Clutch spoke with Alice Azzaro, owner of Management Accounting and Payroll (MAP) Solutions, about Clutch's 2016 Payroll Solutions Survey results.
Please describe your organization and position there.
I am the owner of Management Accounting and Payroll Solutions. We offer small-business accounting, tax, and payroll solutions, as well as individual tax preparation and representation.
Most Popular Payroll Solutions Used
38% of our respondents use QuickBooks or Bank of America, which is also powered by Intuit. Are you surprised by their market dominance?
Intuit seems to dominate in every niche it enters. It offers low cost, highly powerful, user friendly solutions for many small business needs.
I've been involved in some of the QuickBooks product development. Intuit is the undisputed leader in terms of accounting software. Their payroll solutions coordinate, which is invaluable. A lot of time can be saved by being able to sync multiple systems. Payroll can be purchased with QuickBooks accounting and synced automatically; Intuit Online Payroll is the standalone payroll product. They work quicker than ADP or Paychex and are more efficient.
I do have a couple of clients using ADP because, for their particular situation, coming to me wouldn't have saved them a lot of money. ADP is responsible for paying payroll taxes and assumes the responsibility if there is a problem. I do not offer this, so it wasn't worth it in those cases.
ADP and Paychex are often very costly and have mostly shifted from full-service to self-service over the years. They have some bells and whistles that aren’t offered in other solutions, but they are not necessarily useful.
Do you know why QuickBooks is relatively cheaper than ADP? Was there a decision made by Intuit to attract a bigger volume of users through low pricing?
I think so; and on the other hand, ADP and Paychex have not significantly moved their pricing since evolving from less full-service into more self-service. In the past, clients would call in, give their hours, and have the solution run the payroll. Now, people do everything themselves online, without human interaction. They're essentially providing a simpler service, but haven't reduced their fees in accordance with that. The fact that they employ a sales force that gets paid well has to be reflected in the cost as well. ADP and Paychex also offer more complex reporting, but almost no one uses them.
What are some factors that help a solution dominate the market?
In this case, Intuit payroll solutions sync well with popular Intuit accounting solutions (QuickBooks). Because the services are integrated and the costs are relatively low, using them together is the obvious solution.
Intuit also has partnerships with a lot of other apps, some of which offer more robust solutions for QuickBooks users. The wave of the future is creating a QuickBooks ecosystem surrounded by different apps. TSheets, for instance, is a time keeping payroll attachment which can be integrated to QuickBooks, giving users much more functionality than a simple payroll solution.
How difficult is it for newer and/or smaller payroll solutions to gain visibility and market share?
Very difficult. If there is a solution in place that is working, which most companies have, there is not a lot of motivation to change. New payroll companies come and go, but the leading actors remain the same.
Can you think of any unique tactics or features that some newer solutions have offered as a way of disrupting the market?
Patriot Payroll does a lot of radio advertising, but they're an unknown entity for me. I'm so satisfied with the solutions I have that I wouldn't consider starting over with someone new. The cost and learning curve of inputting into a new system isn't justified.
There are free payroll solutions like Zenefits that generate revenue only through referring healthcare benefits options and getting commission. I work with health insurance companies as part of my practice. Many small companies don't offer benefits or are very particular about what benefits they do offer, so that's a dicey proposition. For example, I was working with clients who had group insurance. When the recession hit in 2008, almost everyone dropped health insurance because it wasn't affordable anymore. Very few have put it back into place since then.
Payroll solutions have become so inexpensive that I can charge smaller amounts for those services and still have a profit. It used to involve a lot of time and manual work, but now I can do the same tasks in a few minutes each month. I used to have various forms to fill out and send to clients to sign and mail in. Now, the work is done at the push of a button. I'm able to charge less and earn more per hour as a result.
I do value pricing for my customers. I charge a flat monthly fee for an array of services, raising it according to the number of services used. The starting point is only $29 per month for self-service accounting, and $79 with payroll. For this, I review those payrolls, file tax returns, and so on. A company with fewer than 5 employees can have unlimited payroll for $49, including an accountant who will support them. We also have an outlet to provide desktop software at good rates with accounting support.
First Encounter with Payroll
Is it surprising that SMBs first encountered their payroll solutions as legacy systems or by a referral?
No; I find that small business owners/management are not inclined to spend much time on various accounting solutions. Most prefer quick and inexpensive.
Most business owners do not do the due diligence to know what is available. In addition, they don’t necessarily have the accounting skills to be able to discern what the best solution might be. The path of least resistance is to keep what is in place.
Why do direct sales pitches and advertisements represent such a small portion of the responses, despite many of these payroll companies’ huge sales teams?
I get contacted by sales people all the time. They are aggressive and very persistent. The cost to the users reflects this, creating less demand. From my experience, I've also found that the solutions offered won't be the most effective ones. Years ago, they were the only types of solutions available; even though they were costly, they offered full service, but now they are shifting toward self-service. I have had some clients using ADP and Paychex in the past. Everything went to an Internet-based service, and the clients didn't get the bang-for-their-buck that they used to get when those were the only options.
On the other hand, Intuit's payroll solutions are so efficient, robust, and inexpensive that it's hard for other services to compete with them. They also sync with the desktop and online versions of QuickBooks, which almost every business uses. I have not been able to find a way of syncing ADP with QuickBooks, which can become a problem, unless there is a bookkeeper or accountant for the business. Some of our clients simply input numbers as payroll every month or every couple of weeks, which leads to a big mess to clean up at the end of the year.
Use of and Satisfaction with Payroll Features
Why are the top 3 most commonly used payroll features generating payroll reports, W-2s, and direct deposits? What makes them so vital to a company’s operation?
The top two are reporting requirements that are nonnegotiable and have penalties for not addressing. Direct deposit is time and cost saving.
It’s also important to note that clients tend to confuse payroll reporting with payroll tax reporting. Many accountants and bookkeepers will call payroll tax returns “payroll reporting” because they're reporting payroll information to the federal government. To me, most people have tax reporting in mind in these cases. Payroll reporting is important, but not nearly as important as tax reporting, because that implies specific obligations which need to be both timely and correct. It has to be the highest payroll priority for most people.
Benefits management or PTO are less used. Do you think that this is due to the fact that some payroll solutions don't offer that kind of integration, or is it because smaller businesses don't have a need for it?
There are two causes. First of all, in this evolving economy, those benefits aren't offered as much. Many small businesses aren't offering vacations, holidays, and benefits like they used to; or, they’re not being packaged in a way that needs official or exact tracking.
Another side of the problem has to do with administration. Smaller businesses will find it easier to do it on pen and paper or in a spreadsheet, rather than learning a new system and keeping track of it. That may not be a good use of their time. I encourage my clients to use those payroll functionalities, but not many do; I think vacation time tracking in particular is hardly used. Even the ones that offer this will prefer to keep track of it in a spreadsheet or just in their heads. Technology has a learning curve, and these businesses are more keen on perfecting their craft, services, and products. They're less interested in being on-point with their administrative systems.
Are you surprised that 85% of respondents are at least somewhat satisfied with their payroll’s features? Is this due to payroll solutions actually becoming better/user-friendly?
Payroll solutions have become very user friendly – especially the Intuit payroll solutions. In addition, they offer robust features that accomplish most tasks. The full service payroll options of years gone by are now more self-service. If you have an issue, it is difficult to reach a live person for assistance.
Generally speaking, what do you think causes people’s satisfaction or dissatisfaction with payroll solutions?
Technical issues tend to be the problem that comes up the most.
Payroll solutions are becoming more user-friendly and adopting more robust features. Do you think that their customer service isn't as great as it could be, which is compensated by the fact that solutions are more user-friendly, therefore not requiring as much assistance?
Because they're so user-friendly and streamlined, the process itself doesn't create any issues. The only issues I ever have with payroll systems are technical and usually on the user-end, not something that the providers did wrong.
Why are the top 3 most desired additional features a mobile app/friendly version, customization for unique cases, and employee self-access? Are they critical for a modern business, or are they just for convenience’s sake?
Convenience is critical for modern business. Time spent on administrative tasks is often lost time. As businesses increasingly move away from bricks-and-mortar, they require increased portability and functionality.
Why do so few respondents care about multi-country compatibility, despite our increasingly interconnected global economy?
Small businesses are not as global-centric as larger businesses, but that time will come.
Use of and Satisfaction with Customer Support Features
What do you think phone is the most important support feature?
Email is the most important support feature in my practice, because I am hard to reach by phone. Millennials are much less phone-centered and much more social-media centered. I am surprised at the high number attached to phone support, but it may be a reflection of the average age of the people surveyed.
For example, I've seen a divide in my practice: millennials are usually not phone-oriented at all. They prefer Facebook and Twitter as communication means, not even using email as much. People who are over 40 will be more email-oriented, while the 50+ demographic will be phone-oriented. I'm trying to get my clients to use the phone less because it's costly and time-consuming to provide this type of support, while a quick question on social media can be answered in seconds.
How important is 24/7 support to businesses?
For small businesses, not so much. Extended hours are usually sufficient. However, as small businesses expand globally, this will not always be the case.
What are some ways to improve a payroll solution’s overall customer support?
Efficient and time-sensitive chat feature.
Do you think that any support features are underutilized?
I think that people are either too comfortable with more traditional means, or they are intimidated by the process of learning from a demo or looking in the FAQs. They may even lack the knowledge to know exactly what to look for and where. I certainly don't like wasting time, so I will not spend a lot looking for information that may or may not be there. I may do it if I can't get through to a support person quickly.
Is 71% an impressive level of user satisfaction for customer support, or should it be higher?
Impressive; it speaks well to the software development that has streamlined the payroll process.
What are the main factors that SMBs consider when evaluating customer support?
The preference of the staff that uses the payroll system and reviews of other users.
Do you think that modern payroll solutions are putting an emphasis on delivering better customer support, or are they trying to make the solution generally easier to use so there is less need for support?
I think that there is definitely a move away from support. I can get support relatively easily because I provide the service to my clients, but when they have a problem, they won't have such a quick experience.
Is there a certain age range or type of client who would consider customer support to be more important than the payroll solution's features themselves, or vice versa?
I represent the bridge to support for my clients, so it's hard for me to answer. They choose services based on my recommendations, not based on the support provided. Many times, they won't even know what the level of support will be, going in. It's an unknown factor, until the client is actually using the service. I don't think that this is a key issue, though. My experience has been that solutions have become so user-friendly that there is little need for support anyway, other than for technical issues.