Advantages of Adding Niche Services to Your Accounting Practice
By Hugh Duffy
Beggars can't be choosers. Right? Wrong!
When Tom Palm Jr., EA, joined his father's accounting firm in Baltimore, Maryland, he was concerned about getting additional business in the door. As a result, Tom offered practically anything his clients wanted, regardless whether he really wanted to offer them.
In 2008, that changed. The firm, Thomas J. Palm, PA, implemented a new kind of marketing strategy that began with examining the firm's clients and their business to determine what services the firm wanted to offer and what services would be more lucrative for their business. In addition, this strategy enabled Tom to spend more time on matters he enjoyed and less time working with problem clients.
"We stopped doing work we hated doing or work that didn't help our practice grow", said Tom. "For example, we sold our payroll work and stopped doing sales tax deposits. Essentially, we moved away from transactional work into engagements that allowed us to oversee the books for our clients and help them with tax planning and more strategic activities to grow their business."
Identifying a Niche
Once Tom determined the services he wanted to provide, he briefly thought about what he didn't want to do. For example, he didn't want to deal with inventory, so manufacturing was not a good niche for him. Similarly, restaurant industry idiosyncrasies didn't appeal to him.
To determine what he did want to do, Tom identified the niche or industry most of his clients were coming from and the clients his firm enjoyed serving.
Through this process, Tom found that 15 to 20 percent came from real estate and construction, including plumbing contractors, real estate agents, real estate flipping groups, rental property managers, and home improvement companies. Because he knows the ins and outs of this industry – aka, a "subject matter expert" – and enjoys working with these clients, Tom decided to focus his marketing efforts on this industry.
Reasons the Niche Approach Works
Regardless of the industry, all businesses have a need for an accounting firm. For Tom, identifying the industry his firm wanted to work with was a strategic decision that helped him grow his business. Here's why the niche approach works:
A niche establishes your firm's credibility and industry expertise. While accounting tasks are common across industries, each industry has its own nuances. Establishing a niche helps you gain credibility. For the real estate and construction industry, Tom needs to be aware of matters such as heavy equipment depreciation, commissions for real estate agents, and parts and labor expenses for the plumbing contractor.
When he's able to "talk the talk" with potential real estate or construction clients, his knowledge provides a sense of ease because he knows how to account for the unique issues facing their businesses. "One plumbing contractor even asked me to the name the local plumbing supplier as a test before he hired me", said Tom.
A niche increases word of mouth marketing and referrals. Nearly 40 to 50 percent of Tom's business comes from referrals. People within the same industry generally have working relationships with each other and ask for referrals when looking for an accountant, lawyer, or banker.
Marketing opportunities increase with a niche focus. Having a specific target audience by industry makes marketing simpler and more targeted. For example, Tom has a separate website focused on his real estate and construction accounting services. He also sends direct mail letters to this audience and an e-mail newsletter to clients and prospects he has in his database. Although his newsletters aren't niche-based, they focus on accounting and business tips that will benefit any of his clients.
"The most effective way we market our firm is through niche websites", said Tom, who estimates 50 to 60 percent of his leads come through the web. "If our client searches for 'construction or real estate accountant in Baltimore' the results load our niche website. It makes it looks like all we do is work with this type of client."
Niches offer the ability to replicate. Your business may specialize in more than one niche. Once you've established your first niche, and the marketing and sales cycle around that, you can replicate the approach for other specialties. For instance, Tom has his real estate and construction niche as well as a QuickBooks accounting niche and is considering another site around IT services. He uses the same newsletter to communicate with these clients, but he has different websites that look and feel like that industry.
Tom does admit that because so many leads come in through the web, it's hard to know exactly how they came in: through Google searches, a referral who sent a link, or social media sites.
â"I look at my niche websites as one of the bullets in my gun", said Tom. "If I shoot all the bullets, it doesn't matter which one hits the target as long as I hit it."
Everything Leads to Sales
Once you create a strategy for getting potential clients to reach out to you, lead management is crucial.
"We only have four people on staff at our firm", said Tom. "We don't have sales, IT, or other departments, so I wear a lot of hats and one of them is sales."
Tom says his success in closing a deal is because his potential clients can see he's knowledgeable about accounting and what small businesses need to do. He points out that clients are looking for the same thing. They want someone they can talk to and not feel like they're in the accounting class in college. He's also honest with small business owners, telling them when they do or don't need an accountant.
"This approach has actually gotten me referrals, even when I didn't end up working with a client", he said.
Getting new clients in the door is always a challenge, regardless of the services you offer or your expertise. An essential component of brand building is becoming known in an industry for providing quality and expertise; in other words, defining a niche. What are you waiting for? Creating and marketing a niche is the first step in brand building for your business.
Read more articles by Hugh Duffy.
About the author:
Hugh Duffy is cofounder and chief marketing officer of Build Your Firm, an accounting website design and accounting practice development firm. Hugh teaches a series of Accounting Marketing Workshops; has a LinkedIn Discussion Group called Modern Marketing Methods for Accountants; and provides outsourced marketing for accountants. He can be reached at (888) 999-9800 ext. 151 or at [email protected].