In Part 1 we talked about how the “best practices” employed by professional sales people can be of value when you are raising your fees while at the same time maximizing the probability of maintaining good relations with your clients.
I received some feedback on the subject from readers you may find both interesting and humorous.
Eric in Tennessee has a long time client/semi-friend whose billing rate hadn’t been increased for many years and needed a significant jump to be in step with 2010. The client is a painting contractor and Eric had recently engaged him to paint the exterior of his house, so he thought that would soften the blow. He was wrong. The client became absolutely apoplectic, got red in the face, began yelling and carrying on like this was the worst thing that had ever happened to him. The meeting ended badly. Still distressed by the experience, when Eric got home he plopped down dejectedly and told his wife about the confrontation. She listened politely, excused herself and he headed to the liquor cabinet to make himself a stiff one.
His wife returned a couple of minutes later with a file. She showed him how much they had been charged by the same client when he painted their house in 1995 and then what the price was in 2009. It was two and a half times as much! Armed with the evidence, Eric drove to the client’s office in the morning, put on his angry face, and stormed in waving the painting contracts, demanding to know how it is that he’s expected to pay more when the contractor’s costs go up, but Eric’s cost increases somehow don’t count. He continued his rant and the client finally held his hands up in submission, called it even and agreed to pay the new rates. Two weeks later they had a beer together and laughed about the experience. Eric is still shaking his head.
Janice, in Phoenix, has a neighbor Marco who is also a client. The client owns an insurance agency and does very well. Once again, a great deal of time had gone by and the rates hadn’t kept up with costs. Marco has a big personality and is, as Janice puts it, intellectually aggressive. She had a strong sense of trepidation about approaching him to talk about the increase.
She made an appointment and met the client at his office. Laying out her case, she began explaining the reasons for the increase. Marco interrupted her and asked, in effect, “Are you telling me you’re going to charge me more money for doing my accounting?” Not knowing what would happen next, Janice nodded yes. He said nothing further, so she continued.
After a few minutes he interrupted her and said he had a great idea. He began explaining how this was a perfect opportunity for a quid pro quo – a tit for tat – he would consider paying the higher rates if she would consider expanding the coverages of the insurance she carried through his agency. Marco launched into an explanation of the advantages the upgrades he envisioned for her would bring, noting the risks covered, the reduced deductibles, the greater peace of mind, etc. Janice couldn’t get a word in edge-wise and realized very quickly that he’d turned the tables on her and now she was being pitched to add revenue to his agency instead of the other way around.
Taken completely out of her game plan, and feeling the situation slipping away, apparently Janice’s facial expression revealed the distress she was feeling. Marco paused, and then began chuckling. He reached across the table, patted her hand and apologized for upsetting her. He explained that he’s a sales guy; that he couldn’t help himself when faced with the temptation to, as he put it, “play around a little bit.” He told her he had been expecting an increase for the past couple of years and that she shouldn’t be concerned because he was OK with the change. Like Eric, Janice is probably still shaking her head.
Ray, whose practice is in Northwestern Florida, talked on the phone with one of several clients whose rates he was determined to increase. The client listened and then asked if he could get back to Ray. About a week later the client phoned and said that he’d obtained several bids for his accounting work and began naming some of the firms off and the rates they had quoted.
Now, we all know there are any number of questions related to what is included in “accounting services” and what is extra, and that if someone claims their rates are “low” you need to check into exactly what you will be getting for that price. Ray’s client didn’t do that. Instead, he simply obtained hourly charge rates, not the number of hours to perform any particular set of services. And, of course, this is meaningless for comparative purposes.
Nevertheless, the client pressed on, saying that he intended to conduct an “auction” for his business; that he’d select the most competitive firm to do his work. He was going to “accept email bids between the hours of 10:00 a.m. and noon” on the appointed day, etc. etc. Then, he’d take two days to evaluate the offers, and notify the winning bidder no later than, etc. etc.
Ray pointed out to me that his client owns a landscape maintenance business that is neither large nor especially profitable. He was only charging the guy about $2600 a year and wanted to raise him to approx. $3000. Ray decided he didn’t want to play and didn’t send a bid in. Three days later a competitor whom Ray considers to be a bottom feeder called and asked Ray to send over some of the client’s documents, to which Ray agreed. Later the same day the (former) client called over to boast about how he was now only paying $115 (!) per hour for his accounting work and how glad he was to have discovered Ray had been overcharging him all along.
Ray is very glad he decided not to bid. Some clients really shouldn’t be clients. Maybe you have a couple like that?
Friday, March 26, 2010
Wednesday, March 17, 2010
Successful Strategies For Raising Fees
In previous posts I have offered several reasons supporting why I believe it is a poor choice to raise fees in today’s economic environment. I have also written about tactics you can employ to maintain fee levels in the face of client pressure to reduce them.
But, what if there really is a strong reason (or even a need) to raise fees? For example, you may have a long time client who is paying you below market level and after an analysis you realize you are literally losing money with the client. Their fees need to be raised. Or, you realize your charge rates are below the market and to arrest your eroding profitability you need to raise your fees. Or, you acquire additional/upgraded capability (personnel, space, computers, etc.) and you want to not only cover these new costs, but you want your rates to reflect your practice’s higher service level.
There is a source we can draw from that tells us in clear terms the best strategies for raising your rates. That source is the group comprised of tens of thousands of sales people who sell goods to America’s businesses. The underlying challenge facing an accounting practice and the owner of a manufacturer of swimming pool sweepers, is exactly the same. Neither has a client/customer base wishing to pay more; both will encounter resistance, both want to reduce the number of lost clients/customers to the absolute minimum, and both want to implement the increase with a minimum of disruption. These “best practices” have been hard won, because poor technique offers up the potential for lost business, unhappy clients/customers and a very negative experience.
A) Understand the reason(s). First of all, ensure you really clarify to yourself why you need the price increase. What’s the rationale? What factors are relevant? This sounds self-evident, but you may be challenged by a client, e.g. “Maria, you say you wouldn’t do this unless you had to, but what does that really mean? Why do you have to?” In this instance you should be prepared to respond without stumbling around, sounding unsure and lacking conviction. As a general statement, you want to avoid talking specifics, i.e. “Our pretax profit percentage is down to only 17% and all the partners have had to reduce their annual bonus.” That’s too much information and doesn’t help anything.
B) Leverage your status as an owner and/or partner. You are a professional accountant and your client is well aware you understand numbers. Take the position that the increase is necessary (why else would you do it in today’s troubled economic times?) and is a final decision reached after much deliberation and analysis. Convey that it is final; the decision won’t be rescinded.
C) Discuss and offer suggestions how the blow can be softened. In industrial sales it is common to tell a client, “Arthur, the price of 24” rolled .060” steel is going up 9% in July. That gives you three months to place an order at the present price.” The idea is that it both generates an immediate sale and gives the customer a means to soften the impact and defer the increase’s effect. In an accounting world this may come out something like, “Victoria, for reasons I’ll explain in detail if you wish, we’ve concluded we have to increase our rates. Now, this won’t occur until July 1st. We have a couple of ways we can soften the impact of this. The first is that we can get your next quarterly filing accomplished at the lower rate. I’ll make sure that happens. Also, you also talked about doing a cost study analyzing the feasibility of opening the new sales office. If we can get going on that before July I can freeze that at today’s lower rate.”
D) Don’t surprise your best clients. It is overly impersonal and just bad form to send out invoices with previously unannounced higher rates. While a letter sent to all clients is OK as far as it goes, you will get far better results if you personally contact at least the top 20% - 25% of your clients. Face-to-face is best. If you have been proactive about maintaining contact with your “A” level clients (meetings, lunch, conversation when you see each other at the Elks, etc.) and there is an actual relationship, they expect this from you and will react much more positively.
E) Be empathetic. If your client gets angry or annoyed, let them do so. Don’t debate or argue (if you do, it may carry the suggestion that the increase is rescindable or negotiable). And, don’t, in effect, tell them they are wrong for being upset. After all, you’re telling them you’re your services are going to cost them more. When things settle down and you can continue your discussion, an effective approach is to talk about how you and your partners agonized for months about this; that it is necessary to maintain services, acquire key resources, etc. In other words, it was unavoidable. The idea is to give the client a plausible, believable rationale. That it makes business sense and gives them confidence that your decision was considered, sound and not capricious.
F) You might offer a delayed date of effectiveness. In addition to the techniques described above designed to soften the impact of the price increase, you also have the option of simply delaying the effective date in some instances. For example, you might compromise with a good client by agreeing to do their compliance work at the old price for the rest of the year, but the projections and P&L/balance sheet work will have to be at the higher rate.
G) Finally, your staff should know about the increase(s), when they become effective and how you would like them to react should a client broach the subject to them.
The foregoing best practices won’t guarantee your clients will openly embrace your upwardly revised fee structure, but will go a long way to ensuring the angst and potential loss of clients is kept to a minimum.
But, what if there really is a strong reason (or even a need) to raise fees? For example, you may have a long time client who is paying you below market level and after an analysis you realize you are literally losing money with the client. Their fees need to be raised. Or, you realize your charge rates are below the market and to arrest your eroding profitability you need to raise your fees. Or, you acquire additional/upgraded capability (personnel, space, computers, etc.) and you want to not only cover these new costs, but you want your rates to reflect your practice’s higher service level.
There is a source we can draw from that tells us in clear terms the best strategies for raising your rates. That source is the group comprised of tens of thousands of sales people who sell goods to America’s businesses. The underlying challenge facing an accounting practice and the owner of a manufacturer of swimming pool sweepers, is exactly the same. Neither has a client/customer base wishing to pay more; both will encounter resistance, both want to reduce the number of lost clients/customers to the absolute minimum, and both want to implement the increase with a minimum of disruption. These “best practices” have been hard won, because poor technique offers up the potential for lost business, unhappy clients/customers and a very negative experience.
A) Understand the reason(s). First of all, ensure you really clarify to yourself why you need the price increase. What’s the rationale? What factors are relevant? This sounds self-evident, but you may be challenged by a client, e.g. “Maria, you say you wouldn’t do this unless you had to, but what does that really mean? Why do you have to?” In this instance you should be prepared to respond without stumbling around, sounding unsure and lacking conviction. As a general statement, you want to avoid talking specifics, i.e. “Our pretax profit percentage is down to only 17% and all the partners have had to reduce their annual bonus.” That’s too much information and doesn’t help anything.
B) Leverage your status as an owner and/or partner. You are a professional accountant and your client is well aware you understand numbers. Take the position that the increase is necessary (why else would you do it in today’s troubled economic times?) and is a final decision reached after much deliberation and analysis. Convey that it is final; the decision won’t be rescinded.
C) Discuss and offer suggestions how the blow can be softened. In industrial sales it is common to tell a client, “Arthur, the price of 24” rolled .060” steel is going up 9% in July. That gives you three months to place an order at the present price.” The idea is that it both generates an immediate sale and gives the customer a means to soften the impact and defer the increase’s effect. In an accounting world this may come out something like, “Victoria, for reasons I’ll explain in detail if you wish, we’ve concluded we have to increase our rates. Now, this won’t occur until July 1st. We have a couple of ways we can soften the impact of this. The first is that we can get your next quarterly filing accomplished at the lower rate. I’ll make sure that happens. Also, you also talked about doing a cost study analyzing the feasibility of opening the new sales office. If we can get going on that before July I can freeze that at today’s lower rate.”
D) Don’t surprise your best clients. It is overly impersonal and just bad form to send out invoices with previously unannounced higher rates. While a letter sent to all clients is OK as far as it goes, you will get far better results if you personally contact at least the top 20% - 25% of your clients. Face-to-face is best. If you have been proactive about maintaining contact with your “A” level clients (meetings, lunch, conversation when you see each other at the Elks, etc.) and there is an actual relationship, they expect this from you and will react much more positively.
E) Be empathetic. If your client gets angry or annoyed, let them do so. Don’t debate or argue (if you do, it may carry the suggestion that the increase is rescindable or negotiable). And, don’t, in effect, tell them they are wrong for being upset. After all, you’re telling them you’re your services are going to cost them more. When things settle down and you can continue your discussion, an effective approach is to talk about how you and your partners agonized for months about this; that it is necessary to maintain services, acquire key resources, etc. In other words, it was unavoidable. The idea is to give the client a plausible, believable rationale. That it makes business sense and gives them confidence that your decision was considered, sound and not capricious.
F) You might offer a delayed date of effectiveness. In addition to the techniques described above designed to soften the impact of the price increase, you also have the option of simply delaying the effective date in some instances. For example, you might compromise with a good client by agreeing to do their compliance work at the old price for the rest of the year, but the projections and P&L/balance sheet work will have to be at the higher rate.
G) Finally, your staff should know about the increase(s), when they become effective and how you would like them to react should a client broach the subject to them.
The foregoing best practices won’t guarantee your clients will openly embrace your upwardly revised fee structure, but will go a long way to ensuring the angst and potential loss of clients is kept to a minimum.
Tuesday, March 9, 2010
You Have A Website; Why Not Make It Add Value?
As professional service firms move through the current recession with an eye to better days, each is making decisions about how they can best allocate their resources. Upgrading the computer system and/or software to improve productivity? Investing in more marketing? Culling the workforce of marginal performers and/or seeking upgraded skills among the accounting professionals who have been downsized? Taking advantage of low lease rates and relocating to upgraded offices?
Any of these may be the right choice for your practice, but one thing you can do that is inexpensive and has real upside potential value is taking another look at your web presence.
The reality is that the vast majority of accounting firms have what I call “placeholder” web sites. In other words, everyone has a site, so it was determined your practice should have one too. The money was spent on a web designer, some system was (hopefully) implemented to maintain it at reasonable intervals, and except for writing a check every now and then, you don’t ever think about it. So, is it actually doing anything for you?
My challenge to you is to reflect for a minute or two upon this state of affairs. You’ve already put the effort and money into creating a web presence. Unless you are the exception, your site is more or less just “there;” contributing essentially nothing to your marketing efforts. But, the hard work has already been done, so why not take another, considerably smaller step, and make it an effective component of your efforts to not only attract new clients to your practice, but to stay in contact with your existing clients?
The bar isn’t really set all that high. You aren’t competing against Amazon or the other really skilled online marketers. Instead, you are being compared to other accounting websites that are, in the main, ineffective. This is an opportunity to elevate your game and qualitatively differentiate your practice/firm from your competition.
There are specialists available who are highly skilled at optimizing your site. In fact, I’ll tell you about a couple in a moment. Both have worked with enough clients to establish track records of success and make it their business to be right on top of the latest internet marketing trends.
Yes, you have to write a check for their services, but you don’t have to invest much of your time at all. (And, their charge rates are a lot less than yours.) Even during the crush of tax season, you probably have the time to consult with these firms and have your enhanced presence up and running shortly after April 15th. Just in time for that summertime marketing push you’ve been promising to initiate, right?
The first outfit I’ll tell you about is Alesco Marketing. They’ve created hundreds of web sites for both professional service providers and other businesses. They are proven experts in effectively tying together the site’s design with how the web is really used. In other words, they design sites so they are a) easily found by prospective clients and search engines and, b) they are very user-friendly and contain the features visitors actually place value upon.
I think one of their most important strengths is that they have the experience and insight to stay on top of how marketing on the web is evolving and then adopting strategies to maintain their client’s advantage. Check out www.alescomarketing.com. If you contact them ask for the owners, Tim or Doug Williams.
By the way, if you would like a quick read that offers a sophisticated look at web marketing best practices, I recommend you order a copy of Doug’s latest book, “Website Marketing Mastery,” published in 2010. It is available through their website.
Another proven source for web expertise is E. Mochila. I believe they are unique in that their only business is creating and maintaining accounting web sites. Currently, they manage over 1800 CPA websites. They have a business model that operates somewhat like a subscription: for a low monthly fee they provide ongoing support, upgrades, client portals, newsletters, calculators, etc. You can check them out at www.emochila.com. If you would like more information, ask for Cameron Hendrick. He is intimately familiar with everything they offer.
In terms of marketing your services, your website presence will never be as important as consistently getting out and talking with people who are desirable prospects. But, it is an important part of the whole package that is you, your firm, its image and presence and, ultimately, how your are perceived in your marketplace.
Bottom line: it’s more than worth a couple of hours of your time to investigate how you can upgrade your online visibility.
Any of these may be the right choice for your practice, but one thing you can do that is inexpensive and has real upside potential value is taking another look at your web presence.
The reality is that the vast majority of accounting firms have what I call “placeholder” web sites. In other words, everyone has a site, so it was determined your practice should have one too. The money was spent on a web designer, some system was (hopefully) implemented to maintain it at reasonable intervals, and except for writing a check every now and then, you don’t ever think about it. So, is it actually doing anything for you?
My challenge to you is to reflect for a minute or two upon this state of affairs. You’ve already put the effort and money into creating a web presence. Unless you are the exception, your site is more or less just “there;” contributing essentially nothing to your marketing efforts. But, the hard work has already been done, so why not take another, considerably smaller step, and make it an effective component of your efforts to not only attract new clients to your practice, but to stay in contact with your existing clients?
The bar isn’t really set all that high. You aren’t competing against Amazon or the other really skilled online marketers. Instead, you are being compared to other accounting websites that are, in the main, ineffective. This is an opportunity to elevate your game and qualitatively differentiate your practice/firm from your competition.
There are specialists available who are highly skilled at optimizing your site. In fact, I’ll tell you about a couple in a moment. Both have worked with enough clients to establish track records of success and make it their business to be right on top of the latest internet marketing trends.
Yes, you have to write a check for their services, but you don’t have to invest much of your time at all. (And, their charge rates are a lot less than yours.) Even during the crush of tax season, you probably have the time to consult with these firms and have your enhanced presence up and running shortly after April 15th. Just in time for that summertime marketing push you’ve been promising to initiate, right?
The first outfit I’ll tell you about is Alesco Marketing. They’ve created hundreds of web sites for both professional service providers and other businesses. They are proven experts in effectively tying together the site’s design with how the web is really used. In other words, they design sites so they are a) easily found by prospective clients and search engines and, b) they are very user-friendly and contain the features visitors actually place value upon.
I think one of their most important strengths is that they have the experience and insight to stay on top of how marketing on the web is evolving and then adopting strategies to maintain their client’s advantage. Check out www.alescomarketing.com. If you contact them ask for the owners, Tim or Doug Williams.
By the way, if you would like a quick read that offers a sophisticated look at web marketing best practices, I recommend you order a copy of Doug’s latest book, “Website Marketing Mastery,” published in 2010. It is available through their website.
Another proven source for web expertise is E. Mochila. I believe they are unique in that their only business is creating and maintaining accounting web sites. Currently, they manage over 1800 CPA websites. They have a business model that operates somewhat like a subscription: for a low monthly fee they provide ongoing support, upgrades, client portals, newsletters, calculators, etc. You can check them out at www.emochila.com. If you would like more information, ask for Cameron Hendrick. He is intimately familiar with everything they offer.
In terms of marketing your services, your website presence will never be as important as consistently getting out and talking with people who are desirable prospects. But, it is an important part of the whole package that is you, your firm, its image and presence and, ultimately, how your are perceived in your marketplace.
Bottom line: it’s more than worth a couple of hours of your time to investigate how you can upgrade your online visibility.
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