By Patrick McLoughlin
This week's blog looks at the big picture, the reason we are all in business in the first place: How we can make more money to spend and invest in our futures.
It's natural for accountants marketing to focus on winning new business. But there's an awful lot we can do, to make more money from the client we already have. Four of the five tips below review ways to increase your margins. The other looks at the most profitable approach to business development:
1) Value Pricing
Value pricing is about charging fees based on the value of the service to the client, not the cost of production. It’s too big a topic to go into great detail in a brief blog.
So once again, I recommend a short and practical book: ‘Effective Pricing for Accountants’ by Mark Wickersham. If you haven’t already read this book you have no excuse not to. It will take you no time to zip through it and it has the power to transform your profitability.
2) Return On Investment Marketing
As a first step, measure the average lifetime value of your clients and the profit they generate. Armed with this, decide how much you are prepared to pay to generate a new client.
View marketing as an investment that must deliver the best possible return, not a budget to be spent. Then only invest in marketing that delivers a clear, measurable return in fee income.
Accept that the difference between fast and slow growth practices is not technical accountancy skills, but aptitude at winning new business. Make a commitment and invest in learning about effective marketing and improving your ROI.
Bin your bad clients. Make space for the firms you love working with
3) Increasing Client Lifetime
I wrote earlier how your average client’s value is key to your marketing. The more you can increase this value, the more you can afford to spend to attract a client. If you can afford to spend more to win a client than your competitors can, you are on your way to dominating your market.
Clients will stay loyal to firms that understand and exceed their expectations. But different clients have different expectations and different priorities.
Client care research is the only way to increase and exceed your clients’ satisfaction levels. That means picking the phone up and gauging not just their views on your performance, but also what they really value from an adviser. Then carefully shape your service around their priorities.
4) Dump Difficult Clients
Bad clients tend to have a lot in common with each other. For some reason, late payers tend to be the rudest and most demanding clients. They sap your strength, take up far too much time and generally make your life misera
If you can chart the time and resources they take up, you usually find they are loosing you money as well. I suggest you run through your client list highlighting the trouble clients. Then either get them on track, or out the door. .
To prevent the problem from re-occurring get all new clients to sign a service agreement outlining each parties responsibilities. I try to deter potential problem clients by giving all prospects a free guide: ‘Is telemarketing right for my practice.’ In it, I list the behaviour and attitude of partners and firms that should avoid telemarketing.
Equally, if the warning signs are there when you are talking to prospects, back off or price your services at a premium.
This blog is about improving your profits, not your marketing. Therefore, it is only fair to raise the subject of outsourcing your accountancy production work.
Clearly, outsourcing can have a positive impact on your costs and profit margin. The market has developed at great pace over the last few years as service and communications have improved.
Some UK practices just outsource during the busy months of the year while others rely on the service all year round. Most outsourcing companies will offer you a free trial to demonstrate the quality, speed and cost savings available.
You may have noticed that one particular form of marketing is vital to a couple of the opportunities above. Client care research is central to extending the lifetime, and therefore lifetime value, of your clients.
Equally understanding your clients priorities is essential for value pricing to work. But clients are reluctant to discuss issues with their service provider for fear of straining their relationship. That’s why the most productive research is carried out externally.
To help you start on the road to a more profitable practice I am offering a 10% reduction on all research fees if you contact me before the end of September 2012. Click on the link below and I’ll contact you to show you how little effective research costs.
Click on the box below and I'll be in touch