How Do Smaller Firms Compete?
By Bob Lewis
Q: How can my two-person firm convince clients we can serve them?
A: Have you ever heard of “spin?” Spin is how you position a situation. Is a half empty glass a positive or a negative? It depends how someone looks at it, and how the half glass is presented. As an example, at a restaurant, if you sat down and got a half glass of water, you would think it was odd (and not in a good, eccentric kind of way). In the same restaurant, if you ordered an after dinner cognac, you would get served a big glass with a little fluid in it. In this case, you expected the drink to be served this way. Why does one half empty glass create a negative image, and another half empty glass bring a more pleasant feeling? Since most CPA firms do not sell water or cognac, let’s try a more practical example. A two-person firm has resource and time limits. So, is a two-person firm too small to service me, or is it sized to provide personalized attention? You decide the spin. Your presentation of the firm will go a long way in deflecting, if not totally avoiding, the entire issue of size.
Get a web presence. Don’t hire a high school or college student to make your web site unless they are related to Bill Gates. They will not know the first thing about marketing. Invest in a brochure. It can be as simple as a nice tri-fold that holds your business card. Nothing will make you look like a small, disorganized firm more than presenting an old business card with an AOL or Yahoo e-mail address on it. Remember, presentation is important. Ultimately, they buy the relationship with you, but if you cannot get past the qualifying stage, they never will get to see the value you can provide.
Q: How do you handle prospects who have unreasonable expectations?
A: How you handle the prospect initially is what sets a realistic expectation. Unfortunately, sometimes this may require you to walk away from a lead. Some prospects call us wanting to add 20 percent in revenues immediately, or work on all commission. In our case, many of those prospects have done limited marketing in the past and are entering into new areas. This presents an almost impossible marketing challenge. Many have not thought out what they want to pursue nor sized their potential market, or they don’t have defined services in place. Often, a firm needs to invest in some infrastructure to begin an organized marketing effort.
For a CPA firm, most prospects have been using a CPA for some time. The client is already trained on what to expect from their accountant. Unfortunately, most clients are badly trained and have the same unreasonable expectation many of our prospects ask us to achieve. A lot of the complaints we hear when speaking with CPAs is that the client thinks everything is being done for them. In reality, all the CPA is doing is a corporate tax return. We developed a method for a CPA firm to communicate to clients exactly what services they are getting. Instead of using a generic engagement letter, send out a letter that specifically addresses what you are providing, and then include a section in the letter that suggests service areas to consider. This tells the client you are not providing a service they may be assuming you are providing. As an example, tax planning is one area that many clients assume is part of the tax return. A client will perceive their CPA is doing everything unless the CPA tells them they need other services. Again, doing so may require you to take a chance the client may leave when you break their fantasy bubble.
Q: In a down economy, how can we create new “energy” with clients?
A: The time to pick up ground is when people are in trouble. Start talking to clients. Beyond basic tax and accounting work, how much work has been done advising clients on their operations? Have you reviewed pricing strategies or costing systems? Offer to analyze benefit plans, employee productivity, product or service margins, and get into the details. Many clients look to their CPA for financial advice, but do not think of using their CPA for operational issues. The client is good at making products or delivering services. Some clients may be “too nice” to take hard actions. If a client has 10 employees with an average cost of $40,000 per employee, and productivity is 70%, at what point do you have to make the decision to reduce headcount by one or possibly two people? That step alone would add $40,000 to $80,000 to the bottom line. When times are good, people have a tendency to overlook details. When times are tough, many try to ride it out. Help clients by adding additional elements for them to consider that improve their net profitability.
Bob Lewis is the founder of Visionary Marketing — a firm that helps CPA firms develop marketing strategies to address new client targeting, increase existing client revenues, and educate referral partners. Mr. Lewis can be reached at 800-995-9186 or blewis@ThinkVisionary.com. Logon to http://forums.cpasn.com and post a question in the Marketing Hot Spot forum.