Business Services,

Interview with Eric Hernandez from PrimePay

August 8, 2016

by Sean Huang

Business Analyst at Clutch

eric-hernandezClutch spoke with Eric Hernandez, VP of Client Success at PrimePay, about Clutch’s 2016 Payroll Solutions Survey results.

Learn more about Primepay on their homepage. Also, read more from Hernandez in his recent article about payroll providers for SMBs.

Background

Please describe your organization and position there.

PrimePay is a complete business solution offering multiple services, from payroll (where we started 30 years ago) to HR administration, 401(k), workers' compensation, benefits administration, merchant services, pay cards, and so on. We are one of the largest privately held payroll companies in the country and growing.

I am the Vice President of Client Success. I oversee all payroll services and support nationally.

Most Popular Payroll Solutions Used

What are your reactions to the results? Why are people choosing these solutions to do their payroll?

I am not surprised that self-service or off-the-shelf solutions are attractive means to an end, especially in the small business space. Many believe that they can handle payroll themselves when starting a business. We've determined, through 30 years of experience, that newer business owners may not understand the benefits of outsourcing payroll. This is understandable, especially with new startup businesses, when people are conscious of every dollar and cash flow.

We found that, as businesses grow, outsourcing the solution is not only a very cost-effective method, but also provides peace of mind. The cost of outsourcing the work is minimal and the added benefits of outsourcing these efforts are worthwhile: ensuring that your employees are paid correctly and timely, informational accuracy, precise and timely tax payment and reporting, W-2s, etc.

As an example, many people use online personal tax solutions which may be an ideal option depending on the individual. The reason for using it is that it's effective, but depending on the complexity of your reporting needs or portfolio, you may determine that a CPA is a more viable option. Even though that software is very intelligent and has the ability to lead the user through the process, at some point you may want expert care from someone who can walk you through complexity. There's a place for everything.

How do you think that newer or smaller payroll solutions can overcome difficulties in gaining more visibility and market share?

This is a very complex question. In any scenario, if the focus is on the client first, then that will determine the direction of growth. How are they perceived, where are they strongest in the market, and where they will make the greatest impact for the client and their business should all be considered. In my opinion, the client dictates the market and need.

First Encounter with Payroll

For most respondents, their payroll solution was a legacy system, or they were referred by someone. Not many people found out about their solution through advertising or a pitch from a salesperson. What are your reactions?

This doesn’t come as a surprise to me. I agree that, for many businesses, word-of-mouth is the number one method of finding out about a payroll solution. We maintain many relationships with certified public accountants, financial advisors, and brokers who have clients that benefit from a relationship with PrimePay. Much of our business in the last 30 years has come from word-of-mouth. We have thousands of clients, and our satisfaction rate is high in regards to service.

We understand legacy relationships with services such as ours in the case of clients that take over a company by whatever means. They will typically, at least within the first 12-18 months, want to maintain whatever supporting services are in place in an effort to maintain stability of the newly acquired business. However, sometimes businesses will consolidate with the intention of integrating the acquisition into current processes.

Would you say that much of the success seen by PrimePay has come through word-of-mouth, rather than through traditional sales pitches and advertisements?

We have a marketing department and we do advertise, but our means of advertising are via online engagement campaigns, through brokers or the CPA community, and further educating current and prospective clients. You don’t see many TV commercials for payroll companies. For PrimePay, the most viable and successful method has been word-of-mouth.

Use of and Satisfaction with Payroll Features

Generating payroll reports, W-2s, and direct deposits are the most commonly used features. Some less common ones are PTO tracking or benefits measurement. Why is this?

Based on the information provided, I would say that when it comes to payroll, the three most commonly used features are what they are because they work together. Most people do not use payroll solutions such as PrimePay just to process paychecks. Business owners see the benefits of outsourcing payroll for the reporting aspect, which includes all payroll tax reporting, payments, W-2s, and direct deposit for timely payroll distribution. With that said, I view payroll as one fluid function; from running payroll which may include deductions, general ledger requirements, online access to payroll, check printing, federal, state and local tax payments, payment processing, tax reporting, etc.

This process can be quite complex depending on the business (type of business, reporting requirements, accounting needs, insurance offering, employees vs. contractors, etc.) and the employees (full-time vs. part time, type of deductions, tax exemptions, hourly vs. salary, etc.). Also, keep in mind that what were once considered “ancillary services” are now becoming extremely relevant and critical to business. This transpires when labor regulations evolve such as the recently updated Overtime Rule and the Affordable Care Act (ACA).

Do you think that fewer people use hours tracking or PTO tracking because they are seen as less critical, or because many of the payroll solutions that they're using don't have that extensive of a functionality?

This depends largely on the size of a business. For a staff of 1-3 employees, for example, there may be less emphasis on tracking specific hours worked or accrual of PTO hours. Most payroll processors without an integrated time and labor management solution (TLM) will typically work with a third party vendor. They will be able to accommodate an import or an informational “feed.” PrimePay’s TLM system is integrated with payroll, which is more effective for our clients. When it comes to small businesses of 1-10 employees, it is more likely that the legacy process will be the solution for the business, especially in reference to the generation X and baby boomer culture.

85% of respondents are at least somewhat satisfied with their payroll solution’s features, while only 9% are dissatisfied. Is this surprising to you? Do you think the satisfaction level should be higher or lower?

I don't know if “surprising” is the word I would use. At PrimePay, our number one focus is always client satisfaction and the client experience. We work to avoid dissatisfaction, and we take proactive measures to ensure clients are happy. I'm not necessarily surprised that satisfaction is high. For clients, it's a matter of perspective as to what will drive satisfaction. Accuracy is a very easy metric to analyze. Timely response and access are also important: when a client calls, will someone be available to assist with their needs? If there is an error, how is it responded to and how quickly? Did we not only correct the issue, but also resolve the overall cause so it wouldn't happen again? Is the client well-informed as to the resolution?

Satisfaction is a very broad topic with a lot behind it. I want our satisfaction levels to be above 95% because we're very dependent on our clients' longevity, satisfaction, and the sharing of a positive experience with other business owners (word-of-mouth). For example, a client with a good experience will mention it to five peers, while a client with a bad experience will mention it to twenty. Client satisfaction in our business must be the highest priority.

Do you think that working towards high satisfaction is a function of the payroll solutions themselves becoming better, or is it still driven by customer support?

I think that it should be a combination of the two. Technological enhancements are important, but it's imperative to maintain a relationship with our clients. Our industry deals with a very complex and personal segment of the business: payroll, insurance, HR, etc. Clients must have faith that we have the technical ability and agility to maneuver through the complexities while providing expertise in areas where they may require support.

With that said, we've seen a shift with many clients from the old methodologies of calling in payroll to a focus on technology, especially for the millennial generation. In this day and age, smaller businesses have farther reach and the ability for more rapid expansion. They want self-sufficiency. This comes in the form of online services and 24-hour access.

For additional features, many wanted mobile app/friendly versions of their payroll solution. They also wanted customizations for unique cases as well as employee self-access. What are your reactions to these answers?

People want the ability to run their business from anywhere. We've seen more people working from home in a number of industries. Business leaders want the mobility and flexibility to continue moving their business forward no matter where they are. The larger a business grows, the more they will consider additional services to help them with that growth.

Fundamentally, clients will want basic features like a general ledger, which can already be a complex item. There may be some customizations that a payroll company should be able to provide. Employee self-access is necessary not only when reporting hours, but also when it comes to making basic changes to their benefits platform. Gone are the days of having to fill out a bunch of paper forms. We can achieve so much online, from changing an address to adding dependents, without having to wait. The focus is on ease of use, accuracy, and access.

Do you think that these features are critical to modern businesses, or are they more for the sake of convenience?

It depends on your business preferences and needs. Access is always critical. For example, if payroll is processed out of Pennsylvania for a client in California, but it's delivered in time, the client will be satisfied. Critical has everything to do with ability and availability. For a trucking company, mobile access is probably going to be more critical than it would be for a restaurant.

It is also important to determine how many man-hours are saved by adding these services. If running payroll, calculating taxes, making payments, and reporting takes one hour per employee, then what is the value of that time vs outsourcing? Can a business run without these automations? Possibly, but it won't allow the client to focus on running their business, since their time would be consumed by doing payroll.

It’s understandable that small and medium-sized businesses are primarily operating within the US, but it's easier now more than ever to do business on a global scale. So how come, in spite of this, people don't care much about multi-country compatibility?

The millennial generation is coming into the market with global access via Internet and smartphone. It is easier to do business in multiple countries for many reasons, such as reduced costs or access to solutions outside of the US. This mindset will not be as prevalent in the small business demographic as much as it would be found going upmarket to larger scale businesses. It comes down to the fact that the majority of small businesses operate within their lane. Many small business solutions don't focus on multi-country markets.

Use of and Satisfaction with Customer Support Features

The most commonly used customer support feature was phone, followed by email and online chat. Any reactions to why phone is still the most popular?

When it comes to payroll and human resource matters, there is a degree of intimacy. People want to be taken care of and walked through situations. The true success to all support is to minimize the need for support. If I can educate a client or give them the resources to resolve issues on their own, then they won't have to call for support. This gives me the ability to be more available when they do call.

Payroll must be timely; everything is a deadline in this area, from when people get paid, to when items get reported, to when taxes are paid. We've seen a reduction in that need because we've expanded our FAQs and Q&As, providing clients the ability to find answers on their own. I'm not surprised that people still want phone support, though. It has to do with the transition in the market from the baby boomers to the millennials. There are still many business owners from both cultural groups that are part of the marketplace who will prefer to pick up the phone.

Do you think that any of these customer support features are underutilized?

I completely agree that phone support and email are the number 1 methods of communication, combined with online chat, which is immediate as well. There is a substantial dip in the usage of FAQs, recorded demonstrations and tutorials. It may not be necessarily lower than it should be, but I wish it was somewhat higher.

I believe that the reason, in part, is the fact that one can't ask questions or engage with other support features. There is a lack of dialogue, which relates to the intimacy I previously referred to. I'm not surprised by the situation, but I do wish that the usage of these resources was higher. Part of our job is not only making the answers available, but also educating the marketplace as to where to find those answers. Many people simply don't know there's a Q&A or tutorial available to meet their needs.

Would educating the users and making resources easier to find be a way of improving payroll solutions overall? Many users don't bother looking, but instead prefer just to pick up the phone and ask their question.

Exactly. Education is critical and can be accomplished by several means. Most of our clients will call in payroll simply because that's how they like to communicate. PrimePay has a sizeable number of clients who prefer online access, opting for a self-service solution. Both methods may require support. The best way of achieving this is to educate our clients regarding the tools and resources available to them.

71% of our respondents were at least somewhat satisfied by customer support. Is this figure too low, given the focus on customer support?

I believe that the figure should be much higher. As I mentioned previously, at PrimePay we focus heavily on customer satisfaction and the client experience. Many look upon payroll providers as software companies. At PrimePay, we view ourselves as a complete business solution. Our business is about satisfying our clients’ needs. As long as we focus on the client first, we will always be leaders in this industry.

What do you think that payroll administrators in small to medium businesses are prioritizing when evaluating customer support? You mentioned that the perception of access is a big issue. Is there anything else which clients should focus on, either related to features or interface?

To clarify what I mean by perception of access: it no longer means where we may be physically located. Access means 24-hour access to information and the clients’ ability to manage their business without having to wait.

Clients, especially in the small business arena, focus on the multiple features or services to complement payroll. The 1-3 employee business segment may be focused on cost, while larger businesses focus on features of the service. People are looking to have features made available to them as the business grows and new needs arise. They are going to require additional services integrated into a one-stop-shop solution. Clients want a solution that can complement their business and let them focus on growing.

We obtained average ratings for certain categories of payroll solutions – features, ease of use, customer support, overall rating, and likelihood to recommend – and they were all roughly 8 out of 10. Any thoughts?

People want functionality and ease of use, in order to eliminate the need for support. Typically, they want operations explained in layman's terms and immediate access to answers. Clients, as they grow, will want to incorporate additional features. When looking at clients that will typically call in payroll, we've seen that they want immediate access and accuracy. Dissatisfaction is usually due to inaccuracies or to the fact that features of another service are not available. Overall, I believe that the average ratings are in line with my expectations.

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