Accounting Marketing: Why some Firms Shouldn't Bother
By Patrick McLoughlin
Now January is out of the way many Partners in the UK are focusing on growing their fee income. But before you think about marketing, take a closer look at the services you offer and who you offer them to.
We live in times of enormous and rapid change. Trades that have existed and thrived for decades are in fast decline; think of retailers, printers, estate agents, recruitment consultants, the list goes on.
Adapt or Die
Of course, there are exceptions to the rule, companies that are growing as their industries crumble. But these are exceptions for a reason. These businesses have transformed their services in line with demand and technology: online estate agents, printers offering digital services.
You might not associate accountancy with the struggling sectors listed above, but maybe you should. From 2008 to 2011, the Office of National Statistics shows, there were 12,255 accountancy firm insolvencies.
The faltering economy and the internet have changed how and what we buy. The middle / mass market is collapsing. We will pay a premium for special or better. If you are neither of these, the cheapest option usually wins.
Seth Godin’s latest book, ‘The Icarus Deception’, describes this perfectly:
‘The race to the bottom is the Internet-fueled challenge to
lower prices, find cheaper labor, and deliver more for less.
The other race is the race to the top, the opportunity to be the one they can't
live without, to become a linchpin (whom we would miss if he didn't
show up). The race to the top focuses on delivering more for more.'
Delivering More for More
More means more value, more understanding of my industry sector, more help improving my profits. More of whatever sort of help your clients value. Pick up the phone and ask your clients what ‘more’ means to them.
At A4G, we speak to thousands of business owners about their accountancy service every month. Sure, some decision makers are purely interested in the cheapest service, but not the majority. Most look for value. They will compare your quote to their current adviser’s fees if the services look the same. However, show them the difference in terms they value, and they will pay a premium.
We also speak to a smaller group of buyers prepared to pay substantially more for the service they want.
The 3 Types of Buyers
There is a study by Wharton Business School that backs this up. It breaks buyers down into 3 groups:
Tightwads (24%) - People that have a lower ceiling for spending
Unconflicted (61%) - Average spenders
Spendthrifts (15%) - People that have a higher ceiling for spending
This suggests that only 1 in four buyers are truly fee driven. If you understand and deliver what is important to the remaining 75%, they will pay more than the basement rate.
Just like the budget airlines and pound shops, some firms promote themselves as the cheapest option and prosper. However, there are far less of them than the growing band of firms delivering more and charging well for it too.
Most partners tell me they would rather compete in the race to the top, as Seth Godin puts it: ‘the opportunity to be the one they can't live without, to become a linchpin (whom we would miss if he didn't show up).
Practice Growth Tips for the New Economy
1) Increase your Non-Compliance work
What percentage of your income comes from non-compliance services? Once you know the answer, decide how much you are going to grow it by and how.
2) Look into Value Pricing
Mark Wickersham’s book: Effective Pricing for Accountants is a good starting point. It is very practical and short so you can read a couple of times.
If you specialise in my industry, I value your service more. I expect to pay a premium for your expertise.
4) Listen & Act
If you are not sure how you can become more valuable to your clients ask them. If they want help in increasing profits or planning and reporting, package new services to suit them. Structured client care research will open up new opportunities for you.
5) Get Help
There is so much help and support available to firms looking to change the essence of their work. Some of the most successful firms I have worked with have benefited from AVN membership. They are experts in helping firms package and promote added value services.