When I am talking with a brand new client, I always ask about the client turnover in their own practice. I do this because turnover is a good overall indicator of how well their practice fulfills its client’s expectations. If the client turnover appears excessive, or if my client wants to reduce their turnover rate, then our analysis turns to individual factors that can affect client loyalty.
An obvious driver can be pricing. Most of my clients adjust their pricing at the beginning of a new calendar year. Not surprisingly, one or more of their clients may find the increase excessive and seek a lower cost provider. Most readers know that client size isn’t necessarily a factor when it comes to price sensitivity. Large clients can be just as price conscious as smaller, and it isn’t unheard of for the CFO of a major contributor to your practice’s revenue to call up and put the pressure on for some fee relief or an invoice adjustment.
It can be argued, of course, that any client whose primary concern is cost is never going to be motivated to stay with you except by a very competitive price structure. I’ve always assumed a given percentage of any practice’s clients are price sensitive and may be lost when fees are adjusted upward. It is almost a cost of business issue; some clients are just bound to leave. Nevertheless, no accountant wants a good client to leave, and so the challenge is to enhance the sense of loyalty they feel to you.
You do have some control over what percentage of your clients are primarily driven by price. If your practice has been built upon impersonal, price driven marketing, which I describe as advertisements delivered via any medium that say, in effect, “Your 1040 taxes prepared for as little as $149,” your client base will be highly price sensitive.
If you lose some of these people when fees are adjusted upward, you will in all likelihood be able to amp up your ad campaign and replace them. I am familiar with some 1040-based practices, and have learned they anticipate having not-insignificant client turnover each year and if it occurs, they adjust their marketing effort accordingly and deal with it. Their practices earn them a good living and in some ways are less draining and stressful because their relative lack of client involvement means they aren’t fighting and dying as their clients careen between various ups and downs.
If instead, you market your practice based upon a promise of service coupled with a close working relationship with your clients, the opportunity for greater loyalty and reduced turnover is greater. By its very nature, this approach means your clients will be relatively larger and fewer, because each will take more marketing effort. It is the process of successfully signing up these prospects that is the basis for this blog.
Client service levels are a more subtle, yet the most impactful factor in client loyalty. Assuming your fees are consistent with other local accountants, the key differentiating factor in client loyalty is how they perceive the treatment they are receiving from you and your support staff. Do they feel respected, important, valued, etc.? And, to state the obvious, accuracy and meeting filing deadlines are crucial.
As advocated ad nauseum in prior posts, I believe experience has demonstrated repeatedly that you should have at least three, and preferably four “touches” with clients during the calendar year. They need to “feel the love” as current phraseology would put it. All your clients? Probably not. If you have 200+ client you are too busy for that. However, I think the top 20 – 30% of your revenue producers are worthy candidates. More, if you have an exclusively high end practice.
Every client I have ever worked with who has wished to increase client loyalty/reduce turnover has been successful when they initiated a plan to ensure these “touches” occur on a consistent basis. Lunches, birthday and various life event greetings, planning meetings, shared social events, etc. all offer potential occasions to make contact.
It’s just like a recipe: then add a marketing plan that doesn’t emphasize price. Stir in accurate and timely client services and your client loyalty will be off the chart with virtually no turnover.
Wednesday, January 20, 2010
Are they REALLY an ideal prospect? – PART 2
I used to work with a good number of clients in the San Francisco Bay Area, and many of them were located within, or operationally connected to, Silicon Valley. The unique nature of the environment meant that there was a strong possibility that a new business venture would either expand rapidly or expire quickly with hardly a whimper; the employees immediately dispersing and reattaching themselves to the Next Big Thing.
Many national law and accounting firms recognized the upside potential and invested millions locating satellite offices in the area. Out of the many start ups arose Apple, Oracle and hundreds of other highly successful technology businesses. In the years following hundreds of millions of revenue dollars flowed to those firms that had placed their bets on the valley’s entrepreneurs.
How does this relate to you? Here’s a story to illustrate one possibility: Frank worked for one of the big accounting firms in Silicon Valley and experienced the explosive growth in his firm’s office. In 1999 he and his wife felt the whole California scene was becoming a bit much and moved back to Texas to be closer to family. He set up a one-person practice and began doing exactly what thousands of other accountants do – 1040s, small business compliance and tax, some transactional services and providing advice and counsel to his client base.
Frank didn’t forget what he’d seen in Silicon Valley and he began networking with start up and new business forums. He didn’t invest much of his time, maybe 5%, in this effort, but he’d seen enough successful entrepreneurs to be confident he’d know one when he saw one, and he felt he had been around enough business plans to have a good idea when a winner appeared. So, he was patient and kept his eyes open.
His patience was rewarded when he ran across a small company with some unique approaches to robotic miniaturization. Frank approached the engineer who was the force behind the effort and offered his services at a greatly reduced price in exchange for assurances of a continuing relationship if success was forthcoming (“we’ll bet on the future together”). A deal was struck and to fast forward to today, the little business became a big business and Frank’s firm’s annual billings for that one account are now approaching $200,000. Plus, out of that relationship have come several lucrative referrals. Ten years later, Frank’s one person firm is now a very profitable medium size firm.
The bottom line is that a really great prospect may not just be the one that offers immediate substantial billings, but may additionally be one offering a significant future upside.
How might you expose yourself to the entrepreneurs in your area? If you are in or near a large urban area there are seminars, incubators, on-line groups, etc. Could you provide a free or low cost presentation to help them create an accounting structure suitable for businesses with the potential of rapid growth? Perhaps a seminar discussing basic approaches to wealth retention for the suddenly successful? How about strategies for extending the life of first stage(s) investment cash? Venture capital ins and outs? Bank line strategies for rapidly growing businesses?
It goes without saying that for every so-called can’t miss venture twenty will fail and one might make it. But, if you invest just a small fraction of your business development time – like Frank did – in future winners, the payoff can be huge.
If you never hit one, well, you’ll have met some interesting people. Perhaps REALLY interesting. I mean, how boring can someone be who claims to have invented an implantable recorder so the implantee can actually re-live their alien abduction in stereo and HDTV once they get back to earth? (yes, someone actually invented that device)
A clever strategy employed by an accountant in Sacramento, CA is to approach patent attorneys with the goal of creating a relationship that can lead to growth opportunities with the attorney’s clients. I am told this tactic has worked very well for him. A nice collateral benefit of this methodology is that the attorney in all likelihood has a pretty good idea of not just the client’s financial condition but also an opinion of their intangible qualities, such as focus, dedication, maturity, energy, drive, reasonableness and other factors that can impact the probability of future success.
A more difficult challenge (because larger accounting firms have worked this ground for many years) is establishing relationships with venture capital firms and/or individuals. Obviously, these firms (as well as angel investors, later round financing entities, etc.) work very hard to separate the wheat from the chaff because their livelihood depends upon it. Many of them prefer to have “their” CFO installed to watch the investment, and there is no doubt they can greatly influence which accounting firm is hired by the company being financed. If you can nurture one or more of these relationships the upside can be dramatic.
However you identify your future growth prospect, at least charge enough to absorb your overhead and don’t commit to more than you are truly willing to do. Finally, get the agreement in writing. Create a suitable engagement letter detailing what you are going to do for the client and what you’ll receive in return.
Yes, they are long shots, but the payoff can be huge. The secret is to be selective and only devote a small percentage of your time chasing them down.
Many national law and accounting firms recognized the upside potential and invested millions locating satellite offices in the area. Out of the many start ups arose Apple, Oracle and hundreds of other highly successful technology businesses. In the years following hundreds of millions of revenue dollars flowed to those firms that had placed their bets on the valley’s entrepreneurs.
How does this relate to you? Here’s a story to illustrate one possibility: Frank worked for one of the big accounting firms in Silicon Valley and experienced the explosive growth in his firm’s office. In 1999 he and his wife felt the whole California scene was becoming a bit much and moved back to Texas to be closer to family. He set up a one-person practice and began doing exactly what thousands of other accountants do – 1040s, small business compliance and tax, some transactional services and providing advice and counsel to his client base.
Frank didn’t forget what he’d seen in Silicon Valley and he began networking with start up and new business forums. He didn’t invest much of his time, maybe 5%, in this effort, but he’d seen enough successful entrepreneurs to be confident he’d know one when he saw one, and he felt he had been around enough business plans to have a good idea when a winner appeared. So, he was patient and kept his eyes open.
His patience was rewarded when he ran across a small company with some unique approaches to robotic miniaturization. Frank approached the engineer who was the force behind the effort and offered his services at a greatly reduced price in exchange for assurances of a continuing relationship if success was forthcoming (“we’ll bet on the future together”). A deal was struck and to fast forward to today, the little business became a big business and Frank’s firm’s annual billings for that one account are now approaching $200,000. Plus, out of that relationship have come several lucrative referrals. Ten years later, Frank’s one person firm is now a very profitable medium size firm.
The bottom line is that a really great prospect may not just be the one that offers immediate substantial billings, but may additionally be one offering a significant future upside.
How might you expose yourself to the entrepreneurs in your area? If you are in or near a large urban area there are seminars, incubators, on-line groups, etc. Could you provide a free or low cost presentation to help them create an accounting structure suitable for businesses with the potential of rapid growth? Perhaps a seminar discussing basic approaches to wealth retention for the suddenly successful? How about strategies for extending the life of first stage(s) investment cash? Venture capital ins and outs? Bank line strategies for rapidly growing businesses?
It goes without saying that for every so-called can’t miss venture twenty will fail and one might make it. But, if you invest just a small fraction of your business development time – like Frank did – in future winners, the payoff can be huge.
If you never hit one, well, you’ll have met some interesting people. Perhaps REALLY interesting. I mean, how boring can someone be who claims to have invented an implantable recorder so the implantee can actually re-live their alien abduction in stereo and HDTV once they get back to earth? (yes, someone actually invented that device)
A clever strategy employed by an accountant in Sacramento, CA is to approach patent attorneys with the goal of creating a relationship that can lead to growth opportunities with the attorney’s clients. I am told this tactic has worked very well for him. A nice collateral benefit of this methodology is that the attorney in all likelihood has a pretty good idea of not just the client’s financial condition but also an opinion of their intangible qualities, such as focus, dedication, maturity, energy, drive, reasonableness and other factors that can impact the probability of future success.
A more difficult challenge (because larger accounting firms have worked this ground for many years) is establishing relationships with venture capital firms and/or individuals. Obviously, these firms (as well as angel investors, later round financing entities, etc.) work very hard to separate the wheat from the chaff because their livelihood depends upon it. Many of them prefer to have “their” CFO installed to watch the investment, and there is no doubt they can greatly influence which accounting firm is hired by the company being financed. If you can nurture one or more of these relationships the upside can be dramatic.
However you identify your future growth prospect, at least charge enough to absorb your overhead and don’t commit to more than you are truly willing to do. Finally, get the agreement in writing. Create a suitable engagement letter detailing what you are going to do for the client and what you’ll receive in return.
Yes, they are long shots, but the payoff can be huge. The secret is to be selective and only devote a small percentage of your time chasing them down.
Are they REALLY an ideal prospect?
I’ve received several comments from readers who have had bad experiences while prospecting for new clients. A recurring theme is that they hadn’t previously experienced these problems, suggesting that the present state of the economy may be introducing some new wrinkles into the finding-new-clients challenge.
Marsha in Florida attended a local networking get together and met a couple who own several home/internet based businesses. She wasn’t familiar with the business model, so Marsha began asking some questions about how they made it all work. One thing led to another and she was told they were not happy with their present accounting services and would prefer to work with an accountant who understood their economic model and could provide advice and financial projections for new ideas as well as competent compliance and tax work.
Marsha rose to the moment and described how she might be of assistance; talking about her practice areas, how she interfaced with clients, and the like. A meeting at the couple’s house was scheduled.
The house looked very impressive as Marsha drove up and when she saw the computers, boxes of products ready to ship, a dedicated shipping area and a couple of employees scurrying about, she felt comfortable she was viewing a going concern.
A deal was struck and Marsha drove away with a box of records and data. She worked up a needed refiling, did some timely compliance work, cleaned up a couple of other areas and completed everything by the agreed upon due date.
She submitted a bill for $2800. In the meantime, some more compliance work was due, so she prepared that also. The bill was now $4100. To make a long story short, the bill still hasn’t been paid after over 180 days. Marsha had another client run a credit check and found the couple was in arrears to practically everyone, including the lease payments on the big house. She eventually found out the prior accountant hadn’t been paid either, which explained the couple’s presence at the networking meeting.
Marsha had previously operated on trust and her instinct. She’s changed her approach when evaluating prospective clients in light of this experience, and will be considerably more careful in the future.
Gino in New York has a lot of clients who invest in real estate. The essence of his practice is working with high wealth individuals and providing accounting services for their (primarily) commercial real estate investments. Most of it is old money, and his practice has been in mild decline for several years as clients passed away, sold assets to free up cash and generally tightened their belts in a declining market.
Sarah, a client and heiress, recommended he talk with a gentleman – we’ll call him Stephen - she had done some business with who she felt would be a “wonderful” contact for Gino. A meeting was set and Gino was introduced to a man in his 50s, quite elegant, and apparently heavily involved in commercial real estate.
Stephen told Gino he had heard “great things” about him from Sarah and other clients they shared and that Stephen was always on the lookout for an accountant who understood the nuances surrounding real estate investments of this magnitude. Suitably flattered, Gino made his case that he was indeed the right guy for any of Stephen or any of his clients who might need accounting services.
At a subsequent lunch, Stephen again talked about how Gino’s revenues could really take a jump if he began doing work for his clients, and Stephen promised to “see what he could do” to make this happen.
When Gino did Sarah’s 2008 taxes he noticed some irregularities in the data for one of the properties. As it turned out, it was the property Stephen had brought Sarah in on. He was struck by a series of events and transactions completed just before the end of the reporting period that had a disproportionately positive effect upon operational results.
When he called Stephen, his questions were downplayed and deflected, and Stephen again emphasized how Gino’s skills could be particularly valuable to some of Stephen’s large clients.
With the hair rising on his neck and sensing a scam, Gino carefully began to probe around. Sure enough, Stephen was being investigated. Several complaints had been filed and at least one other accountant had blown the whistle on him.
In retrospect, Gino believes Stephen’s vision of more revenue was a subtle bribe to either keep quiet or perhaps it was a first step in recruiting him to become part of the scam. In the following months Gino has been drawn further into the investigation and spent untold hours dealing with frightened clients.
It’s tough out there. A lot of people are in trouble. Why is your prospect looking for a new accountant? Are you sure it isn’t because they couldn’t pay the last one? None of us can afford to expend hours on activities that don’t produce collectible revenue, let alone spending billable time participating in a fraud investigation.
Be careful. When in doubt, run a credit check. Another strategy is to use retainers, so you are – even if it is only partially – working with the client’s money. When in doubt, check ‘em out!
Blogger’s Note:
You may have noticed I’m not posting as often as I have in the past and this is because I began Proton treatment for prostate cancer a month ago. My prognosis is excellent and the treatments will last through mid-January. In my case, the side effects are tiredness. Coupling that with the several hours each day dedicated to going and coming, standing by, dressing/undressing, getting zapped, etc. and my current production is less than stellar.
By the way, if any of you of the male persuasion are or in the future become similarly afflicted, I can not speak more highly of the Loma Linda Proton Center in Loma Linda, CA. Incredible technology, facility and people. Check it out. I’m very glad I did the research and made what I strongly believe to be the correct treatment choice. Oh, and a final note, they treat over 40 different types of cancer and are just now embarking upon a breast cancer study and looking for volunteers.
Marsha in Florida attended a local networking get together and met a couple who own several home/internet based businesses. She wasn’t familiar with the business model, so Marsha began asking some questions about how they made it all work. One thing led to another and she was told they were not happy with their present accounting services and would prefer to work with an accountant who understood their economic model and could provide advice and financial projections for new ideas as well as competent compliance and tax work.
Marsha rose to the moment and described how she might be of assistance; talking about her practice areas, how she interfaced with clients, and the like. A meeting at the couple’s house was scheduled.
The house looked very impressive as Marsha drove up and when she saw the computers, boxes of products ready to ship, a dedicated shipping area and a couple of employees scurrying about, she felt comfortable she was viewing a going concern.
A deal was struck and Marsha drove away with a box of records and data. She worked up a needed refiling, did some timely compliance work, cleaned up a couple of other areas and completed everything by the agreed upon due date.
She submitted a bill for $2800. In the meantime, some more compliance work was due, so she prepared that also. The bill was now $4100. To make a long story short, the bill still hasn’t been paid after over 180 days. Marsha had another client run a credit check and found the couple was in arrears to practically everyone, including the lease payments on the big house. She eventually found out the prior accountant hadn’t been paid either, which explained the couple’s presence at the networking meeting.
Marsha had previously operated on trust and her instinct. She’s changed her approach when evaluating prospective clients in light of this experience, and will be considerably more careful in the future.
Gino in New York has a lot of clients who invest in real estate. The essence of his practice is working with high wealth individuals and providing accounting services for their (primarily) commercial real estate investments. Most of it is old money, and his practice has been in mild decline for several years as clients passed away, sold assets to free up cash and generally tightened their belts in a declining market.
Sarah, a client and heiress, recommended he talk with a gentleman – we’ll call him Stephen - she had done some business with who she felt would be a “wonderful” contact for Gino. A meeting was set and Gino was introduced to a man in his 50s, quite elegant, and apparently heavily involved in commercial real estate.
Stephen told Gino he had heard “great things” about him from Sarah and other clients they shared and that Stephen was always on the lookout for an accountant who understood the nuances surrounding real estate investments of this magnitude. Suitably flattered, Gino made his case that he was indeed the right guy for any of Stephen or any of his clients who might need accounting services.
At a subsequent lunch, Stephen again talked about how Gino’s revenues could really take a jump if he began doing work for his clients, and Stephen promised to “see what he could do” to make this happen.
When Gino did Sarah’s 2008 taxes he noticed some irregularities in the data for one of the properties. As it turned out, it was the property Stephen had brought Sarah in on. He was struck by a series of events and transactions completed just before the end of the reporting period that had a disproportionately positive effect upon operational results.
When he called Stephen, his questions were downplayed and deflected, and Stephen again emphasized how Gino’s skills could be particularly valuable to some of Stephen’s large clients.
With the hair rising on his neck and sensing a scam, Gino carefully began to probe around. Sure enough, Stephen was being investigated. Several complaints had been filed and at least one other accountant had blown the whistle on him.
In retrospect, Gino believes Stephen’s vision of more revenue was a subtle bribe to either keep quiet or perhaps it was a first step in recruiting him to become part of the scam. In the following months Gino has been drawn further into the investigation and spent untold hours dealing with frightened clients.
It’s tough out there. A lot of people are in trouble. Why is your prospect looking for a new accountant? Are you sure it isn’t because they couldn’t pay the last one? None of us can afford to expend hours on activities that don’t produce collectible revenue, let alone spending billable time participating in a fraud investigation.
Be careful. When in doubt, run a credit check. Another strategy is to use retainers, so you are – even if it is only partially – working with the client’s money. When in doubt, check ‘em out!
Blogger’s Note:
You may have noticed I’m not posting as often as I have in the past and this is because I began Proton treatment for prostate cancer a month ago. My prognosis is excellent and the treatments will last through mid-January. In my case, the side effects are tiredness. Coupling that with the several hours each day dedicated to going and coming, standing by, dressing/undressing, getting zapped, etc. and my current production is less than stellar.
By the way, if any of you of the male persuasion are or in the future become similarly afflicted, I can not speak more highly of the Loma Linda Proton Center in Loma Linda, CA. Incredible technology, facility and people. Check it out. I’m very glad I did the research and made what I strongly believe to be the correct treatment choice. Oh, and a final note, they treat over 40 different types of cancer and are just now embarking upon a breast cancer study and looking for volunteers.
Even Good Business Developers Can Strike Out
A CPA – we’ll call him Tom – had a great prospect handed to him by Ray, a consultant who has been a reliable referral source for many years. The prospect was a good size commercial interior design firm with historic accounting billings in the $20,000 range.
Even better, Ray was going to be at the meeting where Tom’s firm would be evaluated as a prospective provider of accounting services. Further, Tom’s competition was a local accountant who Tom knew did not have nearly his familiarity with design firm tax and accounting issues.
The topping on the business development cake was that Tom knew Ray had given Tom’s firm an excellent recommendation because Tom already served several of Ray’s design and architectural clients, all of whom were satisfied with his firm’s services.
The meeting attendees would consist of Tom, Ray and Joyce, one of the prospect’s owners.
Tom was unable to see the prospect’s financials and tax returns until the beginning of the meeting. This was not a problem – in fact it was probably an advantage – because of Tom’s nuanced knowledge in this area. He scanned the documents and quickly confirmed the prior accountants had not taken advantages of several strategies to reduce the prospect’s tax exposure.
Knowing it was highly unlikely his competition would know about these solutions, he exploited this knowledge gap by explaining to Joyce how her firm could improve her bottom line.
Ray, while not an accountant, has a sophisticated lay understanding of the subject, and with Ray’s occasional input Tom was able to illustrate in concrete terms why Tom’s firm was the desired choice for Joyce’s design firm.
The meeting adjourned cordially and on time. Tom was told a decision would be made in a day or two. Tom has a strong record as a successful business developer and walked away with a very positive feeling.
Two days later Tom was told by Ray his firm didn’t get the engagement.
How could a “can’t miss” prospect, a potential contributor of $20,000+/- to the firm’s revenue, get away? What went wrong?
If you have been reading all of the approximately 60 prior postings of this blog, you already have a good idea of why Tom’s competitor got the work.
Let’s begin with a truism you MUST be aware of: unless your prospect is exceptionally knowledgeable, or the engagement has a highly unique nature to it (I have an investment … it’s a fractional share in an offshore oil rig owned by Royal Dutch Shell … do you know anything about that?), they think all CPAs are capable of doing a decent job.
As it turned out, Joyce had taken some notes as Tom made suggestions to her and when she met with his competitor, Charles, she asked Charles if he was aware of the various approaches. Ray reported that Charles simply nodded and smiled, muttering an occasional, “Yes, that’s standard treatment,” and “I can see he (Tom) is up to speed.” Ray knew he probably didn’t have a clue, but it wasn’t his place to say something. And Joyce never considered that Charles and Tom might have a significant knowledge gap between them. After all, both their cards say CPA; both have accounting degrees and both practice accounting in the area. Tom’s demonstration of knowledge accomplished nothing.
The second factor is that there was a reason why Joyce’s firm fired the prior accountant. Why was that? What behavior do they need assurances will not be repeated by the new firm? Tom never asked.
Charles asked Joyce what happened with the fired firm and was told they wouldn’t return calls, had missed a couple of deadlines, quoted a five figure fee for a project and then came in 50% higher with no advance warning, and never really demonstrated any particular interest her firm’s business. Charles ticked off the reasons why that would, of course, NEVER happen with his firm and made a real point of emphasizing that Joyce could call him anytime, no matter the problem, etc., etc.
You MUST discover the prospect’s needs, desires, fears and motivations. Those factors are what they feel are the most important considerations. Put simply, they have an itch and they’ll hire the outfit they think will do the best job to scratch it.
Tom knows all this. He’s an excellent business developer and has a large and profitable book of business. But, this so-called “can’t miss” turned his head, got him away from the basics, and reminded him how you can never ignore the basics.
Even better, Ray was going to be at the meeting where Tom’s firm would be evaluated as a prospective provider of accounting services. Further, Tom’s competition was a local accountant who Tom knew did not have nearly his familiarity with design firm tax and accounting issues.
The topping on the business development cake was that Tom knew Ray had given Tom’s firm an excellent recommendation because Tom already served several of Ray’s design and architectural clients, all of whom were satisfied with his firm’s services.
The meeting attendees would consist of Tom, Ray and Joyce, one of the prospect’s owners.
Tom was unable to see the prospect’s financials and tax returns until the beginning of the meeting. This was not a problem – in fact it was probably an advantage – because of Tom’s nuanced knowledge in this area. He scanned the documents and quickly confirmed the prior accountants had not taken advantages of several strategies to reduce the prospect’s tax exposure.
Knowing it was highly unlikely his competition would know about these solutions, he exploited this knowledge gap by explaining to Joyce how her firm could improve her bottom line.
Ray, while not an accountant, has a sophisticated lay understanding of the subject, and with Ray’s occasional input Tom was able to illustrate in concrete terms why Tom’s firm was the desired choice for Joyce’s design firm.
The meeting adjourned cordially and on time. Tom was told a decision would be made in a day or two. Tom has a strong record as a successful business developer and walked away with a very positive feeling.
Two days later Tom was told by Ray his firm didn’t get the engagement.
How could a “can’t miss” prospect, a potential contributor of $20,000+/- to the firm’s revenue, get away? What went wrong?
If you have been reading all of the approximately 60 prior postings of this blog, you already have a good idea of why Tom’s competitor got the work.
Let’s begin with a truism you MUST be aware of: unless your prospect is exceptionally knowledgeable, or the engagement has a highly unique nature to it (I have an investment … it’s a fractional share in an offshore oil rig owned by Royal Dutch Shell … do you know anything about that?), they think all CPAs are capable of doing a decent job.
As it turned out, Joyce had taken some notes as Tom made suggestions to her and when she met with his competitor, Charles, she asked Charles if he was aware of the various approaches. Ray reported that Charles simply nodded and smiled, muttering an occasional, “Yes, that’s standard treatment,” and “I can see he (Tom) is up to speed.” Ray knew he probably didn’t have a clue, but it wasn’t his place to say something. And Joyce never considered that Charles and Tom might have a significant knowledge gap between them. After all, both their cards say CPA; both have accounting degrees and both practice accounting in the area. Tom’s demonstration of knowledge accomplished nothing.
The second factor is that there was a reason why Joyce’s firm fired the prior accountant. Why was that? What behavior do they need assurances will not be repeated by the new firm? Tom never asked.
Charles asked Joyce what happened with the fired firm and was told they wouldn’t return calls, had missed a couple of deadlines, quoted a five figure fee for a project and then came in 50% higher with no advance warning, and never really demonstrated any particular interest her firm’s business. Charles ticked off the reasons why that would, of course, NEVER happen with his firm and made a real point of emphasizing that Joyce could call him anytime, no matter the problem, etc., etc.
You MUST discover the prospect’s needs, desires, fears and motivations. Those factors are what they feel are the most important considerations. Put simply, they have an itch and they’ll hire the outfit they think will do the best job to scratch it.
Tom knows all this. He’s an excellent business developer and has a large and profitable book of business. But, this so-called “can’t miss” turned his head, got him away from the basics, and reminded him how you can never ignore the basics.
Monday, November 2, 2009
Learning & Teaching Business Development – Part 4: Teaching
The prior two posts took an overview look at the challenges of teaching students how to become effective business developers. This post concludes the Teaching thread.
When each meeting is concluded, the student makes a critique of how it went. They should explain to their instructor the good, bad and ugly of the meeting and what they – the student – have learned from the experience.
Remember that the student, who is almost invariably younger, possibly considerably younger, and doesn’t enjoy partner status, has neither the presence, experience nor clout of a more senior member of the firm. For this reason, expectations and goals should be adjusted downward accordingly.
When the student is ready to get their feet wet, they should be given prospects generated from the firm’s marketing and/or networking efforts that can be described as simple and straightforward. If they’ve accompanied more senior accountants on at least four or five actual business development meetings and otherwise seem to be “getting it,” I think it’s time to let them solo.
To get the experience and practice, they should over-prepare for the meeting. The meeting plan I like for the first solo effort is to go in with the idea the student will touch all phases of the method they’ve been taught. However, only three elements will be really focused upon because if they try to be perfect on the whole method it will simply be too much, too soon. That too frequently leads to discouragement. Just commit to do a few things “right” in the beginning and then expand and ramp up expectations.
The first element is the preparation. The second element is the phase that makes up the first five minutes of the meeting; the “make a good first impression” phase. The third is to decide in advance how the student will ask for the prospect’s business at the end of the meeting. Usually, it will just be one or two sentences, e.g. “I think we’ve covered everything Ted. How would you like to proceed?” If they don’t get this in mind in advance I’ve found they can get very tongue-tied when the moment arrives.
For the period extending from the “good impression” phase to when the “close,” if necessary, occurs, the newly-soloing student only has to remember to ask questions to see what the prospect thinks is important and explain briefly how they/the firm can solve these issues. Just muddle through the process initially; expand the envelope as time passes.
None of this has to be perfect for it to be effective. You'll probably be a skeptic when I say this, but if you only did what is written in this and the prior paragraph you would be a superior business developer than at least 75% of the accountants in your trading area. Probably more.
For subsequent prospects, the student is expected to master more of the lements until they have become comfortable with the entire method. My experience suggests it will take at least 20 meetings for this to occur.
Once the teacher thinks their student has become reasonably competent with the method, I suggest the student take the lead on a business development meeting and bring the teacher along as the observer. Kind of like a check ride when a co-pilot is promoted to captain. If it doesn’t go as well as hoped, then do it again.
When you are satisfied the student has sufficiently mastered the method, it is “graduation” time. They are thereafter assigned prospects with the assumption they will routinely convert them into clients.
When each meeting is concluded, the student makes a critique of how it went. They should explain to their instructor the good, bad and ugly of the meeting and what they – the student – have learned from the experience.
Remember that the student, who is almost invariably younger, possibly considerably younger, and doesn’t enjoy partner status, has neither the presence, experience nor clout of a more senior member of the firm. For this reason, expectations and goals should be adjusted downward accordingly.
When the student is ready to get their feet wet, they should be given prospects generated from the firm’s marketing and/or networking efforts that can be described as simple and straightforward. If they’ve accompanied more senior accountants on at least four or five actual business development meetings and otherwise seem to be “getting it,” I think it’s time to let them solo.
To get the experience and practice, they should over-prepare for the meeting. The meeting plan I like for the first solo effort is to go in with the idea the student will touch all phases of the method they’ve been taught. However, only three elements will be really focused upon because if they try to be perfect on the whole method it will simply be too much, too soon. That too frequently leads to discouragement. Just commit to do a few things “right” in the beginning and then expand and ramp up expectations.
The first element is the preparation. The second element is the phase that makes up the first five minutes of the meeting; the “make a good first impression” phase. The third is to decide in advance how the student will ask for the prospect’s business at the end of the meeting. Usually, it will just be one or two sentences, e.g. “I think we’ve covered everything Ted. How would you like to proceed?” If they don’t get this in mind in advance I’ve found they can get very tongue-tied when the moment arrives.
For the period extending from the “good impression” phase to when the “close,” if necessary, occurs, the newly-soloing student only has to remember to ask questions to see what the prospect thinks is important and explain briefly how they/the firm can solve these issues. Just muddle through the process initially; expand the envelope as time passes.
None of this has to be perfect for it to be effective. You'll probably be a skeptic when I say this, but if you only did what is written in this and the prior paragraph you would be a superior business developer than at least 75% of the accountants in your trading area. Probably more.
For subsequent prospects, the student is expected to master more of the lements until they have become comfortable with the entire method. My experience suggests it will take at least 20 meetings for this to occur.
Once the teacher thinks their student has become reasonably competent with the method, I suggest the student take the lead on a business development meeting and bring the teacher along as the observer. Kind of like a check ride when a co-pilot is promoted to captain. If it doesn’t go as well as hoped, then do it again.
When you are satisfied the student has sufficiently mastered the method, it is “graduation” time. They are thereafter assigned prospects with the assumption they will routinely convert them into clients.
Friday, October 16, 2009
Learning & Teaching Business Development – Part 3: Teaching
The prior post took an overview look at the challenges of teaching students how to become effective business developers.
In summary, Rule #1 was you can’t teach your student to do it “your way” unless your interpersonal styles are very similar. Most often, they aren’t. Rule #2 is that accountants learn business development best when they do so by taking bite size bits within a logical structure. You can either create one or use mine. Rule #3 is the lessons cannot be learned intellectually. Instead, they must first be understood and then practiced. In the hundreds of clients I’ve worked with, I have never seen even one who could ace it the first few times. It is better to make your initial (and usually more egregious) mistakes in a training environment where there is no money on the table.
Let’s get right to exploring the specific actions you can take to effectively teach your student to become a competent business developer.
Create or obtain an outline, manual or book of the method you will be using. The student should have a decent grasp of the overall structure before you begin. Break it down into chapters, phases, stages, milestones, or in some other manner to create bite-size segments that can be isolated, discussed and eventually practiced.
My suggestion is to always connect each lesson or discussion to real or constructed client situations. Every discussion with your student should tie the topic to a real world setting and context. If possible, always use examples that reflect the real world the student will be facing when they are implementing the lessons.
Once the basic “rules” for a given phase (e.g. how to prepare for a business development meeting) are covered, I believe you will achieve a better level of comprehension if you switch to a Socratic teaching method. Instead of simply nodding that they understand what you are saying, you ask them a series of questions to draw the points of the lesson back out of the student, thereby ensuring they really do understand.
For example, you might say, “Laura, we’ve taken a look at an overview of how you prepare for a business development meeting. Let’s explore it in more depth. How do you think your preparation might differ if you knew you were only meeting with one person vs. if you weren’t sure how many people might be in the meeting?” or “How would your preparation change if you were meeting with the owner versus the CFO?”
In short, have the student demonstrate to you they really do understand the lesson content.
When the student has begun to get the gist of how business development works my experience is that it is good practice to get them out in the field right away. Not on their own, but accompanying more experienced accountants to real meetings with real prospects.
This can begin by having the student do the preparation for the first meeting they will be attending. Once this is completed the teacher and student should develop a meeting plan so each attendee’s role is defined.
A proven way to structure the first training meeting is for the “lead” accountant to take a close look at the prospect’s situation and identify a given area that has a degree of potential complexity to it. Let’s use 1031 exchanges as an example. Then, when the meeting introductions are made, the student is introduced something like this, “Joan, I’ve brought Pat with me because I see you are considering making the sale of your warehouse subject to a 1031 exchange. He probably has the most current knowledge of anyone in our office about these transactions and their tax implications. His input may be valuable in our discussion.” (Obviously, Pat will bone up on 1031 exchanges before the meeting.)
NOTE: when two or more accountants attend a business development meeting things can go quite wrong in terms of coordination, presenting a united front to the prospect, etc. My blog archive is at (http://acctbizdevelopment.blogspot.com). Go over on the right column, scroll down, click 2008, then click April, then click “Who’s On First.” About halfway down it talks about having a meeting plan. The text that follows gives you some ideas about how to ensure your presentation will go smoothly.
This will be too long. We’ll conclude with Part 4 next week.
In summary, Rule #1 was you can’t teach your student to do it “your way” unless your interpersonal styles are very similar. Most often, they aren’t. Rule #2 is that accountants learn business development best when they do so by taking bite size bits within a logical structure. You can either create one or use mine. Rule #3 is the lessons cannot be learned intellectually. Instead, they must first be understood and then practiced. In the hundreds of clients I’ve worked with, I have never seen even one who could ace it the first few times. It is better to make your initial (and usually more egregious) mistakes in a training environment where there is no money on the table.
Let’s get right to exploring the specific actions you can take to effectively teach your student to become a competent business developer.
Create or obtain an outline, manual or book of the method you will be using. The student should have a decent grasp of the overall structure before you begin. Break it down into chapters, phases, stages, milestones, or in some other manner to create bite-size segments that can be isolated, discussed and eventually practiced.
My suggestion is to always connect each lesson or discussion to real or constructed client situations. Every discussion with your student should tie the topic to a real world setting and context. If possible, always use examples that reflect the real world the student will be facing when they are implementing the lessons.
Once the basic “rules” for a given phase (e.g. how to prepare for a business development meeting) are covered, I believe you will achieve a better level of comprehension if you switch to a Socratic teaching method. Instead of simply nodding that they understand what you are saying, you ask them a series of questions to draw the points of the lesson back out of the student, thereby ensuring they really do understand.
For example, you might say, “Laura, we’ve taken a look at an overview of how you prepare for a business development meeting. Let’s explore it in more depth. How do you think your preparation might differ if you knew you were only meeting with one person vs. if you weren’t sure how many people might be in the meeting?” or “How would your preparation change if you were meeting with the owner versus the CFO?”
In short, have the student demonstrate to you they really do understand the lesson content.
When the student has begun to get the gist of how business development works my experience is that it is good practice to get them out in the field right away. Not on their own, but accompanying more experienced accountants to real meetings with real prospects.
This can begin by having the student do the preparation for the first meeting they will be attending. Once this is completed the teacher and student should develop a meeting plan so each attendee’s role is defined.
A proven way to structure the first training meeting is for the “lead” accountant to take a close look at the prospect’s situation and identify a given area that has a degree of potential complexity to it. Let’s use 1031 exchanges as an example. Then, when the meeting introductions are made, the student is introduced something like this, “Joan, I’ve brought Pat with me because I see you are considering making the sale of your warehouse subject to a 1031 exchange. He probably has the most current knowledge of anyone in our office about these transactions and their tax implications. His input may be valuable in our discussion.” (Obviously, Pat will bone up on 1031 exchanges before the meeting.)
NOTE: when two or more accountants attend a business development meeting things can go quite wrong in terms of coordination, presenting a united front to the prospect, etc. My blog archive is at (http://acctbizdevelopment.blogspot.com). Go over on the right column, scroll down, click 2008, then click April, then click “Who’s On First.” About halfway down it talks about having a meeting plan. The text that follows gives you some ideas about how to ensure your presentation will go smoothly.
This will be too long. We’ll conclude with Part 4 next week.
Monday, October 5, 2009
Learning & Teaching Business Development – Part 2: Teaching
The last post addressed the two foundational keys underpinning the student’s journey to become a truly superior business developer. The first is they have to adopt an approach that allows them to be themselves. The second is they must understand and practice the people skills that allow them to establish a strong rapport with their prospect.
When you select prospective students, there is one overriding concern: they MUST want to learn business development. My experience, teaching literally hundreds of clients how to identify, approach and convert prospects into clients has taught me The One Great Truth – learning effective business development is impossible for those individuals who are predisposed not to.
They know their manager wants them to learn; they know any thoughts of eventual partnership depend upon them learning; they know their income will never rise to the level they desire unless they learn, but they still won’t/can’t do it! This is a whole separate subject, but as a teacher who is busy with your own practice you don’t have time for students who can’t or won’t learn, whatever the reason.
Another lesson from my experience that may be helpful is that the average accountant doesn’t need any additive technical training as a precursor to learning business development skills. The reason I say this is because they’re going to be starting with “basic” prospective clients with issues that are mainstream for the firm’s practice focus. If the student needs specific upgrading of their technical skills it can be done on their time.
A final lesson is that you will get much greater mileage by focusing upon teaching the humanistic side of the equation. It is that element which is a foundational key for your student to become an über successful business developer.
Now to specifics.
Rule #1is that unless your interpersonal style and that of the individual you are teaching are very similar, you will almost NEVER be successful teaching them how to do it “your” way.
They won’t be able to do it because they’ll be acting. Even if they are good actors, the greater probability is the prospect will sense the disconnect, and the accountant will feel uncomfortable because they aren’t in their own skin. In the long run, the odds are greatly stacked against success if you force feed an unnatural style upon your student.
Your challenge is to devise approaches where your student can be effective but do so in their own skin.
Rule #2 is creating a structure or process for your student. Accountants are very good at operating within a framework of rules and predictability. As a teacher, you will be better served by providing such a structure. It is true a highly skilled professional salesperson can “wing it” from the first moment they begin talking with a prospect, but your student can’t.
I suggest breaking down the business development process into several phases. This creates bite size segments the student can deal with. And, each segment falls within a general sequence, which is easy to comprehend and learn. What you end up with will be something like the following:
The first segment is approaching prospects. I believe this is best taught by selecting leads generated from referrals, responses to the firm’s marketing efforts, etc. which can be described as simple or uncomplicated. An accountant who is just being introduced to business development should never be encouraged to initiate contact with a so-called “cold” prospect. This is a recipe for almost immediate discouragement and frustration.
Number two is preparation. What should be done to get ready for your business development meeting with the prospect?
Number three are the protocols surrounding the first few minutes together. Who sits where, how to avoid any social gaffes, handling the paperwork you’ve brought to the meeting, etc.
Number four is what you actually ask and say to the prospect. What subjects will be the highest priority? How should they be broached? Is there a preferable sequence?
Number five is concluding the meeting. What will you say at the meeting’s end? Is there a chance to secure the engagement? What do you do is no decision is forthcoming? What if they say “no?”
There are some manual excerpts at www.cpaprofitplus.com. In Section 2 of the Table of Contents there is a general sequence you can use as-is or to develop your own approach.
Rule #3 is that the skills you teach MUST BE PRACTICED.
It goes without saying that accountants are smart. Considering your student’s greater than average ability to listen, read, reason and analyze on a “book learning” level, it’s no surprise they will easily understand – on an intellectual level – what you are teaching them.
Unfortunately, while comprehension is necessary, its importance pales by comparison to the value of learning how to actually DO the skills. It is here where the disconnect between promise and performance frequently appears.
The reality you will face is that more often than not your student will demonstrate a distinct lack of enthusiasm for any type of role-playing or practice.
To explain: Any learning process almost always begins with the student performing poorly and then, with practice, they improve. But, whether we’re learning to roller skate, play the piano or business development techniques, initially we can expect skinned knees and/or bruised egos.
People don’t like psychologically exposing themselves to potentially negative events, and they don’t like being in a position where a manager, owner or partner will see them performing less than competently.
What this translates into is you will more often than not get some form of push back from your student when you attempt to incorporate practice into the training regimen. But, they have to do it to really succeed.
This post has looked at the teaching process from an overall perspective. Next time we’ll explore the nuts and bolts of how you can effectively implement your training plan.
When you select prospective students, there is one overriding concern: they MUST want to learn business development. My experience, teaching literally hundreds of clients how to identify, approach and convert prospects into clients has taught me The One Great Truth – learning effective business development is impossible for those individuals who are predisposed not to.
They know their manager wants them to learn; they know any thoughts of eventual partnership depend upon them learning; they know their income will never rise to the level they desire unless they learn, but they still won’t/can’t do it! This is a whole separate subject, but as a teacher who is busy with your own practice you don’t have time for students who can’t or won’t learn, whatever the reason.
Another lesson from my experience that may be helpful is that the average accountant doesn’t need any additive technical training as a precursor to learning business development skills. The reason I say this is because they’re going to be starting with “basic” prospective clients with issues that are mainstream for the firm’s practice focus. If the student needs specific upgrading of their technical skills it can be done on their time.
A final lesson is that you will get much greater mileage by focusing upon teaching the humanistic side of the equation. It is that element which is a foundational key for your student to become an über successful business developer.
Now to specifics.
Rule #1is that unless your interpersonal style and that of the individual you are teaching are very similar, you will almost NEVER be successful teaching them how to do it “your” way.
They won’t be able to do it because they’ll be acting. Even if they are good actors, the greater probability is the prospect will sense the disconnect, and the accountant will feel uncomfortable because they aren’t in their own skin. In the long run, the odds are greatly stacked against success if you force feed an unnatural style upon your student.
Your challenge is to devise approaches where your student can be effective but do so in their own skin.
Rule #2 is creating a structure or process for your student. Accountants are very good at operating within a framework of rules and predictability. As a teacher, you will be better served by providing such a structure. It is true a highly skilled professional salesperson can “wing it” from the first moment they begin talking with a prospect, but your student can’t.
I suggest breaking down the business development process into several phases. This creates bite size segments the student can deal with. And, each segment falls within a general sequence, which is easy to comprehend and learn. What you end up with will be something like the following:
The first segment is approaching prospects. I believe this is best taught by selecting leads generated from referrals, responses to the firm’s marketing efforts, etc. which can be described as simple or uncomplicated. An accountant who is just being introduced to business development should never be encouraged to initiate contact with a so-called “cold” prospect. This is a recipe for almost immediate discouragement and frustration.
Number two is preparation. What should be done to get ready for your business development meeting with the prospect?
Number three are the protocols surrounding the first few minutes together. Who sits where, how to avoid any social gaffes, handling the paperwork you’ve brought to the meeting, etc.
Number four is what you actually ask and say to the prospect. What subjects will be the highest priority? How should they be broached? Is there a preferable sequence?
Number five is concluding the meeting. What will you say at the meeting’s end? Is there a chance to secure the engagement? What do you do is no decision is forthcoming? What if they say “no?”
There are some manual excerpts at www.cpaprofitplus.com. In Section 2 of the Table of Contents there is a general sequence you can use as-is or to develop your own approach.
Rule #3 is that the skills you teach MUST BE PRACTICED.
It goes without saying that accountants are smart. Considering your student’s greater than average ability to listen, read, reason and analyze on a “book learning” level, it’s no surprise they will easily understand – on an intellectual level – what you are teaching them.
Unfortunately, while comprehension is necessary, its importance pales by comparison to the value of learning how to actually DO the skills. It is here where the disconnect between promise and performance frequently appears.
The reality you will face is that more often than not your student will demonstrate a distinct lack of enthusiasm for any type of role-playing or practice.
To explain: Any learning process almost always begins with the student performing poorly and then, with practice, they improve. But, whether we’re learning to roller skate, play the piano or business development techniques, initially we can expect skinned knees and/or bruised egos.
People don’t like psychologically exposing themselves to potentially negative events, and they don’t like being in a position where a manager, owner or partner will see them performing less than competently.
What this translates into is you will more often than not get some form of push back from your student when you attempt to incorporate practice into the training regimen. But, they have to do it to really succeed.
This post has looked at the teaching process from an overall perspective. Next time we’ll explore the nuts and bolts of how you can effectively implement your training plan.
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