Satisfied, Loyal Clients: The Key to Growing a Practice

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Larry BildsteinSatisfied, Loyal Clients - A Key Strategy to Grow Your Practice
Presented by Larry Bildstein, CPA
President and CEO of The Whetstone Group
Contact Larry at [email protected]

June 21, 2001

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You can read the complete transcript of the workshop.

With the economy slowing and companies feeling the pinch, meeting growth goals will likely become more difficult. And as your goals fall further away, the marketing dollars to get you there will be harder to come by. That's why targeting and selling to your loyal, satisfied customers might be the most effective marketing you can do this year.

Workshop participants learned about the four growth strategies all firms should understand and consider, and how satisfied, loyal clients can help you achieve success through each of these strategies.

  • Understand the four strategic growth alternatives and the implications these have for your marketing activities;
  • Get specific ideas on how satisfied, loyal clients can contribute to your success when employing each of the strategies;
  • Discuss different ways to measure and track client loyalty;
  • Consider whether your firm's infrastructure and systems support building client satisfaction and loyalty;
  • Hear how one firm is seeing quick results from tapping into their loyal client base.

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.

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.

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.

Welcome, Larry!

Larry Bildstein: Thank you. Good afternoon everyone. Thank you so much for joining us this afternoon.

I'd like to begin by asking you to consider the following analysis: A CPA firm with $7.5 million in annual revenue and ten partners who each spend 300 hours per year on business development should be growing their top line at a rate over 20% per year to get even a 20% return on their investment in partner time.

Add to that the typical out-of-pocket costs in marketing and sales and you're looking at a need to grow close to 30% per year. Is your firm growing at that rate? Not many we have talked to are.

How can you improve the ROI in partner business development time? What's the most predictable, least expensive way to grow your top line in the short term? And as the economy slows, what series of activities have you planned to meet your growth goals? Targeting and selling to your loyal, satisfied clients can be a firm's most effective marketing strategy and its least expensive.

It seems like when a CPA firm needs growth quick, the partners turn to a new service - a service they have never provided in the past - and try to use that new service to attract new clients. Sometimes the prospects they go after are in a geography that is outside of where the firm is known or in an industry the firm has not served in the past, for example attempting to sell cost report and fee consulting to medical offices when the firm has no significant medical office practice now. Then, the firm expects results fast. It just won't happen.

Penetrating your current client base is the quickest way to get short-term growth results. Since the communications channel is already in place, simply using your relationships with clients to open conversations is the least expensive and most predictable route to increasing sales. But it won't just happen because you decide it should. You have to plan an organized, focused approach to growth.

Is this making sense or sounding familiar to any of you?

Session Moderator: It makes quite a bit of sense to me

Larry Bildstein: They key to laying out growth plans is to evaluate and consider each of these four strategic growth alternatives:

  1. Selling more of what you are good at to more of your current clients
  2. Introducing new or extended services to your current clients
  3. Selling more of what you're good at to first-time buyers
  4. Introducing new or extended services to first-time buyers

Though selling more of what you are good at to current clients isn't what most firms consider a “growth alternative” it does offer the most potential for many reasons.

You are good at it and have satisfied and loyal clients to prove it.
You have critical mass of service providers.
You have good processes that make the services cost effective and profitable.
And finally, you have the communications channel directly to the customer, your client.

Think about it. The communications channel to your clients is cheap. You can just pick up the phone and call. No expensive advertising campaigns. No flashy direct mail. No glamorous seminar events. Just conversation with someone you already know who trusts you. Compare selling to your clients versus finding new relationships. Consultative selling takes time. It must be done face-to-face.

Ellie Miller: Can you talk more about the strategic growth alternatives?

Larry Bildstein: Yes. Picture a square divided into 4 equal quadrants. Along the left axis are your services - core competencies are the lower half and new or extended services are the upper half of the left quadrant. Along the bottom axis are you target customers - the left side represents your current clients and the right potential clients or prospects.

When you're working in the lower left box, we call that a penetration strategy. You're working on selling more of your core competencies - often audit and accounting, basic tax services and some core consulting services - to your existing client base. When you're in the upper left box, you're working on selling newer or extended services - those not many of your clients are using - to the client base. The lower right is where you're going after new client relationships.

We're talking today about how your loyal clients can help you grow in these three boxes - or using these three growth strategies.

Effective consultative selling happens when the potential buyer has a high level of trust in the seller and the seller listens well enough to determine real needs. It's easier to talk with existing clients than to set an appointment with a stranger.

If you look at the cost of prospecting and closing a sale, the first time costs involved in the initial project that will not get billed, the discount you might have to offer in the first place to close the sale, you'll likely find that work for a new client is not profitable for at least two years. Your loyal clients will buy more from you and will pay more because they value your services. And, there won't be the first time costs associated with delivering an engagement to a new client.

Frugal times aren't the only times that selling to your clients makes sense. Are any of your firms thinking about investing in a new product or service?

Megan Vaughan: Yes.

Richard Stinson: Yes we are too.

Larry Bildstein: Especially if the product or service isn't one that is typically associated with the brand of a CPA firm, like investment advice for example, you'll have a much easier time selling to an audience that already likes and trusts you. Why would someone who doesn't know you, who doesn't associate your profession with delivering investment advice services, give you the time of day?

Another common scenario is that a CPA firm that is trying to build a consulting practice often feels a need to immediately go out into the market and find a bunch of new clients. While new clients are good, in fact, vital - this is a long-term process and it takes a lot of money. The communications channels, advertising, direct mail, seminar events, are much more expensive. Many new consultants die on the vine waiting for new business to keep them busy. Selling to loyal clients first enables the consultants to find enough work in the short term to at least break even until the new clients begin to sign-on.

Larry Bildstein: How have your firms gone about introducing new services?

Richard Stinson: Newsletters, one-on-one w/clients.

Megan Vaughan: Announcements.

Melody Wagler: We sent out a letter to all our current clients, put an ad in the newspaper, included on our website, put in the newsletter.

Larry Bildstein: If you're trying to sell new services start by talking about them with your current clients. Sounds like a lot of you are doing that.

Your clients don't have to be convinced you are capable before they buy your service, they already experience your expertise on other services. Your clients will give you the benefit of the doubt if the service is outside your brand. You can't afford the time and dollars in a start-up service to sell enough of it to non-clients to a make a profit in the near term. A firm should never introduce a new service they aren't comfortable introducing first to their current client base.

Loyal clients can also help you grow your top line through the other strategic growth alternatives. They can help you find relationships with new clients. Asking clients for referrals is one of the most effective means of finding new relationships. There is an indirect trust already established with the prospect because of your mutual relationships with the client. Loyal clients will feel comfortable giving you the names of their peers.

We work with one CPA firm for whom we have developed several growth plans. One of the plans involves growing a relatively new consulting practice. A significant focus in this plan is an effort to obtain referrals from current clients. This was quite a cultural hurdle to overcome. We asked all the partners to get on the phone and ask two of their good clients for referrals. After much complaining about not having enough time to complete this monumental task (two phone calls!) they finally got down to business.

The result was 18 referrals, which became 10 face-to-face meetings for the partner in charge of the consulting practice and an immediate proposal along with several promising prospects.

How many of you have an organized approach to obtaining referrals from current clients?

Ellie Miller: Nothing organized, no.

Larry Bildstein: How many times have you asked clients in written documents if they are willing to give you referrals, and they've said “yes”? But, then you don't do the follow-up and never get the referral from them. Actually, this happens all the time.

Richard Stinson: I wish we did.

Larry Bildstein: My experience is that a written “yes” with which a partner doesn't follow up via phone or a face-to-face meeting to get a name is worthless. In fact, it can be a negative if your client is left wondering why you didn't follow up.

It's also important to follow up with the referring client after you've worked their referral to let them know the result. It's an opportunity to thank them again for the referral and they'll want to know how it turned out.

Testimonials from loyal clients are also a very effective selling tool with prospects. They can help in selling more of what you're good at or introducing new services to first-time buyers. We recommend developing mini “case studies” that describe how you've helped a current client with a service you want to promote to prospects. Describe the client's need, how you suggested the solution and then provided it. Go to your client's site and get a quote from them and a picture to include in the case study. Clients like the opportunity to share their story and prospects can see tangible evidence that your advice is valuable.

You can also use your success with client satisfaction to impress prospects and increase their confidence in you so they will take a chance on a new relationship. However, you cannot just say your clients are satisfied. You need tangible examples and documentation to effectively make this point with prospects. Consider including descriptions of your quality control systems in your proposals and discussions with prospects.

Let's talk about the difference between satisfied clients and loyal clients.

Satisfied clients are those that are ok with the results of the project you just completed. How many of you measure client satisfaction?

Megan Vaughan: Mostly just new clients unfortunately.

Larry Bildstein: Have you considered that while a client who rates their satisfaction with you as a ‘7' or ‘8' on a 10-point scale may be fairly satisfied, they are also vulnerable to looking at what your competition has to offer them vs. what they are getting from you? Anything less than a ‘9' or ‘10' represents a risk to your future relationship with a client.

Richard Stinson: We are just starting that process.

Larry Bildstein: Most firms measure satisfaction by sending out job evaluations after the engagement. Although this is a very good initiative, it does not give you an indication that the client will stay with the firm and purchase additional services on an ongoing basis.

Say you go to a restaurant. You're really hungry for a hamburger. You look at the menu, and the restaurant doesn't have a burger, but they have a chicken sandwich. You order and eat the chicken sandwich. It tastes good. It's delivered fast. You leave that restaurant feeling satisfied with the chicken sandwich. However, you're not loyal to that restaurant because it didn't have the burger you craved. And the restaurant manager doesn't know you won't be back because it appeared you were satisfied.

It's not uncommon that clients give a firm high ratings on a project satisfaction survey, yet still move to a new provider. They do so not because they weren't satisfied with the project, but because they were not loyal to the firm.

Client loyalty can be measured in many ways: number of continuous years with the firm, volume of net services per year, increase in services purchased each year, increases in the number of services purchased, number of new services they buy from you and realization.

Do you think satisfied clients are always loyal? Are loyal clients always satisfied?

Melody Wagler: No and No.

Session Moderator: Obviously not. So how do you transform a satisfied client into a loyal client?

Larry Bildstein: I'll get to some suggestions for that in just a minute.

A client can be satisfied but not loyal. A loyal client can be dissatisfied with a current project, but because the client is loyal, your professional relationship will likely remain in tact. However, they must be satisfied with the resolution to their negative experience or their loyalty will deteriorate.

Let's talk about some ways you can improve client loyalty.

The most obvious way is to satisfy your client on every project. But you can't stop there. Make regular needs assessments with clients a part of your client service approach. Talk to them about what you observe in their operations. Listen to what they have to say about what keeps them up at night and offer suggestions for resolving those issues.

Always thank clients for their business. This sounds obvious, but do we do it? Even consider a loyalty program for good clients. A loyalty program could involve rewarding loyal clients who give you successful referrals with travel certificates; partnering with an office supply company to offer certificates to your loyal clients for free or discounted office supplies; giving them exclusive access to a page on your Web site that contains regularly updated business advice.

Treat high volume clients a little differently by always assigning the best people to their engagements and giving them timing priority.

How about this idea: Meet with each client prior to beginning work on the engagement, and ask the client to define what it will take to satisfy them. Push them to include specific attributes beyond the typical “timely delivery, quality work” items; attributes that are important to their satisfaction and continuing purchase decisions. Actually list these items on a flip chart. After the engagement, meet with the client again, put the same flip chart back on the wall, and ask the client to evaluate the firm's performance on each of these items.

Research shows that consistently measuring client satisfaction in and of itself is a tool to increase client satisfaction. And as satisfaction increases, your chances of loyalty also increase.

Do those suggestions sound like things your firms would consider doing?

Richard Stinson: Yes, some excellent ideas.

Larry Bildstein: Who do you think is the best sales person to your client base? Many CPA firms only consider partners in this role. They think their staff people are too inexperienced or uncomfortable in the sales role to be effective, so they don't focus on developing their abilities to identify opportunities in the client base.

I'd argue that staff people are directly involved with making clients satisfied and loyal and thus it is vital they become some of your best sales people. They can contribute to your sales efforts in many ways:

  • They can do fundamental good client service, if you don't lose clients it's a lot easier to make your net service goals for next year.
  • Staff can listen on the job; they interact with the client more than partners. Staff are on the front line with the clients. They are in a position to make observations about what clients need.
  • Staff must have the opportunity to communicate what they learn back to partners who must then act to step in and offer solutions to the client.

Help prepare your staff with two or three high gain questions to ask clients when they are in the field, questions that get the client talking about their pains. Teach your staff people to listen to what the client is saying and communicate this information back to the partners.

A good management letter gives you the opportunity to start the conversation with a client about extended service opportunities. Encourage your staff to think about getting the client involved in drafting the letter so it's complete and correct. Help them understand the value in a management letter doesn't come with volume; don't have them fill the letter with trivial material, but focus on providing even just two solid suggestions or observations. Then, make sure your partners follow up by discussing the management letter face to face rather than just mailing it to the client.

Do you think the line staff in your firm could handle those items?

Megan Vaughan: I think yes, but they seem to lack confidence.

Ellie Miller: What are some "high gain" questions we can ask clients?

Session Moderator: What kind of training is available, or what alternatives are there if the staff can't handle the task?

Larry Bildstein: A couple of high gain questions:

"If there is one thing we could help you with to improve your profitability, what would it be?"

"What are you doing now to control your tax costs?"

A high gain question should be open-ended and designed to open a conversation with the client about their business and their needs.

One alternative to outside training courses is to have staff accompany partners when they're having needs assessment conversations with clients. There is no better training than actually witnessing the process.

While the staff is key to the success of building loyalty, partners need to do their part too. When partners divide up the income at the end of the year, is it typical in your firm that the person that finds a new client gets recognized more than the partner who sold three times more work by just serving his/her clients? Selling more to existing clients in the normal course of great client service needs to be recognized in tangible rewards for the real value it delivers.

One thing to keep in mind with regard to any of the four strategic growth alternatives is that you must continue to actively market to loyal clients. You can't just assume they will come to you because they're loyal. Partners must focus on the client base and be proactive not just reactive.

One of our CPA/consulting firm clients who was developing their own growth plan prior to our relationship was convinced they had to attract new clients outside their immediate geography to meet their goals. But, after looking objectively at the four growth alternatives, along with how they were capitalizing on their current client relationships, they changed their focus. In the plan we developed with them, which is supported by the entire firm, they now spend 70% of their time and efforts marketing to current clients. The plan includes proactive activities to increase business to current clients. This allowed them to take a limited budget and still push for aggressive growth goals. Just a few months later, they are already implementing their plan and seeing concrete results, results that wouldn't have come so quickly (or cheaply) had they stuck with their original intent.

Without a doubt, increasing your wallet share from current clients is the easiest, most predicable growth strategy, not to mention the least expensive.

Are there any questions or any items you were hoping to see today that you didn't?

Richard Stinson: How do you overcome partner shyness or reluctance to sell?

Larry Bildstein: Sometimes you just can't. With others, you need to talk to them about a consultative approach to client service rather than talking to them about "selling" in a traditional sense. A partner can contribute greatly to the growth effort just by being a good listener, identifying client needs and providing excellent client service to create loyal clients. Another key contribution a partner can make is to introduce their clients to other service providers in the firm so they can talk about additional services with the client.

Ellie Miller: Do some current clients feel "put off," or over-saturated by the increased contact?

Larry Bildstein: I really don't think clients ever feel put off by "too much" contact. As long as you are focusing on the client's needs, as opposed to "pushing" your services, clients will see value in the contact.

Any other questions?

Session Moderator: Larry, thank you so much for joining us today - this has been a GREAT workshop!

Larry Bildstein: Please feel free to email me at [email protected] if you have any additional questions or comments on what you've seen today.

Session Moderator: And thank you everyone for attending and asking excellent questions

Larry Bildstein: Thanks - I enjoyed the session.


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.

E-mail: [email protected]
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