HR, Clutch Report

Payroll Solutions Survey 2016

November 25, 2020

by Sean Huang

Business Analyst at Clutch

Clutch surveyed payroll users in the US to determine which payroll features are most commonly used and users’ satisfaction with their payroll solutions. The survey also asked how users first heard about their payroll solutions, what other features are desired, and users’ experience with customer support.

The survey included 301 responses from administrators of payroll solutions at their companies, which are all small-medium businesses (SMBs) with 2-500 employees in the US. 57 percent of the respondents came from companies with 11-200 employees.

Key Findings

  • Intuit dominates the payroll solutions market, used by 38% of SMBs.
  • Sales pitches and advertisements are not very effective at reaching new payroll customers; SMBs usually just use legacy systems or colleagues’ referrals.
  • 85% of SMBs are satisfied with their payroll solution’s current features.
  • More than one-third of SMBs wish their payroll solution had a mobile app or mobile-friendly version of the software.
  • 71% of SMBs are satisfied with their payroll solution’s current customer support features; they most commonly rely on phone support.

Recommendations

  • Payroll is a competitive market, dominated by a few large legacy companies. Smaller, newer payroll companies can establish market presence by identifying niche industries with SMBs that they could serve.
  • There are a multitude of payroll companies from which to choose, all with decent features, support, and customer satisfaction; it is hard to go wrong with a choice.
  • As a payroll user, if you are getting poor customer service and/or outgrowing your current solution’s capabilities, you can easily find another more suitable option.

Tweet this article

Most Popular Payroll Solutions

payroll solutions used the most

Intuit is the market leader in payroll, with 38 percent of SMBs using the desktop or online version of QuickBooks, or Bank of America (also powered by Intuit). 14 percent use Paychex, 14 percent use ADP Workforce Now (which powers Bank of the West), and 4 percent use SurePayroll (which powers Citibusiness and M&T Bank).

“Intuit offers low cost, highly powerful, user friendly solutions for many small business needs… It 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… The wave of the future is creating a QuickBooks ecosystem surrounded by different apps.”
Alice Azzaro, Owner, Management Accounting and Payroll Solutions

“[By contrast,] 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.”
Alice Azzaro, Owner, Management Accounting and Payroll Solutions

Despite Intuit’s dominance, every company needs to do payroll, so there is still plenty of opportunity for other payroll solutions to capture market share.

“The small business segment is the right place to be for a newcomer. There are a lot of millennials starting new businesses, and they are looking to do business in a different format than what the traditional payroll companies offer. So, there is absolutely an opportunity to differentiate from incumbents.”
Shrad Rao, CEO, Wagepoint

For newcomers in payroll, the trick is to utilize strategic planning and observation to find a relatively untapped niche.

“Paying attention is important when competing in the market. There is no way for the large players to see all opportunities. They can only look in certain places, at certain times. Our job is to look everywhere else. A useful analogy is to think of the large legacy systems as old cities with roads that were built for horses, and us newer systems as cities that were built using modern urban planning. The legacy systems mainly have to stick to their existing states and grow where possible, whereas new ones like us can plan everything out at the very beginning, based on market information and observations we’ve gathered.”
Shrad Rao, CEO, Wagepoint

Customer Satisfaction Ratings

To determine which payroll solutions have the highest customer satisfaction rating, we use the Net Promoter Score (NPS). NPS calculations take into account responses to the question, “How likely would you be to recommend your company’s payroll solution to a friend or colleague?”

nps for top payroll solutions

The NPS score shows that SMBs are most satisfied with QuickBooks, Paychex, and ADP Workforce Now. All three payroll solutions are above the reasonable NPS benchmarks of 30+ for software service companies.

First Encounter with Payroll

Most payroll administrators (29%) first encountered their solution as a legacy system, since it is easiest to continue using the current one; others were referred by colleagues (19%).

“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.”
— Alice Azzaro, Owner, Management Accounting and Payroll Solutions

how did you first hear about your payroll service

Very few people heard about their payroll solution through a sales pitch or advertisement. SMBs are increasingly already aware of the value of payroll solutions, so they do not need much convincing. For these customers, it is just an issue of which payroll solution to pick, and they probably trust personal recommendations or their own research more than a sales pitch or advertisement.

Payroll Features

most commonly used payroll features

Many payroll features dovetail into each other, mutually supporting their common usage.

“I view payroll as one fluid function… The three most commonly used features are what they are because they work together.”
Eric Hernandez, VP Client Success, PrimePay

In fact, payroll is no longer simply recording the number of hours worked multiplied by the hourly rate. Modern businesses are faced with complex tax reporting requirements as well as HR management needs; thus, comprehensive and integrated solutions are often necessary.

“Payroll and timekeeping seem like a good combination because one flows into the other… There are also HR functionalities like onboarding an employee, enrolling them into benefits, making sure they’re performing OK, and so on. The new paradigm is to bring them all together.”
Shrad Rao, CEO, Wagepoint

However, some businesses (especially small ones) may not offer formal benefits or need formal tracking of them. Some payroll solutions also do not offer integrated time and labor management services, in which case a third party vendor would be necessary. In any case, some SMBs just may not prioritize administrative tasks beyond accurate payroll for tax purposes.

“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.”
Alice Azzaro, Owner, Management Accounting and Payroll Solutions

User Satisfaction with Payroll Features

satisfaction with payroll features

Although satisfaction levels are quite high, payroll solution providers continue to strive to improve these numbers.

“I want our satisfaction levels to be above 95 percent because we're very dependent on our clients' longevity, satisfaction, and the sharing of a positive experience with other business owners (word-of-mouth).”
Eric Hernandez, VP Client Success, PrimePay

High satisfaction is likely due to the software itself improving in technological capability as well as user-friendliness, but also due to good customer support. Payroll solutions may differ in prioritizing one over the other, but all of them likely strive for a balance between the two.

“Technological enhancements are important, but it's imperative to maintain a relationship with our clients... 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.”
Eric Hernandez, VP Client Success, PrimePay

However, some payroll solutions have existed for so long that they have built solid brand trust and loyalty among many customers, even if their solutions are not necessarily the best. Having enough loyal customers can keep up their satisfaction ratings.

“The millennial-run new businesses that we've worked with are usually less concerned about a company's legacy standing, but people who have been in business for a long time usually feel more comfortable with and are trusting of legacy companies, regardless of how many mistakes those companies make. This is a reality for our business: the longer a company has existed, the more business it will get.”
Shrad Rao, CEO, Wagepoint

Additional Features Desired

additional features payroll users want

Employees and the business they conduct are increasingly on-the-go, out-of-office, and beyond typical work hours. As such, they need solutions that they can access anywhere and anytime.

“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.”
Eric Hernandez, VP Client Success, PrimePay

“Convenience is critical for modern business. Time spent on administrative tasks is often lost time. As business increasingly moves away from bricks-and-mortar, businesses require increased portability and functionality.”
Alice Azzaro, Owner, Management Accounting and Payroll Solutions

Many employers also want to increase transparency and empower their employees to keep track of their own HR-related matters.

“People in general are more savvy at using products and technology. Giving reports to the employee used to be a huge burden for the employer. It makes sense that owners would want employees to access these features themselves.”
Shrad Rao, CEO, Wagepoint

Despite our increasingly global economy, multi-country compatibility is not a popularly desired feature among SMBs because many of them simply do not engage in international business. However, SMBs may increasingly do business abroad, especially if they are headed by millennials, who are uniquely positioned to think internationally about markets.

“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.”
Eric Hernandez, VP Client Success, PrimePay

Customer Support Features

Phone, email, and chat support are the most commonly used customer support features, which makes sense because they all involve direct communication with a person. Almost three-fourths of SMBs are satisfied with the customer support they receive.

which payroll customer support features do you use

satisfaction with payroll customer support

Payroll can present complex and/or urgent problems that need live, step-by-step guidance, for which phone support is probably best.

“Phone is the most interactive and instantaneous out of all support features. Payroll tends to come with an urgency of getting the job done. Also, it's not easy to describe a problem sometimes. The client often has to paint a picture and hope that the person on the other end will understand it, which is hard to do by email or chat.”
Shrad Rao, CEO, Wagepoint

This could change over time as the younger generation grows into company leadership positions, since that generation is more comfortable with online communication.

“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.”
Alice Azzaro, Owner, Management Accounting and Payroll Solutions

However, payroll and HR will always be somewhat intimate issues, so more personal or interactive forms of communication like phone support are unlikely to cease entirely.

“People want to be taken care of and walked through situations… 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.”
Eric Hernandez, VP Client Success, PrimePay

Thus, customer support is still vital for payroll companies, especially for newcomers. They cannot focus solely on making the software technologically advanced; they must also prove to customers that they can take care of them and properly address all their needs.

Prioritizing customer support and carefully observing where niche opportunities exist are probably the best way for new payroll providers to compete with dominant industry leaders.

Overall, it seems that SMBs are quite satisfied with their payroll solutions’ features and customer support.

Tweet this article

About The Survey

The survey included 301 responses from payroll administrators; 98 percent of respondents hold a manager position or higher.

Respondents all work at companies with 2-500 employees in the US, with 57 percent coming from companies with 11-200 employees.

Data collection was completed in April 2016.

Related Articles More

Sharing Success: Why Advocacy is Important at Work
Compensation Strategy: How Small Businesses Plan for Employee Benefits

Stay Updated With Clutch

Never miss new content. Subscribe to get weekly content roundups – delivered straight to your inbox.