By Aaron Taylor
In today’s topsy-turvy world, many accounting firms are struggling to find answers to an economy that keeps raising new questions. So how does a CPA firm market during these challenging times? How does it preserve value? And how can it emerge from this crisis stronger (and wiser) than before?
While there are no easy answers, a few firms are prospering despite the recession. These firms have been able to grow at a rapid clip year over year in part because they approach marketing differently. In this article, we identify five of the most common marketing challenges that face firms like yours, and we discuss marketing strategies that high-growth, high-value firms use to overcome these challenges and lead the market. There is no reason your firm can’t adopt and benefit from these same strategies.
These insights are based on client engagements and a series of studies that investigated the real-world practices of hundreds of professional service firm owners, acquirers, valuation experts and service buyers.
The recommendations below represent the strategies used by the most successful firms — and they could form the foundation of a high-growth strategy for any CPA firm. But even if you tackle only one or two of these issues this year, you should notice a difference.
Challenge 1: Your clients probably don’t know you.
When we asked buyers of accounting services whether they are aware of all the services their CPA firm offers, about 70 percent said no. And when we asked buyers what services they wish their firm would offer, more than 80 percent listed services that are already available from their provider.
We see it again and again: Companies will hire a second firm to handle a seemingly specialized service because they are unaware their current CPA firm can handle it.
The problem here is twofold. On the one hand, buyers of services tend to pigeonhole their vendors. In a world full of competing interests and stimuli, there is a natural tendency for the brain to oversimplify the world and place companies like yours in inflexible mental buckets. For example, if you have prepared a client’s taxes for 10 years running, they may not think of you when they suddenly need risk management advice.
On the other hand, most firms poorly communicate their full range of services — they assume clients will read and remember detailed information from their brochure or website. But buyers are usually very focused on solving a specific problem, and they rarely look for the bigger picture. They need occasional reminding.
Takeaway: Make a point of getting in front of your clients on a regular basis to go over their challenges. Clients are motivated to buy when they are presented with solutions to their problems. This is the best time to suggest relevant services and educate them about the breadth of your firm’s capabilities. As satisfied customers, they are more likely to think of you first when they have a need. Don’t delegate this function to a manager or associate-level staff member; clients will be more responsive to a stakeholder. Remember, if your clients know and trust you, they will appreciate this information. In most cases, your clients will prefer to hire a trusted source over finding and trying a new vendor.
Challenge 2: You don’t know enough about your clients.
Accounting firms often misjudge their clients’ motivations, needs and happiness. On average, 18 percent of clients are dissatisfied with their CPA firm and plan to find a different one. In many cases, the firm will be completely unaware of a client’s dissatisfaction. Even if a principal were to ask directly, the client might not admit their unhappiness. They may dislike confrontation or may be afraid their service will get worse.
Takeaway: Do the due diligence to find out what your customers want and how they think about your firm. To get the most useful and honest feedback, bring in a third party to interview your clients. You are likely to uncover interesting surprises that may allow you to address some hidden customer service issues before you lose valuable customers. These interviews can have other benefits as well. They can help you improve customer service, adjust your service offerings — even discover your true competitive advantage.
Challenge 3: You don’t know how to talk about yourself.
CPA firms rely on networking and word of mouth to drive new business. So if a principal can’t clearly describe his or her firm, the firm will be at a competitive disadvantage. During our interview process, we asked CEOs and partners to describe their firms. We scored their responses on how clearly they described what their firm does, who their clients are and why someone would choose them. Fewer than half of CEOs of non-high-growth firms earned “acceptable” or better scores. Compare that to more than 72 percent of principals from high-growth firms. Clearly, the most successful firms are great communicators.
Takeaway: How you talk about your firm is critical. Think about how your firm competes and why people choose you. Gather your business development team and work on your “elevator speech.” If you find this process difficult, hire a coach or business facilitator to help your team craft a fluid and persuasive message. At your next networking event, you may want to try it out on a few prospects. If they still ask what you do, you aren’t there yet. Expect to refine your message and delivery over time until it becomes second nature.
Challenge 4: You aren’t different (or nobody thinks you are).
Differentiation is one of the toughest challenges for a CPA firm. After all, are your services any different from those offered by 10 or 20 other firms across town? To some degree, basic accounting services have become commoditized, which is why so many firms have added business consulting and other services to their portfolios. But our research has shown that firms with a strong differentiator are more likely to grow and thrive.
Don’t fool yourself — your great people or customer service won’t make you stand out in the marketplace. In accounting, true differentiation comes from specializing in a particular type of client or problem area. In rare cases, proprietary processes or technologies can provide a competitive advantage.
Takeaway: Don’t be afraid to specialize. If you can build a reputation within a narrow but sustainable specialty — and become associated with something specific in buyers’ minds — you will be better positioned to outcompete unfocused competition in good times and bad.
Challenge 5: You have the wrong marketing priorities.
In 2008, most accounting and finance firms spent about 4 percent of revenues on marketing. This is well below the average 5.1 percent other professional services invest. Part of this differential may be explained by CPA firms’ traditional reliance on referrals and personal networking for business development. But our research shows that the most successful firms invest in other marketing priorities — and the referrals flow in anyway!
When we compare the marketing strategies of the most successful firms against those that grow at average rates, we find some marked differences in their priorities. Average firms emphasize their experience, expertise and talented staff. (Sound familiar?) High-growth firms, however, are more interested in fulfilling their clients’ needs and wants. These firms focus on delivering desired outcomes, customer service and flexibility, as well as building their reputation.
High-growth firms target specific types of clients, rather than casting their nets wide. They recognize that they can build a reputation faster and charge higher fees if they pursue a group of customers that have something in common. A byproduct of this targeted marketing is higher referral levels. In fact, they get almost 10 percent more referrals than average firms.
High-growth firms use a variety of marketing techniques to generate leads, including public relations, direct marketing, cold calls, tradeshows and newsletters. These firms are also more likely to devote more energy to their website. Their website, after all, is the first place prospects and job candidates go to learn about the firm. And because they think more strategically, high-growth firms are far more likely to write and use a marketing plan.
Surprisingly, high-growth firms actually spend less on marketing (4.8 percent) than the average professional services firm. Because their marketing strategies produce better results with less effort, they don’t have to burn as much cash to build their businesses.
Takeaway: Consider recalibrating your marketing approach so that you are better attuned to your clients’ needs. Then focus on a market segment and pursue it aggressively with a mix of marketing tactics. To make marketing a priority, develop a 12-month plan that spells out tactics, schedule and budget (5–6 percent of revenues is a good starting place). It will be hard at first, but stick with your plan. Finding time for marketing during busy periods can be especially challenging.
Break free of old habits
The five issues identified in this article are endemic in the accounting and finance industry. But every one of them can be overcome, and we’ve provided some starting points to help any firm become more effective and profitable.
You can begin addressing any one of these issues today. You don’t have to take them all on at once. Begin by getting to know your clients or retooling your elevator speech, then over time make progress on the more complex tasks.
Almost every firm is feeling the heat from today’s economic meltdown. But if you begin taking steps to communicate all that you do, get to know what your clients want and need, articulate how you are better than another firm and stick to a well-conceived marketing plan, you should come out of this recession with a better reputation and awareness than ever. Now get started!
Aaron Taylor is a partner at Hinge, a Reston, Va.-based branding and marketing firm for professional services. To learn more about Hinge and to download the research behind this article, visit www.pivotalbrands.com. Contact Aaron at [email protected].
Reprinted with permission from the Virginia Society of Certified Public Accountants