Insights and Studies, Team Building

Cost Analysis: The Price of Poor Communication

Nearly every business owner knows that decades of research rank effective communication as a crucial skill for a successful business. Yet poor communication habits are still present in many organizations. It leads to issues of employee disengagement and poor morale. This is especially troublesome in industries where the majority of staff is working remotely in the field. Though most owners strive to provide a pleasant working environment, there is a more practical concern with poor communication: It hurts the business’ bottom line. Take a look at this cost analysis of poor communication and strategies for solving it in the field.

1. Employee Turnover:

According to a Communication ROI study, businesses who were found to communicate effectively were 50% more likely to have lower-than-average rates of employee turnover. Aside from the negative effects high turnover has on your remaining employees, it can be very costly. For example, one study found that to replace one $10/hour employee can cost a business $3,328. In 2013, the average employee turnover rate was 15%. That means that if your business has 30 field reps, on average, you will lose 4 a year, costing your bottom line $13,312.

One way to promote healthy communication in the field is by altering your communication strategies. By leveraging a Field Activity Management software solution, managers will be able to communicate with reps in a more focused and efficient way. For instance, managers can comment on activities such as store visits or purchase orders. This kind of focused communication will make goals clear - one of the most important factors in positive employee engagement.

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2. Customer Dissatisfaction:

Businesses who communicate more effectively through happy employees consistently enjoy higher revenues. In fact, a report by Sears showed that improvements in employee attitude were able to raise customer satisfaction by 1.3%, which in turn raised revenue. Conversely, unhappy employees often perform poor customer service, which can seriously injure your bottom line. A study on customer dissatisfaction found that an unhappy customer will tell as many as 10 people about their poor experience. And once a customer is lost, it can cost up to 7 times more to replace them than it would have been to retain them.

A study of consumer switching (when a customer takes business elsewhere) showed that 32% of switchers moved because they were frustrated by talking to multiple reps. Clients want to place purchase orders, assist merchandising audits, and address complaints with the same person. They easily become frustrated if rep A comes to solve an issue Monday and then rep B comes the next day without knowledge and sensitivity of the previous issue. Field Activity Management software will enable managers to appropriately manage rep territories, ensuring there is no rep overlap, which can lead to customer dissatisfaction.

Communicating with customers over multiple channels can help eliminate costly miscues.

3. Project Failure:

In a survey of IT workers, 28% of participants said poor communication was the main cause of project failure. For a field team, you may consider each prospective client as a new “project.” One major communication error made in new customer acquisition is the use of email. If assignments to meet with prospects are sent to reps through email, there is a good chance reps will either see them too late or misinterpret their meaning. When communication fails between field reps and managers, your business can lose up to $243 on one failed project.

Field Activity Management software tools offer alternative collaboration techniques which foster focused and efficient work instructions. Aside from project-specific comments, back-office managers can send texts to reps through instant messaging features offered by many Field Activity Management software tools. Managers should avoid emails whenever it is possible. Not only are response times for IMs significantly faster than email, having the messages in the same interface reps use for work projects will lower the rates of distraction caused by switching between tasks. The instantaneous messaging paired with focused work activity will lower the rates of failed projects and bring in more prospects.

Adding It Up

Effective communication with field workers can be a challenge. With your team spread out between traveling and client visits, managers need a tool that will help them speak more clearly and efficiently. As this cost analysis shows, businesses stand to incur serious financial losses from employee turnover, dissatisfied customers, and failed projects. Investing in a Field Activity Management software solution works to improve these issues surrounding a lack of communication at work and raise overall productivity.  

Erin P. Friar

Erin Friar is a Content Marketing Journalist Intern at Repsly, Inc. and is completing a Journalism degree at Suffolk University. She is a master of grammar and is passionate about creating fresh content to help foster efficiency and overall success in small businesses.

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