5 ms·

I sympathize, partially because I get filled with existential dread every time I get a voicemail message to my business number. ("Who in their right mind calls

by patio11 15y ago

I sympathize, partially because I get filled with existential dread every time I get a voicemail message to my business number. ("Who in their right mind calls to ask for information when it is all right there on the website?! GRUMBLE GRUMBLE." + ) That said: ballpark how many people work in this industry with decisionmaking authority on this. Ten thousand? A thousand? Let's call it one thousand. It is entirely possible that you are smarter than all one thousand of those people. They've devoted their careers to selling payroll services and success at selling payroll services determines whether their children eat tomorrow. You're unwilling to make a phone call because you find payroll services pretty boring. But nonetheless it is entirely possible you've found the thing the whole industry is missing. I just would not bet that way. + n.b. I get phone calls from people whose budget is $9 a month (me: "Oh cripes, not again.") and people whose budget is $200 a month (me: "Now here is a call which I'd gladly take.") and people whose budget requires an NDA to hear ("Schedule a call for 3 AM in the morning? It can be arranged, sir!") P.S. There exist interesting hybrid models where you have the self-service option and published pricing and then there exists the Call Me plan, explicitly or by implication. Find someone in one of those businesses, get them drunk, and then ask whether the published plans or Call Me makes more money.

labaraka 15y ago
As you imply, there are segments in every market. Of course there is a segment of companies with hundreds or even thousands of employees with gigantic budgets. These guys are going to do RFP's and spend months evaluating the different payroll providers. Then there is the segment of small guys lik me who have under 10 employees who frankly don't need anything too complicated. You can say "I am only going to serve large enterprise customers through a complex sales process" and that's completely fine with me. But don't pretend to cater to my segment if you are not to adapt your model.
nhebb 15y ago
The counterargument is that the sales process may not be optimized for total revenue. It may be optimized for commissions. And, the people controlling the entire sales process, including online marketing, are the sales department. I only have anecdotal experience with this, but enough so that I think it's a contributing factor.
- dctoedt 15y ago
  > The counterargument is that the sales process may not be optimized for total revenue. It may be optimized for commissions. In theory, companies' commission plans are supposed to be optimized for total profit (vice revenue). That's really hard to do. Not the least of the reasons for this is that the people who work on commission can be quite creative in maximizing their personal goals, such as commissions, 100-percent-club junkets, etc.
orangecat 15y ago
You're unwilling to make a phone call because you find payroll services pretty boring. But nonetheless it is entirely possible you've found the thing the whole industry is missing. On the contraty, I assume they're good at their jobs, and therefore way better at negotiation than me, and therefore whatever price they come up with will extract nearly all the consumer surplus.
davidw 15y ago
> They've devoted their careers Since payroll is not some hip, new, web 2.0 kind of thing, it's always possible that they do it way "'cause that's the way we've always done it", too.
- equalarrow 15y ago
  Sounds like a perfect opportunity for someone to come along and 'fix' this. :)
gvb 15y ago
+ n.b. I get phone calls from people whose budget is $9 a month (me: "Oh cripes, not again.") When I have a $9/month budget, I would rather know up front (from the web page) that the reaction on the other end will be "Oh cripes, not again." The "call me for a quote" is a very strong signal that I need not bother to call, and I generally don't. It's the old adage "if you have to ask, you cannot afford it." On the other hand, the OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.
- TWAndrews 15y ago
  <i>OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.</i> There might be, but I wouldn't bet that way. There's a relatively small window of company size between the point when someone needs a payroll service (10+ employees?) and the point where it makes sense to speak with a person about what bits and bobs a payroll provider should include and negotiate a price for those services (maybe 200+ employees). I'd guess that's the size of a significant fraction of Y Combinator companies, but I'm not sure how well that would hold up across all industries.
  - incongruity 15y ago
    Well.. don't forget, the distribution of corporations by size isn't even nor is it linear – it's exponential. From small business data taken from: http://www.census.gov/econ/susb/ http://www.census.gov/econ/susb/ – 98.7% of all US firms have fewer than 500 employees. 36.6% have between 5 and 100 employees. To approximate the range you gave, 20.6% of all US firms fall between 10 and 500 employees (The bins in the data don't match your range perfectly) – so it'd be reasonable to guess that ~14% of all US firms are between 10 and 200 people. That's a fairly attractive market – especially considering that if you made it easy enough, you'd draw in more of the smaller companies (say 5-20 employees) and they represent an even bigger slice (~74.5% of all US firms). So yeah, I think it's significant as a target market.
    - Domenic_S 15y ago
huhtenberg 15y ago
My bet is that self-server option has a higher per-transation yield, but the over-the-phone option has a higher closing rate. In fact, I worked with a company that had both options implemented, and pretty much all inbound sales calls resulted in sales. If people are calling, then they are usually ready to buy - from you or from someone else. A good sales person will make sure it's you.
- Angostura 15y ago
  Yes, well I'm sure if you only provided sales through a specialised fax number, virtually every fax would be solid sales enquiry. You might only get one fax a month, of course.
charlieok 15y ago
Signing up online is more efficient than picking up the phone. This alone seems like enough to guarantee that it is only a matter of time before everybody in the industry offers online self-service, excepting those who do not need or want new customers.
- angelbob 15y ago
  You'd think. But you can get much greater differences in pricing if you find out who you're talking to before you give them a price. That's really hard to do with online self-signup.
  - larrys 15y ago
    The payroll companies that I have dealt with have always been efficient and competitive in their pricing and level of service. And this is a mature industry with competition and multiple providers. The amount of disruption possible is probably nominal.
  - charlieok 15y ago
    That's a fantastic reason to be leery of vendors want to do business that way. If I can see their offering described on materials posted in public, I can be much more confident I'm being treated fairly by them. What the hell difference does it make who they're talking to? What matters is what they can provide and under what terms.
- JS_startup 15y ago
  Not really. Pricing gets complicated for enterprise sales so it can't be as simple as just signing up online. Furthermore, if it's a trial they are signing up for then they have to be put into the sales funnel (meaning they have to sift through a bunch of tirekickers to find the real buyers). Finally you'd have to worry about fraud, trial abuse and all of the other related pains of free and open signups. There's a reason that basically every business in the industry does it this way.

by patio11 15y ago

labaraka 15y ago

As you imply, there are segments in every market. Of course there is a segment of companies with hundreds or even thousands of employees with gigantic budgets. These guys are going to do RFP's and spend months evaluating the different payroll providers. Then there is the segment of small guys lik me who have under 10 employees who frankly don't need anything too complicated. You can say "I am only going to serve large enterprise customers through a complex sales process" and that's completely fine with me. But don't pretend to cater to my segment if you are not to adapt your model.

nhebb 15y ago

The counterargument is that the sales process may not be optimized for total revenue. It may be optimized for commissions. And, the people controlling the entire sales process, including online marketing, are the sales department. I only have anecdotal experience with this, but enough so that I think it's a contributing factor.

dctoedt 15y ago
> The counterargument is that the sales process may not be optimized for total revenue. It may be optimized for commissions. In theory, companies' commission plans are supposed to be optimized for total profit (vice revenue). That's really hard to do. Not the least of the reasons for this is that the people who work on commission can be quite creative in maximizing their personal goals, such as commissions, 100-percent-club junkets, etc.

orangecat 15y ago

You're unwilling to make a phone call because you find payroll services pretty boring. But nonetheless it is entirely possible you've found the thing the whole industry is missing. On the contraty, I assume they're good at their jobs, and therefore way better at negotiation than me, and therefore whatever price they come up with will extract nearly all the consumer surplus.

davidw 15y ago

> They've devoted their careers Since payroll is not some hip, new, web 2.0 kind of thing, it's always possible that they do it way "'cause that's the way we've always done it", too.

equalarrow 15y ago
Sounds like a perfect opportunity for someone to come along and 'fix' this. :)

gvb 15y ago

+ n.b. I get phone calls from people whose budget is $9 a month (me: "Oh cripes, not again.") When I have a $9/month budget, I would rather know up front (from the web page) that the reaction on the other end will be "Oh cripes, not again." The "call me for a quote" is a very strong signal that I need not bother to call, and I generally don't. It's the old adage "if you have to ask, you cannot afford it." On the other hand, the OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.

TWAndrews 15y ago
<i>OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.</i> There might be, but I wouldn't bet that way. There's a relatively small window of company size between the point when someone needs a payroll service (10+ employees?) and the point where it makes sense to speak with a person about what bits and bobs a payroll provider should include and negotiate a price for those services (maybe 200+ employees). I'd guess that's the size of a significant fraction of Y Combinator companies, but I'm not sure how well that would hold up across all industries.
- incongruity 15y ago
  Well.. don't forget, the distribution of corporations by size isn't even nor is it linear – it's exponential. From small business data taken from: http://www.census.gov/econ/susb/ http://www.census.gov/econ/susb/ – 98.7% of all US firms have fewer than 500 employees. 36.6% have between 5 and 100 employees. To approximate the range you gave, 20.6% of all US firms fall between 10 and 500 employees (The bins in the data don't match your range perfectly) – so it'd be reasonable to guess that ~14% of all US firms are between 10 and 200 people. That's a fairly attractive market – especially considering that if you made it easy enough, you'd draw in more of the smaller companies (say 5-20 employees) and they represent an even bigger slice (~74.5% of all US firms). So yeah, I think it's significant as a target market.
  - Domenic_S 15y ago

huhtenberg 15y ago

My bet is that self-server option has a higher per-transation yield, but the over-the-phone option has a higher closing rate. In fact, I worked with a company that had both options implemented, and pretty much all inbound sales calls resulted in sales. If people are calling, then they are usually ready to buy - from you or from someone else. A good sales person will make sure it's you.

Angostura 15y ago
Yes, well I'm sure if you only provided sales through a specialised fax number, virtually every fax would be solid sales enquiry. You might only get one fax a month, of course.

charlieok 15y ago

Signing up online is more efficient than picking up the phone. This alone seems like enough to guarantee that it is only a matter of time before everybody in the industry offers online self-service, excepting those who do not need or want new customers.

angelbob 15y ago
You'd think. But you can get much greater differences in pricing if you find out who you're talking to before you give them a price. That's really hard to do with online self-signup.
- larrys 15y ago
  The payroll companies that I have dealt with have always been efficient and competitive in their pricing and level of service. And this is a mature industry with competition and multiple providers. The amount of disruption possible is probably nominal.
- charlieok 15y ago
  That's a fantastic reason to be leery of vendors want to do business that way. If I can see their offering described on materials posted in public, I can be much more confident I'm being treated fairly by them. What the hell difference does it make who they're talking to? What matters is what they can provide and under what terms.
JS_startup 15y ago
Not really. Pricing gets complicated for enterprise sales so it can't be as simple as just signing up online. Furthermore, if it's a trial they are signing up for then they have to be put into the sales funnel (meaning they have to sift through a bunch of tirekickers to find the real buyers). Finally you'd have to worry about fraud, trial abuse and all of the other related pains of free and open signups. There's a reason that basically every business in the industry does it this way.