The Value of Direct Marketing and Lead Generation

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Larry BildsteinThe Value of Direct Marketing and Lead Generation
Presented by Larry Bildstein, CPA
President and CEO of The Whetstone Group.
Contact: [email protected]

Tuesday, August 7, 2001

Visit the AccountingWEB Workshop Calendar for upcoming sessions.


Direct Marketing is an effective marketing tactic to get the attention of your target prospects, get the opportunity to meet with them, and sell them services. In this session, participants learned what direct marketing is, how it fits into an integrated marketing strategy for a CPA firm, how to make it successful, and the importance of active follow up to your direct marketing campaigns. Mr. Bildstein provided actual examples of direct marketing campaigns that have generated ROIs over 100% for CPA firms.

You can read the complete transcript of this workshop.

Some topics covered in this workshop:

  • The four strategic growth alternatives and how direct marketing can help contribute to your growth through each of the strategies.
  • The importance of planning for successful direct marketing campaigns and how to do it effectively.
  • What works and what doesn't when implementing direct marketing campaigns.
  • Ways in which others have successfully used direct marketing campaigns, resulting in impressive ROIs and new client relationships.
  • The importance of forecasting and measuring ROI from direct marketing campaigns.
  • The difference in approach when conducting direct marketing campaigns targeted at your client base vs. new prospects.
  • The dos and don'ts of telephone lead generation.

August 7, 2001 Session Sponsored by: National Payment Corporation

National Payment Corporation

Workshop Transcript
Session Moderator: Welcome everyone, and thank you for joining us today! I'm happy to introduce Larry Bildstein, president and CEO of The Whetstone Group, Inc. Larry will be discussing the value of direct marketing and lead generation.

The mission of The Whetstone Group is to help companies in the professional services market find growth and hone their competitive edge. Whetstone provides clients a variety of simple, yet effective tools for this purpose. When applied properly, these tools can restore a competitive edge to clients that are looking for new ways to not only compete, but also grow in the evolving professional services arena.

I'd like to take a moment to thank National Payment Corporation for sponsoring today's workshop. You can find out more about National Payment Corporation's direct deposit program by going to

Session Moderator: Welcome Larry!

Larry Bildstein: Thanks, it's great to be here!

Session Moderator: So glad you can join us today

Larry Bildstein: I'd like to start by asking the group this question: What would you say is the number one mistake CPA firms make in business development? I'd say it's taking a passive approach to business development activities. Accounting firms traditionally are not aggressive business developers. They rely on word of mouth and relationship-building to foster new business. When we ask accounting firms what they're currently doing to grow their practice, the answer is almost always the same:

Our partners are out in the community meeting with bankers, attorneys to hear about what's happening in the area and to get referrals for new business?

When we ask them if they're meeting their current growth goals, the answer again is almost always the same: no. National research among middle-market companies shows very little differentiation between accounting firms in the minds of their target market. Companies rate the Big 5, other national and regional firms, and even smaller local firms fairly equally on delivering the basic service attributes like timely service, quality work, and being reliable and responsive.

So, if that's the case, and everyone is out there building relationships with the bankers and attorneys in the community, why is your firm going to get the business instead of any other firm?

With increases in competitive activity, a lack of competitive differentiation among CPA/consulting firms, and a weak economy resulting in tighter budgets for your clients and prospects, you can't just rely on traditional methods to grow your business.

What can you do to take a more active approach to business development? One solution is to implement direct marketing campaigns as part of your integrated marketing plan. Direct marketing is an effective marketing tactic to build new business. It almost always returns a positive ROI and can be effective for either expanding services to current clients or for finding new client relationships.

To clarify, when I refer to direct marketing I'm speaking specifically about direct mail followed up with telephone lead generation. But you can't just do these campaigns alone and assume that will be an effective method of business development. Direct marketing campaigns have to be part of an integrated marketing plan that includes activities targeted to each of the four strategic growth alternatives.

Consider this. There are only four ways to grow your business:

1. By selling your core competencies, or high-volume services you're known for (tax and audit/accounting services), to more of your current client base.

2. By providing newer, or expanded services (e.g. HR consulting or wealth management services) to your current client base.

3. By taking your core services and offering them to new targeted prospects in your market to develop new client relationships.

4. By diversifying into a new market area (a new niche industry or new geography, for example) and/or offering services not necessarily associated with your firm's brand.

Direct marketing can be effective for each of these strategies, although it takes different forms and has different results depending on which strategy you're employing.

The key is to determine how you want to allocate your effort among the four strategies up front. Then, build your campaigns accordingly.

This up-front planning is important for two reasons. First, as I said, in order to be effective, your direct marketing campaigns (and all your other marketing activities as well) must be designed and implemented differently in each strategy.

Second, your results will vary widely depending on which strategy you're employing. It's important understand the differences in order to set expectations for short-term vs. long-term growth. Say you're using direct marketing to work strategy 2, offering a new/expanded service to current clients. You can probably just send one direct mail letter introducing the service and asking for the opportunity to meet with them to discuss their potential needs for the service.

Since you already have a relationship with the client and they're aware of your abilities and trust you, you don't need to spend a lot of money with multiple, expensive mail pieces to tell your story and establish your credibility. The follow-up phone calls in this scenario should carry the message, "The partner on your account (use his/her name) wanted me to call to make sure you were aware we could help you in the area of XYZ. We have XYZ services that provide these benefits" - and so on to set the appointment for a service provider (and the account partner if so desired).

These appointments may consist of one or two meetings with the client to do a needs- assessment and propose on the services if appropriate.

If you're employing strategy 3, offering services to targeted prospects in your market, direct marketing looks different. This time the recipients may or may not be aware of your firm, who you are and what you do. You have to spend a little more time and money getting the message out and establishing your firm's image and brand position.

You'll need a series of mailings, perhaps use 4-color pieces to get attention, and spend more time talking about your firm and what it stands for. Then, you'll finally be ready to introduce a specific service and ask for the opportunity to meet with the prospect.

The phone follow-up is more introductory in this case, with the primary goal just to get the opportunity to get in front of the prospect. Less emphasis is placed on the particular service and more on the broad spectrum of prospect needs and your firm's capabilities.

The results in these two scenarios will be different as well. You'll generate many more leads/appointments (up to 4 or 5 times as many in our experience) with current clients vs. new prospects. The sales cycle will be much shorter with clients.

The first appointments with prospects will be introductory and will require extensive follow-up, perhaps by a variety of individuals.

To summarize, my first major "take-home conclusion" for you today is that you shouldn't just jump in and start implementing direct marketing campaigns expecting positive returns on your investments. Take the time to figure out your growth strategy and design the direct marketing to align accordingly. Make sense? Are there any questions?

Let's take a step back and talk about direct marketing in general terms for a few minutes? Why should accounting firms use direct marketing - what are the benefits?

Adrian Van Zelfden: Strategy 3 - currently not clients - can you suggest what you can say in a letter that would get them to give you an appointment?

Larry Bildstein: The most important thing will be to differentiate your firm from your competitors. Think about what your prospects know about your firm, and your competitors, and focus on messages that will make your firm stand out.

Adrian Van Zelfden: Prospects know nothing about our firm, they already have a CPA relationship, and what kinds of things can you say that will make your firm stand out if there is essentially no difference in services provided?

Steve Campisi: Can you have a campaign that is directed to a specific group that you know uses the equipment you want to provide services for without building the company image and have an effective campaign?

Larry Bildstein: Steve, I think it's difficult to get a prospect to agree to meet with you if they know nothing about your company. You're more likely to be successful if they know your company first.

Adrian Van Zelfden: What is the first step in getting them to know your company first?

Larry Bildstein: Adrian, the things that people are typically talking about are the same. What you need to do is understand what the market thinks is important, and then talk about that. Ask your clients, do focus groups, etc.

Adrian Van Zelfden: Example please? How well do they have to know your company? Are prior mailings sufficient?

Larry Bildstein: Prospects don't need to know everything about your company, just enough to understand how you can help them. We've found that you can usually cover enough information in 2-3 mailings to get them interested.

Adrian Van Zelfden: What types of things do you say in those 2-3 mailings.

Larry Bildstein: For example, many CPA firms talk about high quality service...but everybody says that. We've found that most prospects are more interested in timely delivery in addition to the quality they already expect. But many firms don't talk about that.

Steve Campisi: Are all mailings followed up with a phone call?

Larry Bildstein: When you do what we call the "image" mailings, you don't typically follow up with a phone call. The phone call comes after the second or third mailing after the credibility is established. At that point, people are more likely to give you time on the phone or face to face. Let's get back to some of the benefits of direct marketing. My favorite benefit - and this speaks volumes to accountants - is that the results are measurable.

When you place an ad in a magazine, can you measure the return on your investment in the creative development and ad space? How do you know how much new business (if any) you acquired as a result of that ad? There's no question there are benefits, but they are hard to measure.

Larry Bildstein: When you do direct mail campaigns followed up with telephone lead generation calls, you can directly measure the number of leads generated, the number of proposals (with projected engagement size and probability of close), and the amount of new business acquired as a result of the campaign.

We employ a simple spreadsheet as a tool to measure all costs associated with creative, production, mailing and calling on the campaign and compare that to all new business generated. Using a Return on Investment calculation you can track results over time and measure the effectiveness of your campaigns.

This isn't to say you shouldn't advertise in magazines. Again, the more integrated marketing activity you engage in, the better your overall results will be.

Adrian Van Zelfden: Let's go back to the mailings - timeliness is letter one - what can you say in letter 2 and 3 that differentiate you from other CPA firms?

Larry Bildstein: What you really need to do is understand what else your market thinks is important that they don't perceive that any firm in the market is delivering now. It's also ok to repeat messages as we all know it takes about people about five times hearing a message to remember it.

Adrian Van Zelfden: Certainly, you don't mean we should send five letters about how timely we are?

Larry Bildstein: Not at all, but it doesn't hurt to mention it more than once. My point is that you can't send one letter about timeliness and then think the market associates your firm with being timely. What timeliness does in the first letter is get the attention of the prospect. Once you have their attention, even if they don't associate your firm with timeliness, the chance that they will remember your firm's name when they get a second and third letter from you will improve.

Adrian Van Zelfden: Is timely compelling enough to do that, or is will it be perceived as merely boring, or elicit a "so what" response? When you are talking about getting the attention of the prospect, doesn't it take something dramatic?

Nick Veliky: Would you suggest preparing the mailings to compliment and build on one another emphasizing different attributes of the firm in each

Larry Bildstein: Exactly. They should have the same look, should feature your logo, should use a consistent tag line, etc. I've used timely as an example of one of the attributes we've seen markets respond to. The key is to understand what your market will respond to. However, a majority of the time, we find that prospects aren't looking for anything glamorous from their CPA firm. Timely financial statements and tax returns are very important.

Nick Veliky: Than each series of mailings should be a targeted campaign that has a specific goal and should generate results that can be accurately measured

Andrea Sparks: What do you recommend as far as timing. How far apart between mailings?

Larry Bildstein: Andrea, we recommend about 2 weeks between mailings in a series. We recommend phone follow up one week after the last mailing in the series. The second benefit of direct marketing: it's easy to tie to your other marketing activities. Does that ad you place in the magazine have the same graphics and tagline as your direct mail piece? Maybe your direct mail piece could even say, "Look for our advertisement in XYZ magazine."

By tying the two together, you're leveraging your investment in both to improve your results and increase your overall ROI.

You can even include the cost of the ad in the ROI spreadsheet for the direct mail campaign to see if the additional investment improves your results enough to increase the bottom line - my bet is you'll find it does if the magazine's readership is right.

Adrian Van Zelfden: What is the best tagline you have ever seen a CPA firm use?

Larry Bildstein: I think taglines that focus on meeting the need of a client are most effective. I like "From Thought to Finish". A third benefit of using direct marketing is that it allows you to speak directly to the specific target audience you have identified as your "best potential client."

Think about a billboard in your local airport - sounds like a good idea, but do you know whether your target market is seeing and reading it?

When you're going after new business, you likely can't afford to target everyone in your community - you have to define the type and size of companies to get to a reasonably sized target market.

Steve Campisi: What about direct mail formats, any one over the other?

Larry Bildstein: Your marketing budgets will be a lot more effective if they're focused on a specific target market that's of a manageable size. Coming from a professional service firm, the most effective mail piece we've used is a personalized letter on firm letterhead. Using direct marketing, you can define that target very specifically, purchase a list, and work that list over time to acquire new relationships with companies that meet your description of "the perfect client."

For example, if you want to promote operational consulting services, you can talk to COO/VP Operations individuals at manufacturers in your geography with $5mm and up in annual revenues. You can even get more specific and talk to specific types of manufacturers, or those growing at a minimum annual rate. Lists meeting these criteria are available and have proven effective in past direct marketing campaigns.

One final benefit of direct marketing - if you don't over use it, your results will get better and better. We've all seen research that tells us it takes a message five times to get across. You can't assume one direct mail letter and a phone call will do the job to introduce you or one of your services to the market. Message frequency is an important factor in the success of any marketing tactic.

However, it is possible to overdo it with direct mail, especially the phone follow-up. I wouldn't recommend calling a given individual at a prospect company more than once every 60-90 days.

Your clients will tolerate more activity, but you still have to be careful about overdoing it.

We have found that our clients who do consistent campaigns to the same prospect list on a bi-monthly or quarterly basis, see results improve with each campaign as long as they're engaging in other integrated marketing activity and the messages are consistent.

Let's talk for a few minutes about how to make your direct marketing campaigns more effective. I'll give you five factors for success:

1. An updated, targeted list;
2. Name recognition in your target market;
3. The right topic presented at the right time;
4. Telephone follow-up with well-trained callers;
5. Sales follow-up and sales management!

The quality of your list single is most important factor in the success of your direct marketing campaign. I can't stress that enough. Let's concentrate on prospect lists for now - I'll assume you can pull together an accurate targeted client list.

A rule of thumb in direct marketing is that 80% of your success on a campaign will be driven by the quality of your list - if you don't get that right you might as well skip the whole thing.

The first step is to define the appropriate target market - using the criteria, I mentioned before. Don't target companies that are too large for services they probably handle internally. Don't target companies that are too small if they can't afford to pay for the service.

Don't target companies in industries where the service isn't really needed. That sounds like an obvious one, but you'd be surprised how often we see clients try this. Make sure you target the right individual - decision maker or influencer - in the company.

Once you define the appropriate target market, the next step is to acquire data on companies that meet those criteria - complete, accurate, updated data. Even when you purchase the best data on the market, the accuracy of the list is not 100%. Sometimes partners get frustrated when one company they know of doesn't show up on the list, or they see a contact name of someone they know has left that company.

These kinds of errors do not make a list suspect! But they do point out the necessity of using a list soon after you purchase it and keeping it updated as long as you want to continue working it.

If you consistently implement campaigns on a bi-monthly or quarterly basis to the same list, that list will be of high quality and should return great results if the target criteria were appropriate to begin with.

Larry Bildstein: In summary, my second major "take-home conclusion" today is: get the list right!

If you're going to do direct marketing, even if you get other stuff wrong, don't mess up the list. Define the right target market criteria and then get good data for that list. Name recognition in your marketplace is the second key success factor for direct marketing campaigns. Knowledge about who your firm is and what you do increases the likelihood that a prospect will even open the envelope and read your direct mail letter.

Name recognition can even help on the telephone follow-up to just get past the executives - gatekeepers and actually speak to the decision maker.

How do you get name recognition in your marketplace? I'm going to sound like a broken record - frequent, consistent, integrated marketing activity.

Direct marketing, advertising, speaking engagements, community involvement, getting published, seminars, trade shows, driving traffic to your Web site - whatever makes sense and fits your growth strategy.

Plan it, tie it all together with consistent looks, graphics and branding messages, and implement, implement, implement! Your marketplace will start to recognize your name and your message, and soon all your results will begin to improve as a result. Talking about the right topic at the right time for your target market is the third success factor I mentioned.

Talk about tax services during tax season - it's top of mind for everyone, and you'll be addressing real-time pain! Also, take advantage of recent events in your marketplace.

One of our clients had an auto manufacturer put a plant in their area. This caused a huge strain on the manufacturing labor pool. We advised the client to get out and talk about how they could help manufacturers attract and retain good employees through a variety of services (HR consulting, benefit plans, payroll processing, etc.). It worked!

The fourth success factor: do the telephone follow-up. So many CPAs are uncomfortable with this approach. Telemarketing is a dirty word to anyone who has received a call at dinnertime peddling long distance service. But that's not what we're talking about.

We're talking about using well-trained telephone lead generation professionals who specialize in speaking with executives. If you think you can send a direct mail piece and an executive will pick up the phone and call you just because it says to in the letter, you're mistaken. We've seen incredibly well written letters about very hot topics to well-defined target lists generate one call from a prospect.

When the telephone follow-up to these same letters was completed, leads for over 10% of the prospects were generated. You have to be proactive and ask for the opportunity to meet with the prospect. To the extent possible, use the same group to call on all of your campaigns. They get to know your approach, your services, and can even start to build rapport with the prospects on the list if you're implementing frequent campaigns. All of this improves your results in terms of number and quality of leads.

The final success factor (and second only to list quality in importance) is sales follow up and sales management. When you use direct marketing to generate leads among your target prospects, that first appointment is really just an introduction. It's your chance to get to know about the prospect company and their current situation. In fact, we find the appointments usually go like this: Say you get 20 appointments with prospects from a direct marketing campaign. In our experience, of these 20, 2-3 will be what I call "clunkers." By the time you get in front of the prospect, they've either lost interest or tell you they just agreed to meet to get rid of the caller.

Any of us who have done sales know this happens. Get over it. Then, there will be 2-3 where you just hit them at the right time and they need your help NOW!

Anyone who has done sales knows this doesn't happen ENOUGH! But, it does happen. he bulk of the appointments will be the start of what, in the accounting business, is a fairly long sales cycle. o, you have to have a plan for how you're going to continue to communicate with each of these leads, keep your name in front of them, and advance the sales cycle through the necessary stages and you must manage the sales cycle. Track your activity with each prospect, identify your potential sales volume with each, and estimate the probability and timing of closing the deal.

Use some tool for tracking this information - even if it's just a simple spreadsheet - and work the tool every day. Ask yourself what you've done to advance the cycle for each prospect and what needs to be done to keep it moving. Keep your name in front of each prospect on a regular basis - send them newsletters, articles, have occasional lunches, share your success stories - whatever it takes to keep the contact going.

Update your amount/timing/probability estimates as you work the sales cycle and make sure you have enough leads in the pipeline to meet your sales goals. So there's "take home conclusion" number 3 - don't even bother engaging in direct marketing if you're not prepared to work and manage the sales cycle. You won't get a positive ROI on your campaigns if you don't work the back end.

CPAs usually want to know what expect for costs and results. We've found, both from our work with clients and tracking other providers, that you should be able to generate leads with 5-10% of your prospect list on a campaign, at a cost of under $500 per lead (or appointment).

In our experience with clients - after the typical 6-18 month sales cycle - 1/3 of the leads become proposals, and ½ of those proposals become closed deals. For example, if a campaign generates 12 leads at a cost of $400 per lead you'll expect to get 4 proposals and 2 new clients.

Say the initial engagement from each new client is $12,000. At a 30% margin, you've generated $7,200 of gross profit margin for your firm at a cost of $4,800 for the campaign. That's a 50% return on your investment in the campaign, not even counting the ongoing revenue as you sell more services to these new clients. We've seen ROIs well over 100% on many campaigns using the techniques I've described today - it's hard for even CPAs to turn down results like that!

Session Moderator: We have only a few minutes left , so if any of you are hanging onto questions for Larry, now is the time to ask!

Larry Bildstein: Are there any other questions about anything we've discussed today?

Steve Campisi: For current clients, is a News Letter effective?

Larry Bildstein: Yes. I think clients see a newsletter as a real value-add. Just make sure the content is "information" focused as opposed to salesy.

Melody Wagler: Is it okay to send the same newsletter to current and potential clients?

Larry Bildstein: I think so, as long as you have the budget. However, you can also use newsletters to enhance relationships with current clients if they think they are getting exclusive information.

Session Moderator: Thank you all so much for joining us today - and thank you Larry for an excellent workshop!!!

Larry Bildstein: I'd like to thank everyone for joining us. Please email me at [email protected] if you have additional questions.

Session Moderator: I'd also like to take moment to thank National Payment Corporation for their sponsorship of this workshop.

Steve Campisi: I would like a transcript of this meeting, how do I get this

Session Moderator: The transcript will be available late tonight or tomorrow at this link:

Session Moderator:

Session Moderator: Or just come to the home page of AccountingWEB and you will see the news story about this workshop - that is where the transcript will be posted

Session Moderator: Thanks again everyone for your time today!


Larry Bildstein is president and CEO of The Whetstone Group, Inc. Whetstone's mission is to help companies in the professional services market find growth and hone their competitive edge. Whetstone provides clients a variety of simple, yet effective tools for this purpose. When applied properly, these tools can restore a competitive edge to clients that are looking for new ways to not only compete, but also grow in the evolving professional services arena.

Before creating The Whetstone Group, Larry 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, Larry 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.

Larry 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 $5,000,000 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, Larry 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, mergers and acquisitions assistance in addition to tax and financial services and advice.

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Jun 26th 2015 01:11

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