Blow The Lid Off The Old Way Of Accounting
Business owners are sophisticated and demanding today. Economic conditions have created a focus on value provided, and the availability of abundant information has expanded their knowledge of business in general. Further, partly as a result of the profession’s own educational and marketing efforts, business owners tend to perceive CPAs’ services as all being the same, and CPAs’ themselves as interchangeable with one another.
For example, when we asked firms what makes them different from their competition, the response, typically, was, “We provide top-quality services, our tax department is superb, we care about our clients, we return calls promptly,” and so on. While CPAs think they are different because of these reasons, the business-buying public can’t possibly comprehend how the technical expertise so important to the CPA is relevant to the business person’s needs. To business owners, only two things really matter- their income and quality of life.
Changes in the marketplace due to the computerization of traditional services, fewer client opportunities because of industry consolidations and the effect of mega stores on local businesses, and greatly increased competitive pressures are affecting all CPA firms. Many have hired or are working with marketing professionals to give them an edge. But when you compare what business owners say they want from their CPA (help with business problems, growth, and strategic planning, and for their CPA to be a sounding board) with what CPAs say they sell in the marketplace (tax return and financial statement preparation, audits, estate planning, litigation support, etc.), you can see there’s a problem.
Own your power as a professional -
To be successful in this environment requires a different relationship with the client. It requires you to own your power as a professional. To give an example, if your doctor, after a two- hour examination, asked what treatment you thought he should prescribe and what medication you thought you should take, you would find another doctor. But as a CPA, how often do you ask a client or prospect how frequently you should visit or provide a particular service? And when you give good counsel, are you paid for the value of the result or the time it took you to give the advice?
To the argument that clients don’t want to pay for services, we would respond that you probably don’t possess the skills, mindset, and training to successfully communicate the value of the services in a way that makes the client anxious to engage you and happy to pay you. In reality, there is a huge market for services that create a result with willing buyers who focus on their goals, rather than on their purse strings.
A different approach is needed -
What is required to provide the requisite level of service is a serious commitment and a major investment in time and energy. The following approach would result in a considerable return on investment, if all steps in the process were applied consistently and efficiently. But before you can begin, you will need to overcome resistance regarding:
Change. Most firms say they are open to change but fall short in the implementation. Success in the new environment requires a different type of client relationship, different skills, and a new perspective in terms of service delivery and client acquisition.
Time. It requires a commitment of time to define, design, create, learn, and apply the various processes to achieve the planned result.
Investment. The real investment is not in dollars; it is in learning and using new processes, tools, and ideas. Each participant must challenge his or her beliefs about clients, fees, selling, marketing, and so on. Without direction and support, this is a long and sometimes futile task. Re-focusing the firm will depend on the participation and full cooperation of the partners, principals, and staff.
How to begin -
Decide what type of practice you want to grow. Determine what you like to do on a day-to-day basis. Is it exotic tax research? Is it business consulting? The point is, if you are working with a passion, it will dramatically enhance your chances for success.
For example, would your ideal practice involve high-level consulting, such as business valuation or forensic accounting? This type of practice typically offers a narrow range of services and realizes high fees for successful practitioners. Perhaps you are more comfortable number crunching and enjoy compliance work. Here, competition is greater than with a boutique specialty practice, and profitability is predicated upon becoming the lowest-cost producer. A third alternative-one which we at CPA network believe has great demand in the marketplace-is a profitability consulting practice to the small business community (that is, closely held companies with $1 million to $15 million in sales).
Analyze your client base -
You need to know which clients offer the most potential. In CPA firms, the eighty-twenty rule tends to apply; that is, 80 percent of your profits come from 20 percent of your clients, and 80 percent of your problems come from another 20 percent of your clients. So, analyze and categorize your client base. A and B clients will comprise the top 20 percent. These are the clients who involve you in their activities, cooperate with you, pay promptly, and are profitable to you. Category A clients also make three or four unsolicited referrals a year.
Category C clients-the bulk of the practice-are apparently satisfied with the level of service they receive and reasonably profitable to you. Nevertheless, there are often opportunities to provide additional support and show these clients that, through good fiscal management, their incomes and quality of life can be greatly enhanced. Practitioners are often reluctant to challenge clients that are unprofitable to them-category F-because they don’t want to lose the revenue stream. But once you have become comfortable being paid for providing high-level services that produce results, you should either upgrade category F clients to those standards or terminate the relationship.
The idea is that instead of just providing a product, you have become responsible for creating results for your best clients. And by providing services that support their goals, you will have a more profitable practice.
Graphically define your services -
Using a spreadsheet, list your A and B clients (alphabetically) down the left column. Then across the top list every service you are qualified to provide. We did this for one firm, coloring the appropriate box blue if the client received a particular service, and gold if not. The key was the contrast between the blue and gold boxes. The client service opportunities in gold stood out. Do this and you will most likely find an untapped gold mine in your client base, just with the services you currently provide.
Define market niches and services -
Review your entire client base to determine whether there are four or five clients in an industry that favors your providing pro-active services. Ideally, there would be other local non-client businesses in the industry.
The niche should be of interest to you personally because its development requires a thorough understanding of clients’ needs, industry association involvement, holding profitability workshops, and so on. Finally, you will need to learn to package and sell services that will have significant cash flow impact.
Create a unique selling proposition -
Differentiation is essential to market penetration, whether you wish to further develop our current client base, or are targeting a newly defined market niche. CPAs ask how they might get in a position to market services. Our response is that there are opportunities every day with the people you meet. What you have to do is talk about how your services could benefit them.
First, however, you have to see yourself as different-as a CPA who provides relevant services to help clients enhance their incomes and quality of life. Consider the following. Instead of just telling people you are a CPA, when asked about your profession, say, for example, “I’m a profitability consultant with a different type of CPA firm.” The response to that, typically, is “What makes you different?” This is the question you want to hear because it enables you to use a unique selling proposition describing the specific benefits your firm and individual members of it bring to the business world.
So you might answer that question, “We operate with a different philosophy than other accounting firms. Because our services are different, we are not necessarily the right firm for everyone.” Then say, “May I ask you a question? If it were possible that this different approach might create a significant impact on your income and quality of life, would you invest one hour of your time to explore it?”
That is personal marketing. It is where you will find the key to growth. Marketing is not mailing brochures and hoping people will come running to your door. It involves developing relationships. It requires determining your position in the marketplace, determining the value of your services, and planning your unique selling proposition. You have to make marketing work for you, rather than letting situations happen to you.
Marketing creates opportunities to sell. Once you have created the opportunity, you must sell clients on the benefits they will derive from engaging your firm.
Super client service -
CPAs typically perceive super client service as returning telephone calls promptly and providing accurate and timely information. Our definition of super client service is a relationship that supports clients in realizing their dreams and goals. It means really understanding clients as people and letting them know you understand that their businesses are vehicles to achieving these dreams. It also means letting clients know you will constantly provide advice, services, and resources to help them overcome obstacles in their way. These are value-priced services that will realize two to five times what you can obtain for compliance work.
Run your firm like a business -
There is no management without measurement. Set specific goals for revenue, number of new clients, number of new services, profitability levels, etc. Create a strategic plan for the firm and individual plans for partners and staff.
Provide tools, training and support to permit a higher level of service and hold people accountable for implementation of their individual plans and profitability. Track profitability per partner, per manager, and per engagement on a regular basis.
The bottom line -
A total change to this service philosophy can take one to three years depending on the size of the firm, the level of commitment to making changes, and the support given to creating and implementing the required training and methodology. It is a major commitment, but those who have taken this approach to marketing are excited about the difference it makes and results it creates.