Managing the Sales Process in CPA Firms

Larry BildsteinDiscover the Key to Managing the Sales Process in CPA Firms
Presented by Larry Bildstein, CPA
President and CEO of The Whetstone Group
Contact Larry at larry_bildstein@thewhetstonegroup.com

September 13, 2001

Visit the AccountingWEB Workshop Calendar for upcoming sessions.


Workshop Summary

An organized approach to business development is a must in the competitive world of CPA firms. But business development isn't just about generating lots of leads. Your efforts are ultimately judged by the sales you generate as a result. Is anyone managing the sales activities of the partners in your firm? Participants in this workshop learned why a lead is only the beginning. Managing the sales function is key to getting a return on your firm's business development investment.

You can read the complete transcript of this workshop.

Topics covered in this workshop included:

  • Understanding the role of the partner in charge of business development
  • Ways to motivate partners to sell
  • The value of individual client sales plans
  • Understanding how partners can sell as part of their normal client service process
  • Discovering why you should document your firm's sales process and what that documentation can tell you
  • Ideas for keeping partners on top of the long-term sales process
  • How to hold partners accountable for the sales


Workshop Transcript

Session Moderator: Welcome everyone, and thank you for joining us today! I'm pleased to introduce Larry Bildstein, CEO of the Whetstone Group, who will be presenting a workshop on the key to managing the sales process in CPA firms

Before creating The Whetstone Group, Mr. Bildstein was the Executive Vice President of Marketing and Communications of RSM McGladrey, Inc and Executive Partner of McGladrey & Pullen, LLP. He was responsible for the National Marketing Office of the firm. Together the two McGladrey firms are the 7th largest CPA and Consulting firm in the country.

In setting up the infrastructure for a national marketing organization at McGladrey, Mr. Bildstein led the development of a direct marketing organization, including data management, telephone lead generation, and fulfillment of creative needs. He also led the development of a firm research department that did positioning, pricing, segmentation, new products and client satisfaction.

Mr. Bildstein has also served as a Regional Managing Partner for McGladrey & Pullen, LLP, managing the business activities of a $50 million annual revenue unit. In this role, he led the development of the prototype for specialization in servicing the financial institutions industry, the prototype for information technology services, the prototype for serving companies under $5 million in annual revenues, and the prototype for an approach to marketing and sales. He also co-led the team that developed a Strategic Improvement Process (Total Quality Management) for the firm.

Prior to leadership and management roles with McGladrey, Mr. Bildstein served as a client service coordinator, managing over $1 million of annual client service revenues. His focus at the time was on business advice consulting, growth consulting, and mergers and acquisitions assistance in addition to tax and financial services and advice.

Welcome, Larry - and thank you for joining us today!

Larry Bildstein: Thank you for having me here. And thank you all for joining us today.

One of the most frequent objections we hear when we talk to firms about growth and activities to promote growth is that "We've tried that before and it doesn't work in our market."

If we dig a little deeper, what we many times find is that it's not the activities that didn't work, but that there was little management of the sales process to yield results.

Today, I'd like to talk with you about the elements, challenges and importance of managing the sales process in a CPA firm.

First and foremost, I want to start by asking what should be a simple question but often isn't: Who is responsible for business development in your firm? Who manages the business development process?

Perhaps it's the managing partner of your firm or the best rainmaker for the firm.

Sometimes it's delegated to the partner with the most time on his/her hands.

Other times, and we find this in many cases, it's not delegated at all, and everyone is sort of on his/her own.

Regardless of how the position is chosen, the role is a critical one to fill in your firm because the partner in charge of growth has to act as the sales manager for the firm. To be effective, the partner-in-charge (PIC) of business development must be responsible for managing seven critical elements:

  1. The quantity of time each sales person/partner spends on business development.
  2. The quality of time spent by each sales person/partner.
  3. Training - both in sales techniques & processes and in product/services knowledge
  4. Mentoring sales people - Being a role model to your sales force.
  5. Holding sales people accountable for actions and results
  6. Determining ROI of sales and marketing investments and recommending ways to improve the net results.
  7. Using the sales force to the best of its ability; assigning roles to each player based on their strengths and the combined skills of the organization.

Larry Bildstein: Let's talk for a minute about each element.

1. The quantity of time each sales person/partner spends on business development.

Most partners talk about having a responsibility for growing their practice and that it may even be the most important part of their role as partner. Yet when clients call and there is audit and tax work to be done, business development is set aside.

I'm not suggesting that partners set aside chargeable hours instead. But I am suggesting that many will avoid delegating and defer business development in lieu of charge hours.

Most partners, if they want to and plan it, can delegate the chargeable work so the firm doesn't lose that billable revenue. However, for the most part the business development work cannot be delegated.

In turn, they'll have the extra time to focus on essential business development activities needed for growth.

Your PIC of business development is responsible for making sure that partners delegate work effectively and set aside time for business development.

2. The quality of time spent by each sales person/partner.

Your PIC of business development also has to be sure that partners are spending their business development time on quality, effective activities.

Playing golf every weekend with the same foursome in not necessarily the most effective use of business development time.

Agreeing to be a board member of a non-profit organization and then rarely attending meetings or taking a leadership role might not be the most effective use of a partner's time.

Even cold calling prospects can be ineffective if the right marketing and branding of the firm to create name recognition hasn't been done.

Or, if the prospect isn't within your target client profile, or the prospect's needs haven't been established before the first meeting the time spent cold calling will likely be a waste.

Your PIC of business development has to be involved in how partners are spending their limited but valuable business development time. A little planning and guidance from a sales manager can make a world of difference.

3. Training - both in sales techniques & processes and in product/services knowledge

Larry Bildstein: How many of you have ever met a successful sales person that didn't understand the product, what it did or how it was priced?

It's not a likely situation. Yet how many partners responsible for sales can give you the features and benefits of every service their firm offers?

In particular, if we're talking about a 20+ year partner in a firm that also offers information technology consulting, the knowledge gap may be huge. Do you think this partner is likely to talk to his clients about application development, networks or accounting software packages?

How many partners don't totally trust the consulting service delivery capabilities of their firm and thus won't be effective at introducing consulting services to clients?

I propose that in many cases, CPA firm partners are ineffective sales people because of their lack of confidence and knowledge in the consulting products and their delivery system. If the partners are the only sales people in the firm, you may not see stellar growth in consulting.

The PIC of business development's job is to uncover these real training needs and find ways to educate the sales force (partners).

Larry Bildstein: Does this make sense to everyone so far?
Bailey Coleman: This does sound familiar!

4. Mentoring sales people - Being a role model to your sales force.

Larry Bildstein: Your PIC of business development has to be excellent at mentoring other partners in sales.

He/she has to be a good communicator. He/she has to be willing to spend the time it takes to work with a sales force. And he/she has to have the patience to allow someone to fail and try again.

To develop sales skills in your partners, your PIC of business development also has to be candid and objectively evaluate each partner's strengths and weaknesses.

Because the truth is that getting a degree in business administration, passing the CPA exam and getting a license to practice requires little to no sales and marketing training. Much on-site training and mentoring is needed.

Enter your business development partner. This partner should be trained and well practiced in the sales techniques and processes of your firm in order to model it and teach it well.

They need to plan sales calls with your partners, going over the objective of the upcoming meeting, the desired outcome and the objections that might come up.

They need to go out on some of those calls to observe sales behavior and technique.

And they need to offer candid, helpful advice for improvement and success.

5. Holding sales people accountable for actions and results

To be effective, your PIC of business development not only has to help define realistic sales goals, but also keep partners accountable for those goals.

I'm familiar with a PIC of business development in a regional office of a major financial services firm that fines each salesperson $50 per week if they don't come to the Monday sales meeting with 20 appointments for the week.

That PIC of business development knows that if the sales people work appointments, they will eventually find sales. To some extent, it is the law of the numbers. An untrained sales manager will just talk about the need for new business, rather than holding sales people accountable for the activities that lead to sales.

It's easier to set goals for closed business when you hold the sales people accountable for what it actually takes to get closed business - appointments.

6. Determining ROI of sales and marketing investments and recommending ways to improve the net results.

Let's say your firm has 10 partners with sales responsibilities and each spends 300 hours per year in business development. Let's also assume that each partner manages an average book of business of $750,000 annually.

If the average partner in your firm is paid $150 per hour (assumes fully loaded compensation including benefits, occupancy, computer, supplies, etc.), you are investing $450,000 annually in costs ($45,000 per partner) on business development efforts.

If you want a 20% return on your partners' time, you need $540,000 return on your business development investment. (The $450,000 plus 20% since the partners are probably spending their annual compensation instead of putting it in an investment account to eventually be returned to the firm.)

Now think about the margin on work. If you get a 30% margin on your services, you would need $1.8 Million in revenue in order to get the 20% ROI on your partners' time. ($540,000 / 0.3)

Again, assuming this is a $7.5 Million firm, that's an annual growth rate of 24%. Throw in 2.5% of revenue for out-of-pocket marketing and sales expenses and run it though the same analysis, you need about 34% annual growth to get a 20% return on your time and dollars invested.

Is anyone getting this kind of annual growth year in and year out? Did everyone follow those numbers?
Bailey Coleman: We are not achieving growth rates that high.
Larry Bildstein: We rarely find a firm that is.

Larry Bildstein: The positive thing about finding a new client is that the lifetime value of that client is most likely more than one year. But if you're planning to grow your practice by adding project services that might be one-time projects, you have a major bogie to hit in order to get a reasonable return on your investment.

To be effective, your PIC of business development has to improve the ROI of your partners' business development time. Here are some ideas how to do that:

  • Utilize better growth planning so your partners know how to make their time more effective.
  • Understand the difference between marketing and sales and make sure partners are spending their time on sales.
  • Have some partners spend less time on growth and allocate resources to outsourced marketing so inexperienced partners are not spending ineffective time on marketing.
  • Work from an integrated growth plan vs. implementing random actions of several partners.
  • Hold your partners more accountable for higher sales results if they are investing significant time on business development.
  • Hire full-time sales resources and reallocate partner time - use telephone lead generation services to keep sales people effective.

Bailey Coleman: Tell me what you mean by the "difference between marketing and sales."
Larry Bildstein: Marketing is all the activities that position you to begin the sales process...direct marketing, advertising, PR, etc.
Larry Bildstein: Sales is the process of working the sales cycle: Identifying needs, responding to objections, posing solutions and closing the deal.
Larry Bildstein: Thanks for your question Bailey.

7. Using the sales force to the best of its ability; assigning roles to each player based on their strengths and the combined skills of the organization.

The truth is that not all partners can be taught to be good salespeople in the traditional sense. There are sales training programs that will claim otherwise, but I don't buy it.

This is an industry where many partners entered the occupation on the basis that competitive bidding, advertising and business development were not professional, or even allowed, in CPA firms. Trying to get them to think otherwise is often a waste of time.

I do, however, believe that all partners can play an active role in business development.

In a typical mid-sized CPA firm we find that about 1/3 of the partners are rainmakers. They are active in the community. They know lots of people. They are outgoing and involved and are just fine with making sales calls and doing business development.

Usually these people are pretty good client servers as well. These partners don't need coaching. Just be sure they don't get buried in chargeable hours and defer the business development.

Then there is the 1/3 that are introverts. They just want to do the technical stuff. They want to service clients on a project basis, do a good job, provide the best answer for the situation and wait for the next project to come into their office.

These partners are usually uncomfortable making sales calls. They prefer to be busy with chargeable hours as opposed to networking in the community.

This type of partner can also be effective at helping the firm grow. They can be most effective at business development when teamed with the partners that are comfortable with sales.

These people can pick up a tax return or a financial statement and quickly see what the client needs. They can point these things out to the rainmaker who is busy making sales calls that his/her client needs help with cost segregation consulting and maybe R&D credits.

If you can assess the strengths of each of your partners you can find a way to make them effective contributors to business development.

The final 1/3 needs sales management to succeed. With some training, some sales tools, a good mentor and the support of a good marketing program they will eventually become pretty good at business development.

It's up to the PIC of business development to understand where each of the partners in the firm fits, then help each partner understand how he/she can most effectively contribute to the firm's business development efforts.

Larry Bildstein: Are there any questions about the seven elements managed by the PIC of business development?

Larry Bildstein: So now that we know more about the responsibilities of your business development partner, let's talk for a minute about the best way to motivate your partners to sell.

No surprise - money!

The best way to motivate partners to sell is to design your compensation system to reward their growth efforts. If your partners don't recognize they are being rewarded for growth, they won't spend the time necessary to make it happen.

Perception is worse than reality. If partners think they are rewarded for chargeable hours they will get chargeable hours instead of new clients.

If they think they are rewarded based on having a large client book of business they may hoard work to protect it. They'll be less likely to take risks on new services that might affect the client relationship. Sort of like they're playing not to lose.

Ellie Miller: Do you have any examples?
Larry Bildstein: Of how to compensate for growth?
Ellie Miller: Yes -- just clarify what you're saying
Larry Bildstein: The plans that work the best are the ones that clearly lay out the requirements for chargeable hours as well as specific goals for new business from new clients and from extended services to existing clients.

Larry Bildstein: The PIC of business development needs to monitor these plans and hold the partners accountable for all the components.

When designing a partner compensation plan, it's important to consider rewards for both bringing in new business as well as selling more of your firm's core services to more of your existing clients. This ensures that no matter what role a partner plays in the business development effort, there is financial reward and firm-wide recognition for results.

A common problem is that getting new clients often holds more glory and captures more attention than finding ways to provide more services to existing clients. A common problem is that getting new clients often holds more glory and captures more attention than finding ways to provide more services to existing clients.

If partner A brings in one new audit for $50k in annual fees, there is a buzz around the office for days. Partner A gets a nice compensation increase for her efforts.

In the mean time, Partner B is silently doing a consulting project for a client for $20K; a compensation study for another client for $15K; a business valuation for another client for $25K and brings in a new client with a need for a $10k audit.

Who gets noticed and rewarded? Firms need to pay attention to the value of selling more of the firm's core services to more of its clients.

Partner B clients are satisfied and loyal because multiple needs are being taken care of in a timely manner, etc. Selling more existing services to current clients can be more valuable than finding that new client and the value proposition of each type of business development must be acknowledged and rewarded.

Some other examples of ways to motivate partners to sell would be recognition of accomplishments in a group setting. Traveling trophy for monthly sales leaders. Small rewards for short-term successes. Making it a game and bring in a little fun competition in the efforts.

Larry Bildstein: Any comments? Questions?
Bailey Coleman: Do you find partners are motivated by internal competition and games?
Larry Bildstein: Yes. We've seen this work with several of our accounting firm clients' practices.

Larry Bildstein: Let's talk for a minute about the value of individual client sales plans.

If you don't like "sales plans" or your firm's culture won't accept a client sales plan, call it a client service plan.

No matter what you call it, the idea is the same: You decide based on what your market needs what services your firm can/wants to deliver. Then, proactively plan how you are going to drive those services into your client base.

If your firm has core competency services that the majority of the market (and, your clients) is buying from someone, you must ask yourself why those clients are not buying these services from your firm.
William Borman: That sounds like a failure of marketing
Larry Bildstein: You'd be surprised how many firms are uncomfortable marketing to their clients. And, partners are always surprised when clients say "I didn't know you do that". But it happens all the time.
William Borman: "Professionals don't market"
Larry Bildstein: Yes William, that's a common theme.

Larry Bildstein: No need? No budget? No authority to make the decision? You may have heard all the objections. You can deal with them all in a client services/sales plan.

Or is it just because they don't know you do it?

To develop your plan, do the following:

  1. Identify the services that are core competencies of your firm.
  2. Identify clients that are not currently buying these services from you.
  3. Determine who are the decision makers in those companies and who influences those decision makers.
  4. Consider what will get the attention of those decision makers. What motivates them to listen to you? Are they motivated by threats or opportunities? How can you frame your messages and conversations to deal with their frame of reference?
  5. Determine a calendar of when to approach the client with the services you know they need but they are not dealing with yet. Clients aren't likely to take on 3-4 projects at one. Help them prioritize their needs.
  6. Determine the sales team that will service the client.
  7. Establish frequent communication in a variety of mediums (mail, email, case studies, face-to-face meetings, etc.) to keep the need in front of the client.
  8. Deal with the non-marketing and sales issues that are in the way of your growth success.

Larry Bildstein: Sales is hard work. It takes strategic planning and a lot of time. Consider that time spent invested in your clients as a marketing and sales investment, just as you would a direct marketing campaign.

Don't get hung up on what is a work-in-progress vs. what clients will pay for. In other words, don't worry about how much non-chargeable time you have to invest in a client relationship to sell extended services. This is very effective marketing and sales.

Some partners will argue, "I can't have a sales plan for a client. It's like selling the flavor of the month." They're afraid the client relationship will suffer if it looks like they're peddling services.

But, it doesn't have to be that way!

In order to successfully implement client sales plans, partners must approach the process as a consultative seller.

Simply put, if you are really interested in helping your clients achieve their financial goals and reflect this by the way you serve them, you are a consultative seller.

Unless you're in a not-for-profit business you have to get paid for providing services, right? If you only suggest and provide services that truly help the clients achieve their objectives are you selling? Or are you servicing the needs of your clients?

I'd argue the latter.

You can be very effective at increasing firm revenues by selling services as a part of the normal service process. Here's how you do it:

  1. Know the products and services your firm offers
  2. Find out information about the clients objectives during the engagement
  3. Establish up front in an engagement that a client wants recommendations if you find issues as part of the normal engagement
  4. Ask in-depth questions, and then listen in order to determine needs
  5. Make observations and suggest solutions based on facts
  6. Use combined knowledge from the service team to determine client needs

1. Know the products and services your firm offers.

The key here is to be able to articulate the benefits of your services. It's easy to talk about processes and features, but articulating benefits is more difficult.

A feature is: "Your account is Internet accessible." But the benefit is: "You can save time by getting your information faster and cheaper than before."

You have to understand the benefits of your services in order to recognize a need in a client. And while features sound great, especially to accountants, it's the benefits of those features that convince clients to buy.

2. Find out information about your client's objectives during the engagement.

Too often I see CPA firms that minimize contact with their clients in order to "stay out of their hair." They do just the work that needs to be done and no more. Most firms pressure staff to get in and get out - keep work in process as low as possible.

Instead, your staff should see fieldwork time as an opportunity to not only serve the client, but also meet as many people as they can.

Stop by and meet the HR Manager. Get to know the IT Director. Go to lunch with a good cross section of employees to learn about what is going on in the organization. Then, have staff report to the partner what he/she has learned. It's a great opportunity to discover your client's needs from the people that work in the trenches.

3. Establish up front in an engagement that a client wants recommendations if you find issues as part of the normal engagement.

Think about having a conversation at the beginning of each engagement with the client and have the client agree that they want you to make observations and recommendations about what you see during the audit engagement that might help with cost containment, profit enhancement, growth, etc.

Wouldn't making suggestions for additional services from the firm sound a lot more like service than sales if you agree on the front end of the engagement to provide this kind of help?

4. Ask in-depth questions, then listen in order to determine needs

My mother told me a long time ago that the Lord gave me two ears and one mouth so use them accordingly.

Now she didn't really have a business objective to saying that. I'm sure it was about arguing less with my brothers and older sisters. But, think about it. How much do you learn when you are talking all the time?

Plan open-ended questions to discover the needs of your clients that you can help them with. And the key here is to PLAN those questions. Without planning, open-ended questions won't come to mind automatically for service providers.

We are trained to get to the point - get a yes or no and move on. But that approach won't get you very far in assessing needs. Ask the questions, then shut-up and listen - and learn.

5. Make observations and suggest solutions based on facts

One thing that will kill management advice faster than anything else is if you get the facts wrong in formulating the suggestion. How about this idea: Have the key personnel within the client's organization review a draft of the letter before finalizing it.

6. Use combined learnings from the service team to determine client needs

Have the client service team take the time to brainstorm the learnings of your firm as a result of the service engagement you just finished.

Have everyone that touched the client in the last 12 months provide input about what they learned about the client's needs, how the client feels about addressing those needs, what motivates the client to purchase additional services, etc. You can't buy marketing data this accurate anywhere - use it!

Just remember consultative selling is about doing needs assessments, not peddling the service of the month. Make sure the approach is focused on client needs.

Dealing with objections:

Anticipate two different objections based on your knowledge of the client and be ready with how to deal with each of them.

Help the client determine how to come up with the resources to pay for the services and show them a ROI. The ROI is a major tool to move to the imperative for the client.

Provide proof of value when possible (client testimonial, case study, references, etc)

Larry Bildstein: Think of the objections the client might pose and how to deal with them.

Objection: I don't have time to deal with that issue now.
Suggestion: Review threats of waiting.

Objection: I'm not sure I see a real need here.
Suggestion: Show how the advantages outweigh the disadvantages

Objection: The price of the engagement is too high.
Suggestion: Review and negotiate the scope of the work.

Objection: I should get it done by someone else.
Suggestion: Mention the value of your knowledge of the business based on getting involved doing the audit and the tax work.

Objection: Skepticism - I'm not sure your service is valid.
Suggestion: Give solid evidence such as examples, statistics, references or the judgment of experts.

Larry Bildstein: The bottom line is that you should show your responsiveness to any objection with a plan to address the issue.

Larry Bildstein: Are there any additional questions about anything we've discussed today? If there are any issues we didn't get to today that you would like me to discuss, or if you have any questions, please email them to me at larry_bildstein@thewhetstonegroup.com.
Stephen Riga: Thanks, Larry. Very informative!
Session Moderator: Thank you all so much for joining us today, and thank you Larry for sharing this valuable information. Please stay with us for the next hour, when Don Uhl and Deanna Gildea will present a workshop on Online Outsourced Accounting Services.
Larry Bildstein: Thanks, everyone for participating.
Anthony Nichols: Thanks, Larry!


Biography

Before creating The Whetstone Group, Mr. Bildstein was the Executive Vice President of Marketing and Communications of RSM McGladrey, Inc and Executive Partner of McGladrey & Pullen, LLP. He was responsible for the National Marketing Office of the firm. Together the two McGladrey firms are the 7th largest CPA and Consulting firm in the country.

In setting up the infrastructure for a national marketing organization at McGladrey, Mr. Bildstein led the development of a direct marketing organization, including data management, telephone lead generation, and fulfillment of creative needs. He also led the development of a firm research department that did positioning, pricing, segmentation, new products and client satisfaction.

Mr. Bildstein has also served as a Regional Managing Partner for McGladrey & Pullen, LLP, managing the business activities of a $50 million annual revenue unit. In this role, he led the development of the prototype for specialization in servicing the financial institutions industry, the prototype for information technology services, the prototype for serving companies under $5 milliion in annual revenues, and the prototype for an approach to marketing and sales. He also co-led the team that developed a Strategic Improvement Process (Total Quality Management) for the firm.

Prior to leadership and management roles with McGladrey, Mr. Bildstein served as a client service coordinator, managing over $1 million of annual client service revenues. His focus at the time was on business advice consulting, growth consulting, and mergers and acquisitions assistance in addition to tax and financial services and advice.

E-mail: larry_bildstein@thewhetstonegroup.com
Web site: www.thewhetstonegroup.com

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