Professionalizing the Practice Development Function

Jeff PawlowProfessionalizing the Practice Development Function
Presented by Jeff Pawlow
CEO, The Growth Partnership
Contact Jeff at jpawlow@thegrowthpartnership.com

May 17, 2001

Visit the AccountingWEB Workshop Calendar for upcoming sessions.


Summary

This workshop explored some of the reasons that practice development and marketing continue to present major challenges for public accounting firms. (Source: 2000 Management of an Accounting Practice (MAP) Study).

The complete transcript of the workshop appears below.

Participants learned what it means to professionalize their practice development function, they were exposed to the four disciplines of practice development, they explored the systems that need to be in place to track and measure results and promote accountability, and they learned how to determine what an appropriate return on their marketing investment should be.

By focusing on real-world examples from Jeff's experience as the Director of Marketing at two CPA firms and from current clients of The Growth Partnership, participants were shown how to become comfortable in taking the steps needed to professionalize their own practice development efforts.

Topics covered in the workshop included:

  • The Four Disciplines of Practice Development

    • Growing Existing Client Relationships

    • Building An Active Referral Network

    • Attracting New Client Relationships

    • Support Activities

  • Systems, Tracking and Accountability

  • Return On Marketing Investment

  • In-House vs. Outsourcing


Workshop Transcript

Session Moderator: Welcome everyone, and thank you for joining us today! I'm happy to introduce Jeff Pawlow, CEO of The Growth Partnership. Jeff is going to discuss the topic of professionalizing the practice development function.

Jeff began his career as a Marketing Officer at one of the largest bank-holding corporations in the United States, and then joined the accounting firm of Smith & Gesteland, a local firm based in Madison, Wisconsin. During his tenure as their Director of Marketing, Jeff's efforts were recognized with the "Best of Show" award at the annual Association of Accounting Marketing (AAM) conference. He also won a first place award in the advertising category for a direct mail campaign that yielded a 500% return on marketing investment, and a second place award for the S&G newsletter, Footnotes.

In recent years, as the Director of Marketing Consulting for a "Top-50" firm, Jeff again spearheaded the implementation and development of a successful marketing program and was again recognized for marketing excellence by AAM. At the 1998 conference, Jeff's efforts led to four first-place finishes in the categories of: firm identity, firm newsletter, firm brochure, and statistical surveys. Additionally, Jeff was again recognized with the Best of Show award for overall marketing excellence. This was the second consecutive year that he had captured the top award at the AAM Marketing Achievement Award competition.

As the founder of The Growth Partnership, Jeff is using his knowledge to help CPA firms realize their full practice development and client relations potential. His firsthand experience in both small and large firm environments makes him well suited to work with firms of all sizes on the successful development and implementation of a customized marketing program.

Welcome Jeff!

Jeffrey Pawlow: Thank you! I'm glad to be here!

One of the things that has continued to puzzle me since I began working in the accounting marketing arena is that marketing and practice development issues continue to be near the top list of practitioner concerns in the annual management of an accounting practice (MAP) surveys.

It has been over 20 years since profession eliminated the restrictions on marketing activities, and a tremendous amount of attention has been focused on accounting marketing ever since. Why then does practice development and marketing continue to be a major source of frustration for many firms?

As we work with our clients across the country, we see the same marketing stereotype repeat itself time and time again. Most practitioners seem to feel that marketing and business development is more of an "art" than a "science", and equate successful marketing with alchemy. In other words, if we just mix enough activity together, eventually we're likely to stumble across something that works. Luckily, reality couldn't be further from the truth.

In today's workshop, I'd like to discuss how the marketing function can be "professionalized" within an accounting firm, and I hope to shed some light on the elements of a professional marketing program.

How many of the CPAs who are attending this workshop can tell me 1) what your marketing budget / investment was for the past year, and 2) more importantly, what your return was on the investment that you made?

Unfortunately, if this group is a representative sampling of the industry as a whole, over 90% of you don't have any idea what your return on marketing investment was for the past fiscal year. From the standpoint of a professionalized approach, this is unacceptable.

Let's look at ways that you can begin to professionalize your PD activities and focus your time, attention and resources on activities that will have a direct result on growing both the top and bottom lines of your firm.

The Four Disciplines:

The four disciplines are the cornerstone of a professional marketing program. Discipline One focuses on strengthening your relationship with existing clients, maximizing the impact you have on the client's organization, and improving the profitability of each engagement. We find that in most of our client relationship, the 80/20 rule holds true. That is, 20 percent of the number of total clients account for 80 percent of total revenue. Discipline One activities focus almost exclusively on these "major" clients.

I believe that the successful firm of tomorrow will serve a smaller NUMBER of clients, but offer a broader RANGE of services to the clients that they maintain. I also believe that most firms can grow profits by at least 20% without having to add a single new client relationship.

Discipline One activities focus on systems that help a firm to maximize their existing client relationships. Discipline Two on the other hand focuses on helping firms nurture and stimulate referral sources (lawyers, bankers, bonding agents, etc.) that are working with the kind of clients a CPA firm wants to attract.

In Discipline Two, it's important to note that QUALITY is more important that QUANTITY when it comes to developing a successful network. Referrals are predicated on trust, and trust only comes when there is a personal relationship between two professionals.

Having said that, if a practitioner is serious about developing their network of quality referral sources, it may take a high quantity of initial activity to identify the select group of professionals that are most complimentary to your personal style.

At The Growth Partnership, we work with our clients to host a very unique referral event that is designed with two goals in mind. The first is to educate a potential referring firm about all of the things our clients do that don't fall under the umbrella of traditional compliance services. The second is to provide a forum that is conducive to the development of interpersonal relationships.

Most of you have probably attended what I'll term a "meet and greet" event - - - and most of you probably had a similar experience: you mingled, passed out and received a few business cards, went home, and never talked with the majority of people you met ever again.

In a professionalized system, it is important to structure the event in such a way that participants are linked with other professionals that have an interest in their particular area of technical expertise and that represent a high likelihood of continuing contact. Otherwise, you're simply going through the motions.

Discipline Three activities focus on attracting new clients to the firm that meet a narrowly defined - pre-determined profile. This means that the yellow pages no longer serves as our prospecting guide. It's very important to work with firms to develop a clear understanding of the type of client they wish to (and are well suited to) serve. This profile can be based on any number of factors: geography, industry, employees, sales volume, entity type, public / private, etc.

Once this profile has been developed, we ask our clients the following question: "Is it worth your time to meet with a decision-maker in this organization, even if the meeting doesn't result in an immediate opportunity for new business?" Our experience shows us that unless the CPAs answer that question in the affirmative, the profile that has been developed isn't tight enough. Once the practitioners are able to answer "yes", then we've developed a suitable profile that can be systematically targeted as part of your marketing program. Our goal is to be "number 2" for every one of these profiled clients. In other words, when their current accounting firms trips, we've developed a relationship with them that they will call us first.

Now this is an important point. By profiling these potential clients, that doesn't mean we'll fire existing clients that don't meet that profile, or refuse to take new work that doesn't meet the profile. It simply means that we're not going to spend our time, energy and attention going after work that falls outside the profile. Additionally, there are three variables that come into play when you are pursuing a new client opportunity: 1) what is the initial contact rate, 2) what is the successful contact conversion rate, and 3) what is the new client engagement rate.

For example, we initiate contact with 10 of our profiled contacts during week one of our marketing campaign, as a result of this efforts, how many times do we actually get an opportunity to speak directly with the decision-maker we are trying to target?

Next, of the successful contacts that we make, how many then agree to a face-to-face meeting with us?

Finally, of all the face-to-face meetings that we participate in, how many of these result in an opportunity for new business in the short-term (1-3 months after the meeting takes place.)

By forecasting these different variables, you can easily compute the revenue impact of a particular campaign against the investment of dollars in the campaign itself. Additionally, you can now track actual results versus projected results and determine if you campaign is having the desired effect, and if not, identify where the difficulty can be found.

The one thing that Disciplines One through Three have in common is that it is possible to calculate the return on your investment for each one. In other words, at the end of a year, here is the amount invested, and here is the resulting revenue that is directly tied to those expenditures.

Discipline Four consists of all the other marketing activities not contained in 1-3. For example: developing a brochure, creating a website, advertising, public relations, branding, etc.

All of these activities CAN be an important component of a professional marketing program; they just don't HAVE to be. The challenge with D4 activities is that you can't easily calculate the return on your investment.

For example: I bet that all of you would agree that if you promote one of your managers to partner, you should do a press release to announce the promotion and get the person's name and picture in the paper. I agree with this, but I would challenge you to tell me what the return on that investment was, especially if you were paying a PR to handle the placement for you.

A professional plan incorporates only enough D4 activities to adequately support Disciplines 1-3. Time and time again I come across practitioners that tell me that "we do marketing but it doesn't work." When I press them a bit, I find that "doing marketing" means spending almost all of their time in Discipline 4 activities, and only limited time in D 1-3. No wonder they are disillusioned. They're spending their time, attention and resources on activities that don't yield a specific financial result! Again, I want to be clear. Discipline 4 activities are important, but only in a level that compliments the activities in D 1-3. Unfortunately, most CPA firms are camped out in the Discipline 4 wilderness - the bottomless pit of good ideas.

Session Moderator: Doesn't the press release promote name recognition of the firm, and isn't there some value there?

Jeffrey Pawlow: Absolutely, but how do you quantify that value?

Session Moderator: I'm not sure, but are you suggesting we shouldn't bother?

Jeffrey Pawlow: The bottom line is that yes, you should bother, but realize that PR is only a single facet of a professionalized marketing program. The challenge is to build a plan across all four disciplines, where the total return in 1-3 is greater than the investment in all four. CPAs get frustrated when they look back at the year and say, "we've spent money, but nothing really happened". Without a balance of D 1-3 and D 4, they are destined for frustration.

This leads to my next point. Why is results-oriented accounting marketing still such a challenge for the majority of firms?

Simply stated, it's because marketing and sales in not a core-competency of the typical CPA. Successful organizations must focus their time, attention and resources on their "core competencies" - those activities that are at the center of their business. In today's competitive environment, CPAs and consultants can only maximize their earning potential by leveraging their personal technical abilities (core competencies), and complementing them with the abilities of other members of their firm.

In the future, the successful CPA must function as their clients' most trusted business advisor. This will require spending a greater amount of non-chargeable time developing deeper, more meaningful client relationships. Additionally, successful CPAs will belong to firms that have an ability to offer a wide range of products and services that transcend the individual practitioner's level of expertise. Because successful professionals must dedicate more time to developing deeper client relationships, they have less time for managing, directing or leading practice development initiatives within their firms.

Finally, when it comes to practice development activities, most CPA firms are confronted with a scarcity of resources (time and money) and are generally unfamiliar with the overall sales and marketing function. At the same time, these firms have a tremendous need for a high-level practice development planning and execution in order to be successful and remain competitive, especially in the era of consolidation.

While there are several "tools" in the market to help CPAs grow their practices (e.g. boot camp, turnkey programs, associations, etc.), many of these tools ultimately "rust in the shed" because they are not implemented properly, if at all. Additionally, many of the tools that are used may not be a good fit, or in alignment with the overall strategic direction of the firm.

While CPAs need professional-level expertise in each of the functional practice development areas, hiring this expertise can be an economic impossibility, especially for small and medium sized firms with limited resources. To overcome this challenge, we founded The Growth Partnership in 1999 to help CPA firms achieve sustainable, profitable growth.

Are there any questions about the specific activities in Disciplines 1-4, about professionalizing the practice develop function, or about the logistics of outsourcing?

Session Moderator: Or does anyone here have any experiences with hiring professional marketing help that they would like to share?

Richard Stinson: Jeff, can you speak to the branding issue please. We hear a lot of noise today, but what is its value?

Jeffrey Pawlow: Noise is the right word and there are opinions that vary widely. My viewpoint is that branding is an important element of an overall marketing program. Having said that, branding is a great example of a D4 activity.

Z: Please explain what "branding" is...Thanks

Jeffrey Pawlow: Using a consistent image, logo, color scheme, font package etc improves the overall perception of the firm. But can you trace revenue directly to it? Again, a balance is needed in a professional approach.

To respond to "z", branding can be different things to different types of firms. Branding to Coke and Pepsi is different that branding to a small local CPA firm. The objectives are different. Coke and Pepsi want to develop top of mind awareness. A local CPA wants to create a credible image.

Richard Stinson: Many firms have experienced disaster in their marketing efforts. I think you nailed it when you said the typical CPA is not a marketer. But there have been successes. For example your success at Smith & Gesteland. What do you attribute that to? What made that experience different from most others?

Jeffrey Pawlow: I think the success can be summed up in two words. Systems and Opportunistic

We had a system in place at S&G that generated a steady stream of new leads within our targeted profile. The partners were then very opportunistic in creating the leads into engagements.

Jeffrey Pawlow: The bottom line is that practice development isn't anything that's common sense....it's just not common practice.

Melinda Guillemette: Did you have salespeople accompany partners on prospect calls?

Jeffrey Pawlow: In some instances, yes. But more as a training mechanism as opposed to a crutch. The expectation was that the partners would learn to sell.

Audra McIntosh: Jeff, in D3 - does an entire firm need to buy into the same profile or should different groups within the firm develop their own profile?

Jeffrey Pawlow: It really is a matter of firm resources. At S&G, we selected "family owned businesses" as our profile because that type of firm could meet the needs of multiple areas of the firm. A family business client could support the tax group, the audit group, the human resource consulting group, etc. If you're confronted with limited resources, you need to develop a profile that can meet all stakeholder needs. In some cases, multiple profiles are needed.

Richard Stinson: How difficult is it getting partners to sell when their main focus is on billable hours, or a partner says "I can't sell"? How do you train partners to sell?

Z: What did you find effective in starting the cross-selling process?

Jeffrey Pawlow: We tried to only get partners involved when the "rubber met the road." In other words, I'm only going to ask for your participation in the process when it's vital. The marketing dept. will coordinate the details. This was a good situation because the partners knew their involvement would be limited to specific opportunity development, and that we were committed to not wasting their time.

Melinda Guillemette: Have you seen any good partner compensation systems that recognize non-billable activity?

Jeffrey Pawlow: Melinda, I can honestly say that the partner comp systems are different in each one of our clients. It seems that there really isn't a cookie-cutter answer. The systems that work best are those that meet the needs of the individual firms. Several of our clients have a weighting system for non-billable activities and develop action plans for their non-charge time. At the end of the year, actual accomplishments are compared with the plan.

I think I missed a few questions back there. Any others?

Melinda Guillemette: Are you still seeing firms who promote people to partner based strictly on their technical competency?

Jeffrey Pawlow: More than I would like, but I do think it has diminished somewhat. I think the "up or out" mentality is fading, and Partners are realizing that a career technician isn't a liability, they just don't need to be partners.

Z: I have 2 partners that object to bringing in a marketing firm - the others are supportive. What key points should be brought up to those two partners to get them on-board?

Jeffrey Pawlow: I think you have to start with the overall goals for the organization. Why is there a need to bring in a marketing firm? Why are the two opposed? Bringing in a marketing firm should be a result of getting the firms goals in alignment. It should be self-evident if it's truly needed.

Z: We want to continue to grow and be more unified. They are concerned that it will fail....plus, my intuition is that they are afraid of the new work and afraid to grow. We have multiple locations and they are protective of their areas.

Jeffrey Pawlow: This gets back to the creation of the marketing plan and vision. At S&G, not all of our partners were 100% convinced that our efforts would succeed, but they felt that we had minimized the chance that it would fail. If you're working in D 1-3, it should be fairly easy to lay out a projection for the partners, and then track activity and results vs. that projection.

Jeffrey Pawlow: Are there any additional questions?

Melinda Guillemette: Can you recommend an accurate tracking system? Often, our folks work in teams, and I find each team member, from partner to manager, wants credit on his marketing plan for selling a new service to a current client, for example. It gets tricky.

Jeffrey Pawlow: On the low end, I've had a lot of success with Goldmine. On the high end, Firmworks has been a great product to work with. Firmworks is more of the complete practice management system, whereas Goldmine is a basic contact / lead opportunity manager.

Richard Stinson: Melinda, why not work on a team reward basis as opposed to an individual?

Melinda Guillemette: Mr. Stinson is right. Team rewards vs. individual reward makes sense.

Jeffrey Pawlow: You bet, and teams allow for various skill sets to be recognized. You need a balance of rainmakers, technicians, administrative etc. to make the team successful.

Melody Wagler: What are rainmakers?

Jeffrey Pawlow: Partners that are good at developing business and comfortable with the marketing / sales process. Although I'd prefer a firm with several "mist" makers as opposed to just one rainmaker! :-)

Z: We have found that matching up partners with less skilled individuals have been great learning opportunities... even the older partner with the younger partner has been a great thing!

Jeffrey Pawlow: In an era where many firms are concerned with funding their partner's retirement, you can't say enough about the role of mentoring.

Session Moderator: Any other questions for Jeff or experiences that can be shared with the group?

Richard Stinson: Jeff, please comment on how well a marketing person needs to understand the business. Thanks.

Z: Do you think that e-zines or email contacts with clients will hold a successful future?

Jeffrey Pawlow: I think that it is important that the marketing professional have an understanding of the industry, but more importantly, they have a proven background in services marketing. I'll take a great services marketer with limited industry experience over someone that is well versed in the industry but not a true marketing professional.

Melinda Bosquez: Jeff, thanks for a helpful workshop. Unfortunately, I've got a meeting across town and have to bye!

Session Moderator: There are just a few minutes left - any final questions for Jeff?

Richard Stinson: Thanks Jeff for an excellent session.

Z: Thank you...

Jeffrey Pawlow: You bet! Thanks everyone!

Session Moderator: Thank you so much Jeff for your time and for sharing all of this valuable information! And thank you to everyone for attending today!

Jeffrey Pawlow: If anyone would like additional information, please visit our website at www.thegrowthpartnership.com


Biography

Spending the initial part of his career as a Marketing Officer at one of the largest bank-holding corporations in the United States, Jeff Pawlow began working in the accounting profession when he joined Smith & Gesteland, a local firm based in Madison, Wisconsin. During his tenure as their Director of Marketing, Jeff's efforts were recognized with the "Best of Show" award at the annual Association of Accounting Marketing (AAM) conference. He also won a first place award in the advertising category for a direct mail campaign that yielded a 500% return on marketing investment, and a second place award for the S&G newsletter, Footnotes.

Jeff took on additional responsibilities when he joined St. Louis based RBG&Co. in early 1997. As the Director of Marketing Consulting for this "Top-50" firm, Jeff again spearheaded the implementation and development of a successful marketing program and was again recognized for marketing excellence by AAM. At the 1998 conference, Jeff's efforts led to four first-place finishes in the categories of: firm identity, firm newsletter, firm brochure, and statistical surveys. Additionally, Jeff was again recognized with the Best of Show award for overall marketing excellence. This was the second consecutive year that he had captured the top award at the AAM Marketing Achievement Award competition.

As the founder of The Growth Partnership, Jeff is using his knowledge to help CPA firms realize their full practice development and client relations potential. His firsthand experience in both small and large firm environments makes him well suited to work with firms of all sizes on the successful development and implementation of a customized marketing program.

E-mail: jpawlow@thegrowthpartnership.com
Web site: www.thegrowthpartnership.com

You may like these other stories...

By Deanna C. WhiteThis year, minority accounting students who aspire to become CPAs will have three opportunities to explore the possibilities the career can offer when the American Institute of CPAs (AICPA) holds its...
On May 2, 2012, the Center for Audit Quality (CAQ) has released a report summarizing its recent workshop on the evolving role of the public company auditor. More than thirty workshop participants gathered in New York on...
Session SummaryThe leadership of the National Conference of CPA Practitioners (NCCPAP) announced their concerns regarding the fallout from the events surrounding Enron. The leadership of the organization believes that this...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.