too long to reach a real person on the phone. Generally, any wait longer than two minutes will cause frustration, and most consumers will hang up long before that point.
The crucial issue here is that people talk. When faced with poor customer service, we’re likely to tell others about our experience – usually to warn them off of approaching that company.
By even just a few calls per month, you may be negatively affecting your company image and your reputation within your industry. While it’s hard to quantify in financial terms, a negative company image undoubtedly has a direct impact on revenue and growth.
So, after seeing the impact of choosing to ignore the phone in that split-second moment, you’re definitely going to change your priorities, right? Not so fast. We also have to look at the opportunity cost of taking the other direction – stopping work for an existing customer in order to answer the phone.
By pausing work to answer the phone every time it rings, you’re likely saving your reputation from criticism and perhaps taking on more jobs. However, consider the amount of time that’s now being spent on phone calls. This is time that you could be spending elsewhere, to grow your business!
Instead, you’re now stuck by the phone, answering general questions and sifting through calls, hoping for new custom. It’s now impossible to hit your stride on that earlier piece of work. How can you gain any momentum if you stop every five minutes to answer the phone?
According to a New York times article on distraction in the workplace, we spend an average of 11 minutes on a project before we’re interrupted. It then takes us 25 minutes to return to where we were before the distraction occurred.
25 minutes after every call? What a waste of time.
Let’s return to John’s Sports Apparel. We said earlier that John misses roughly three calls per day. If he chooses to down tools on a project in order to answer those three calls, John is losing 75 minutes of productivity. That adds up to 375 minutes a week, 25 hours a month… 300 hours a year!
That split-second decision just got a lot more complicated again. Well, not necessarily. This is where a 24/7 live call answering service can save the day. Virtual receptionists are available, year round, to represent your business and handle the everyday calls that you may not have time for. Plus, they can book appointments, generate leads, and provide you with detailed call reports.
In part three of our series, we’ll be looking at the concept of total opportunity cost.