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How to Identify Your Ideal Clients

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Nov 9th 2016
CEO Panalitix
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If you are like most accountants, your client base will be a farrago of clients perfectly suited to your firm, mediocre “we can live with them” types, and, sadly, clients where the very mention of their name creates a knot in your stomach.

We regularly ask accountants, “Who in the room has at least one client that you do not like?” Almost without exception, every hand goes up. Why do we live with this?

Remember, it is your business, you make the rules, and one major rule should be rationalizing your client base so that it fits with your beliefs (back to the why) and your proposed service offerings.

When we suggest client classification as a project, accountants often warmly embrace it. We think that is because they envisage a spreadsheet with categories and weightings – happy days for many accountants!

Joking aside, if you are going to categorize your clients, think first about the reason why you would do that. Here are three reasons to consider:

  1. To determine who your “A” class clients are and then design a communication schedule for those clients (which you should communicate to them). Your ultimate goal should be to only work with “A” class clients.
  2. To prioritize the order in which you visit your clients to identify opportunities to help them. “A’s” first, then “B’s,” and so on.
  3. To determine once and for all those “D” class clients (or below) so that you can remove them from your client list. I am regularly told that there is nothing so empowering as firing a “D” class client.

To help you with this process, we have designed a set of client-selection criteria specifically for a firm focused on business advisory work with clients. Feel free to choose criteria from the list that resonate with you; equally, you may add your own and ignore any of my suggestions that are not important to you.

The key is to pull together a tight group of criteria that feel right to you and your team. This is more art than science. Here are our offerings:

1. Decent fees. Experience shows that a client who has previously made a decent investment with you is more likely to increase his or her investment with you in the future.

2. Affordability – strong revenue with good profit margins. Business advisory work done properly doesn’t come cheap. As such, you should prioritize clients with the ability to pay you for the value they will receive from your services.

3. Scope for improvement. If you look at a business and can see opportunities for making a difference, give this one a tick. The place to start is with their management reporting systems. Once you help a client identify the key drivers of revenue and profit in his or her business, and then engineer systems to extract that data so that it can be monitored and acted upon in a timely manner, the numbers will start to improve almost as if by magic.

There will come a time when that improvement will dwindle and you need to step in and take action to drive them to the next level, but scope for improvement in management reporting systems is a big opportunity waiting for your expertise to unlock it.

4. Desire to improve. It’s all very well you identify how you might help a client, but he or she needs to want it as well. Clients who are enthusiastic and open to collaboration to improve their business trump those who are apathetic and happy with their lot.

5. Takes advice. We suggest you work with a client who has a track record of implementing your advice any day over one you might call NATO (No Action, Talk Only). Think back to previous meetings with the client. When you offered advice, what happened as a result of it?

6. Positive mindset. Is the glass half full or half empty?

7. Referrer or potential to refer in the future. So much new work for accountants comes from client referrals that it makes sense to prioritize those with a track record of sending new clients your way. Do not exclude a client who has not yet referred; however, it may be your fault if you have never asked.

8. Good payer. The last thing you want is to find your mental energy absorbed with debt recovery when you should be 100 percent focused on helping the client achieve his or her goals.

9. Case study/testimonial. Put simply, you should have one from every single “A” class client, front and center on your website. Utilize video testimonials for even more dramatic effect. Call your top 10 clients (based on gut feel) and ask them if they would mind you writing a case study about the work you have done together or providing you with a written testimonial for use in your marketing. Your “A” class clients will not refuse.

10. Well-known in the community. This is important especially if you are in a remote or regional location. Clients who are well-connected can be heavily influential in you winning quality new work.

11. Supports your events. If you put on a seminar, who are the clients who turn up consistently to support you?

12. You like them. Let’s face it, for all of us on this planet, time is a scarce resource. You only have a certain number of working hours left in your life. Don’t waste it with idiots.

13. Your team likes them. Not to be overlooked. Sometimes a client will be nice as pie with you then act like a Rottweiler with your team. This needs to be addressed, otherwise your team will lose faith in your client-classification policy.

If you are a CPA, come hear Rob Nixon offer even more tips on how increase profit in your form to $1M per partner, per year and earn CPE in this free webinar on Thursday, Nov. 17.

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