How much does a missed phone call cost?

The cost of missing phone calls is the sum of wasted Marketing to generate 'missed' sales calls, plus the Lifetime Customer Value and  Referral Revenue that would have resulted had calls been picked up and converted, and the Reputational Cost of poor service, i.e. not answering phone calls.

That said, your first response might be:

  • “We don’t miss calls”, or…
  • “The caller will leave a voicemail”, or…
  • “It’s not a problem, I can just call them back”

You would be wrong, VERY wrong, but more on that in a moment, for now, just think, if your caller was a potential client, the cost of not picking up their first call could be huge:

1.      The Marketing Costs:  The Money Wasted by Not Picking Up Calls.

Unless you have an-up-to date telephone system1 and systematically verify 100% of your inbound calls were answered, it is certain, on occasions, potential clients will find your phones ring out, are engaged, or go to voicemail.

You never get a second chance to make a first impression.  It is an acknowledged fact, 80% of potential customers will NOT leave a message…  and you fail to secure new business you could have otherwise won.  The cost?

Estimated Marketing Cost2:  Cost Per Lead:    C       x    No. Missed Sales Enquiries3:  N    x     P (%)                                                                                        

Example:         Cost per lead:  £35   x   Missed Sales Enquiries, 1 per day:  20    =     £700 per month.
Where:                   C              = Total Expenditure on Marketing, (remembering to account for and value your time).
                                  L              = Total Number of Leads Generated from all Sources.
                                  N             = Total number of Calls Missed.
                                  P             = Ratio of ‘Prospect’ enquiries to all Enquires.

  1. If you want to know more about cost effective, modern phone systems and how you can track missed calls, click here: Convergence.
  2. If you need help working out your Marketing Costs, Cost of Acquisition, or other business KPI, click here:  Burgis and Bullock, or click here:  EFM.
  3. To discover how to measure your call / missed call statistics and 'prospect : other caller' ratios, click here:  The Office Genie.

2.      Lifetime Customer Value:  The Long-Term Cost of Missing Potential Sales Calls.

The cost of marketing is just the tip of a much bigger iceberg.  To estimate how much this is costing your business you need to know a couple of additional key business statistics:

  • Average Conversion Rate:          
    If your business generates 240 leads per annum and signs up 60 new clients, your Average Conversion Rate is 240/60 = 4, giving an Average Conversion Rate of 4 to 1. 
  • Average Lifetime Customer Value (LCV):
    This is an estimate of the total profit each client adds to your business.  You need to know average client retention in years, sales frequency, average sales value and gross profit margin.  If for example, a new client stays with you for 5 years and spends £75 each month on a 50% gross margin the Lifetime Customer Value becomes:
  • 5 years x 12 purchased per annum x £75 spend per purchase x 50% gross margin = £2,250

Now you can work out the total annual Lifetime Customer Value lost if you miss just one incoming sales call a day:

  • 20 missed sales enquiries x 25% (1:4 close rate) = 5 ‘lost’ clients per month.
  • 5 ‘lost’ clients per month x 12 months = 60 ‘lost’ clients per annum.
  • 60 Clients x £2,250 LCV = £135,000 of lost profit for each year you are missing phone calls.

3.      Word of Mouth – The Cost of Referrals You Don’t Receive Because of Missed Calls:

It is a well-known fact; satisfied customers are typically the best source of new clients, via Word of Mouth Referrals.  The more satisfied your clients are, the more likely they are to refer you to others.

Do you know your average referral rate?  How many referrals do you receive each year and how many clients do you have…  this one is nice and easy to calculate.  Let’s assume you have 240 clients and you receive 120 referrals per year, your referral rate is 0.5 referrals per client per annum.

What do your missed calls cost you in terms of Referred Clients lost?  Well, if the average client stays with you for 5 years, that is another 2.5 clients you are losing for every 4 missed sales enquiries. 

If your average Lifetime Customer Value is £2,250, so that’s a whopping £5,625 of profit that could have been in your bank but instead, it has slipped through your fingers, i.e. just one client and their referrals.

If your business is missing out on 60 potential clients per annum, the numbers become astronomical:

60 clients lost x 5 years average retention x 2.5 referrals per client per annum…  that comes to 750 missed clients, (admittedly over a 5 year+ time frame), and that comes to £1,687,500 of ‘lost’ profit.

OK, so it is not ‘lost’ as such, because you never had it in the first place, but if you, or someone else had answered your phones professionally your ‘Return on Investment’ could look like this:

  1. Marketing Cost / Return Lost:  £700 per month => £8,400 per annum.
    add to this…
  2. Lifetime Customer Value Lost: £2,250 per client => £135,000 per annum.
    add to this…
  3. Word of Mouth Referrals:  750 potential clients and a possible £1,687,000 of lifetime profit lost.
    add to this…

4.      Reputational Cost:  The Cost of Negative Feedback.

If you are missing the occasional call, what about the negative impact, not only on prospective new clients, but also on existing clients, who may not tell you but maybe harbouring a dissatisfied grudge.

Prospects and clients alike will share their stories, and it is an unfortunate fact, the bad news is far more interesting and likely to be shared than good news.  Some statistics:

“On average, an individual will tell 9 people about good experiences, and 16 about poor ones.”
American Express Survey

“On average, an unhappy customer tells 11 others about their experiences.”
The Sydney Entrepreneur Centre

“A dissatisfied customer will tell between 9-15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people.” – White House Office of Consumer Affairs


So not only are you increasing client dissatisfaction making it less likely those affected will remain loyal.  You are also providing bad news for people to share which damages your brand and your reputation without you even knowing it. 

How many new clients is ‘Word of Mouth Negative Gossip’ costing your business?

5.      The Cost of Staff Disruption.

Have you ever been to a hairdresser or stood at the reception desk and fumed whilst the person serving you stopped to take an incoming call?  For some businesses, the impact of answering the phone, frequently a salesperson or a wrong number, can be dramatic.

Even if your business does manage to pick up all, (or nearly all incoming calls), there’s cost to that too.

Research shows it takes at least 20 minutes to get back on task after an interruption, e.g. a phone call. If you or your staff are taking phone calls, that’s having an impact on your productivity and inevitably your profits.

It may be part of their job description, but how stressful is taking phone calls when also required to deliver work with a consistency and quality of service with constant interruption?  What happens to staff morale and job satisfaction…?

Simply put:  Is answering frontline phone calls worth you or your staff’s time?

All things considered, having an award-winning team of professionals answer your phones isn’t just a good idea, for some, it is the only rational solution, because the cost of not doing so is so great.

Enjoying total peace of mind with costs from lower than that charged for one cup of latte a day isn’t just a good idea, it is the only sane solution.

To find out more, contact Jacqui Frost or one of her team at The Office Genie on  01604 532 025  or email, or visit and we will call you…

To find out more about Intelligent call handling systems that will tell you when you have missed calls enabling you to call them back, click here: Convergence.

To find out more about the hidden costs and how to track the Key Performance Indicators that really matter to your business click here:  click here:  Burgis and Bullock, or click here:  EFM

The Office Genie      Visit Website
Jacqui Frost – Chief Genie
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News Date: 
Monday, February 12, 2018 - 14:30
Jacqui Frost - The Office Genie