Golden Practices

IRC Section 7216: Impact on CPA Firm Marketing

There has been a lot of chatter about compliance with this new code released in July 2008, and put into effect January 1, 2009, and what it means for firms.

Directly reading the code, you'll find a lot of scary verbiage about restrictions to cross-marketing or cross-selling of services to tax clients.

This is to be "managed" via annually-required, signed, consent forms, from EACH client BEFORE their tax returns are delivered in order to be allowed to send said client information about ANYthing else your firm does. And you may only ask the client for their consent ONE time.

First thought, it's sounding a lot like crazy lawyer state bar restrictions on marketing and advertising. However, the intent is to protect taxpayer information including addresses.

Second thought, in keeping with tradition of most accounting regulatory language, this code is challenging, at best, to interpret. I've asked several tax professionals to give me their thoughts, and each professional has seen its implications differently.

(This explains my silence, to date, on this issue).

The accounting marketing community has been abuzz for the last few months about what the new regulations under Internal Revenue Code Section 7216 (26 CFR Part 301 Section 7216) will mean as they continue existing communication efforts with their clients such as print newsletter mailings, e-mail newsletters, and even seminar invitations for events that cover non-tax topics.

Fortunately, some vendor friends of the accounting industry like BizActions (a customizable e-mail news provider with awesome back-end click-through reporting) and PDI Global (long known for their high-quality print newsletters and planning guides, now offering some e-delivery too) have been sharing some insights on applicability of the code, especially as it pertains to the use of products like theirs.

Definitely look at this because, if you think you will use a mail house or a third‐party to distribute things like print or e‐mail newsletters, you may need to get the client’s consent first. Again, "first" means BEFORE you deliver their tax return to them. So you don't have much time.

LOOKING FOR INFORMATION AND RESOURCES?

I'm proud of my long-time trade association, Association for Accounting Marketing, for compiling this list of resources that partners and marketers can use as they embark on interpreting the code and deciding what approaches are best, for THEIR firms.

See AAM's IRC Section 7216 Information and Resource Page (marked Members Only, but access does not seem to be limited) and be sure to check out the AAM/PDI whitepaper found on that page as well as fellow blogger Rick Telberg's post on CPA Trendlines sharing sample consent forms released by the AICPA.

Happy implementing (ugh).

Appended: Also try the IRS Frequently Asked Questions about Section 7216

New Year's Marketing Resolutions

Lyne Noella is a wise lady whom I've long admired and known through the accounting marketing circles. Lucky for us, she has a blog called Relationship Marketing Program.

She posted yesterday her Top 5 New Year's Resolutions (all about marketing).

How Do I Form a Working Marketing Plan?

A relatively inexperienced marketer, new to the firm, wrote recently with the following situation.

Q. I recently interviewed my partners with a few key questions to begin developing a marketing plan for 2009. However, I'm not sure how to utilize this information and form a working plan. Can you point me in the right direction?

[marketer's questions in bold, partners' answers follow, only some of the questions are listed below]

1. What do you think are the firm's strengths? experienced tax department, consulting services, capable and friendly staff

2. Weaknesses? auditing, not enough work for the qualifications our staff has

3. Where do you believe the challenges and opportunities lie? getting quality clients, developing a niche market

4. What are the firm's short-term goals? more QuickBooks clients, more payroll clients long-term? have work that provides year-round recurring revenue, loyal client base

5. How do you believe that marketing can facilitate a process that helps us reach these goals? obtain leads, offer bundled services, advertise for more work.

6. What are the top three services we want to focus on this year? Payroll, QuickBooks, tax

7. What are the top three services we sell? taxes, QuickBooks, audits

A. There's more info to be gleaned before assuring your plan will have the "right" initiatives and but here are two things to delve into as a starting point:

ONE - regarding number 6, above, ask a LOT of questions about the stated desires to sell lots more “Payroll, Quickbooks and Tax services.” Particularly tax.

Payroll and Quickbooks aren’t usually big fee generators so they are lots of work to market for lower ROI. The only investment I’d make in marketing those services would be to significantly court referral sources so they can do the selling for you. Couple dozen good solid relationships can generate a LOT more new biz than a calling directly on three times that many prospects.

For tax, my concern is that I don’t know too many firms that actually have capacity in the tax department between Feb and April. Most firms are already wearing people down pretty well in these months and adding work in this time-frame is not a good strategy for keeping the team members you value. Maybe your firm is different and you have capacity….

So, in looking at their answer to number 2, it would seem you have the qualifications for more audit work but not enough of this work to justify maintaining those qualifications. What about increasing audit work (maybe there is another concern precluding your partners from suggesting this??) or collaborating with another local firm to let your folks supplement their audit teams or let you audit some of their clients if they don't provide these services.

Just some thoughts to consider. I'd have to know more to give a deeper suggestion about what products would be most profitable and practical to build on.

TWO - Your question number 3, above, "Where do you believe the challenges and opportunities lie?" is great and their answer "getting quality clients, developing a niche market" is a good and a rich place for you to start. But the answers provided need two critical follow-on questions:

A) What is your firm’s definition of “quality clients”? Does everyone agree to the same definition? (probably not) – find out whom your firm would clone (as clients) and then, go deep, and find out why!?

B) What niche, specifically? In your interviews, only services were surfaced. A niche should not be inwardly (product) focused, it should be externally (market segment) focused.

You don’t have to only serve “one” but for the sake of marketing effectively and efficiently, you should target one at a time and make your messaging EXTREMELY focused to that segment. The segment might be a demographic group or it might be an industry.

Some exploratory work should help you and your partners determine what groups make sense, in total, and then to prioritize them, starting with the top one or two in 2009. Add the subsequent ones later as your resources allow. 

Some other posts that may help you as you proceed are:

What's In a Plan? Marketing Plan & Budget Development

Choosing an Industry Niche

Excellent Meeting Tips (Especially Sales Meetings)

Came across this fantastic post on the blog of Alexander Kjerulf, aka Chief Happiness Officer.

We've all heard that the more someone else talks, the more brilliant they'll think you are! (or something like that.)

There are truly many different sorts of people in our world. But in general, we fall to two extremes, those who don't talk much and those who don't shut up. By nature, I'm pretty well immersed into the second group, but it is something I really do try to work on a lot. It's even part of why I became a facilitator...because we're not ALLOWED to talk much. Yet we still get to maintain some illusion of control. :-)

So, I'm always up for learning new methods of piping-down. Read the post for some great methods on biting one's tongue and, ultimately, becoming more self-aware.

As Alexander concludes:

Remember: good meetings are not characterized by the amount of talking but by the amount of listening going on.

If you’re a habitual talker like me, I’m sure that you will find that learning to say less and listen more will be a huge boon. People will find you more sympathetic, they will respect you more and even though you may end up saying less, what you do say will be received more appreciatively and have much more of an impact.

Are You a Better Listener Than Tom?

Just read a great story on Craig Weeks' Accounting Practice Business Development blog. The post is called "The Meeting Went Very, Very Wrong." 

I've seen very similar situations. It's like we're looking for that perfect opportunity during a prospect meeting to strut our stuff. And we'll jump at the first chance we get.

But what happens when it's premature? Or worse, when it's irrelevant (or at least the relevance isn't crystal clear)? We tank. Bad.

Read this little tale and see if you've ever "gone there" in a prospect meeting. I'm pretty sure I have.

Also, Craig's blog is only a month old, but I'm enjoying it. If you sell professional services, I think you might find some nuggets in it, too.

The Trick to Proposals is Knowing if You Should Even Do One

Just got back from teaching our Marketing Courses in Texas. Last Tuesday's class was on Proposal Systems and Processes.

Attendees are usually surprised when my class starts off with all the reasons for not doing proposals.

Personally, I hate RFPs, but responding to them is an essential part of doing business for many professional service knowledge firms. If you've got to do proposals, you might as well do them effectively, right?

About RFPs, Ron Baker posted at VeraSage the other day saying:

RFPs have become more commonplace as competitive bidding has replaced negotiation for price buyers.  It is as if dysfunctional buying practices have arisen to counter dysfunctional selling practices. 

Honestly, I didn't know Baker and I agreed quite so much on the topic of proposals. His post "RFPs and the Dreaded Winner's Curse" is a great read. He encapsulates my own philosophy really well (I swear we didn't even talk about this!):

Another strategy with RFPs is:  No surprises. Your potential customer should know everything in your proposal before you submit it. Gaining an understanding of your customer’s expectations, business model—how they make money—and how your company can add value is imperative to increase your odds of a successful proposal, one that will not suffer from the winner’s curse. 

Search for the differences that will ultimately be weighed in selecting a new supplier. If customers are worth bidding on, they are worth spending some resources on in order to improve your chances. 

Baker adds a list of eight hidden costs of bidding, with comments, from the book Co-opetition, by Adam Brandenburger and Barry Nalebuff. The first two really hit home. Some of the others don't trouble me so much...

1. There are better uses of your time. Keeping current customers happy may be a better strategic advantage as opposed to chasing after other company’s customers. Attracting a new customer can cost three to six times more than holding on to an existing one, and the existing one is most likely less price sensitive.
2. When you win the business, you lose money. A customer won on price alone is signaling they have no loyalty, and will leave you once they find a lower price. Do not fall into the trap of thinking you can start with a low price and raise it later; the evidence is overwhelming this will not work, as once you set a low price you are rewarding the customer for beating you up in price.
3. The incumbent can retaliate. 
4. Your existing customers will want a better deal. 
5. New customers will use the low price as a benchmark. 
6. Competitors will also use the low price as a benchmark. 
7. It does not help to give your customer’s competitors a better cost position.   
8. Do not destroy your competitor’s glass houses.

If you want to save a LOT of time and grief, get some good processes in place INCLUDING a process to decide if you even want to propose at all. If you're a firm that doesn't want to recreate the wheel, you should check out my class! ;-)

Contribute to a Study? (just takes a minute) - Part 1

My friend Suzanne Lowe of Expertise Marketing is gathering data for her upcoming book, "The Integration Imperative" and is asking professional service firms to contribute to four VERY brief (3 questions) surveys.

The first is live now (closes next week) and the others will follow (I'll post them, too) over the next couple months.

She writes:

Many professional service firms (PSFs) still haven't figured out how to get fee-earners and revenue-generating practitioners to truly embrace marketing and selling their services. Sure, more PSFs are employing carrot-and-stick programs to encourage fee-earners to market and sell.

But how many firms have intentionally re-tooled hiring guidelines to hire professionals who want to market and sell?

This first survey [take it here] is on deliberately hiring people who want to market and sell. If you take her one-minute survey, she will share the results with you.

The next three surveys will be on:

• evolving the scope of sales and marketing functions at PSFs
• how sales and marketing work with other departments, and
• how integrating sales and marketing benefits clients

Proposal Success Rate

Q. How do we know if our firm's success (win) rate with proposals is at, above, or below average? For that matter, what is the industry average for CPA firms?

A. My answer will apply philosophically to law as much as to accounting. As to a CPA industry average proposal success rate, a number like this isn't meaningful as it never compares apples to apples. There are just too many variables!

Consider different vertical markets. NFPs or governments almost always require formal proposals with most going out to bid at regular intervals. But businesses, especially the highly-desirable closely-held business market, will often close a deal over lunch or golf game and the "proposal," if it exists at all, might be a formality that accompanies the engagement letter.

If a comparison were made, I might suggest comparing a vertical market (construction, NFP, etc) to other firm's success ratios in those markets. But, I still don't think it will be very meaningful without knowing things for the compared proposals such as:

• Was the firm the incumbent?
• Was a personal relationship in existence?
• Did personal contact take place before answering an RFP?
• If so, how much contact? And what was the quality of that contact (i.e. was it private, one-on-one? In person? By telephone? At a widely attended pre-bid conference? etc)?
• How focused was the proposal on the prospect (customer-centric) versus the firm?
• Did the proposing firm demonstrate they really understood the prospect's situation and needs?
• Did the proposing firm meet the requirements of the RFP and have the experience to truly qualify for the work?
• Was the firm already widely known as dominate service provider to that industry?
• Was it a newly entered vertical market?
• Was the proposal professional-looking, user friendly and free from typos and other signs of negligence in preparation?
• Did the person presenting the proposal do a great job of demonstrating competence and trustworthiness? (or leave some seeds of doubt...?)

Any or all of these things will weigh significantly in the outcome and that is why I don't think a CPA (or law) industry comparison is worthwhile.

The best benchmark is to measure the firm against itself now and later. In the meantime, study existing processes to determine where your firm could use some improvement in the above areas!

Prospect Meeting Strategies

My friend Wendy Nemitz (her avatar at right) and her very cool team at Ingenuity Marketing have a fabulous new (since Jan) blog called PUB: Power Up Blog! that is geared for young professionals (35 and under), but provides sage advice for persons of any age.

The post I'm bringing to your attention today shares one of Wendy's take-aways from this month's Association for Accounting Marketing (AAM) conference. She discusses the presentation of a long time friend of mine, Russ Molinar, director at E&Y who talks about sales strategies: Pre-call Planning: Ensuring Effective Sales Calls.

Russ worked in sales with E&Y for years and spent some time in a smaller firm and then as a consultant. A brilliant strategist, I'm not surprised E&Y enticed him back. He knows his stuff.

Russ introduced five approaches to consider, as appropriate, in your competitive situation:

1. Pre-emptive
2. Frontal
3. Flanking
4. Fractional
5. Timing

Check out Wendy's post (and the rest of the PUB blog!) Your Prospect Meeting Strategy.

Confidence Worthy?

Ran across this interesting Harris Poll outcome over at Small Business Trends (Anita's blog is great!)

The poll shows that consumers have more confidence in small business leaders than any other leader they were asked about. Dreadfully, lawyers came out only slightly better than Congress and the press. Major companies didn't fare so well, either.

Here's the Harris Interactive site with full survey details.

(Why are accountants not on the list?)

Bodes well for the growing small business sector, though, doesn't it?

About That "Trusted Advisor" Goal...

I'm thrilled with Charlie Green's post, "Bad Marketing 101: Trust Me!" in which he writes:

...“trusted advisor” is something you want others to say about you, not say it yourself.  You can talk about it amongst yourselves, hope for it—but not proclaim it.

Saying you are, or want to be, someone’s trusted advisor, is like saying you are, or want to be, really humble.

His post is SO right on. "We are qualified to be your trusted advisor" (or similar) is one of the most annoying promises that I see on professional firm websites and in collateral materials. Besides being quite presumptuous (who says you know what I want in an advisor, and what I deem worthy of trust?) it is so commonly stated that it's now cliche.

Charlie, by the way, co-authored with David Maister, THE book on the subject, The Trusted Advisor, agrees it is an inappropriate claim in one's marketing materials. Thank you Charlie!

In his post, he says he googled "to be your trusted advisor" and it generated over 31,000 results. He opines:

Trust is personal—an outcome, not a come-on. On a first date, asking for either sex or for a very long-term relationship is likely to get you neither. “Trust me” is the business version—socially inappropriate, especially on the “first date” equivalent of the internet.

It's very similar to what I wrote in "Please Don't Put This on Your Website" when I recommended against staking a claim to be a future client's "partner" in their business. I wrote not to say:

"We partner with you…"

...This is a status you earn with a long-term client or it may be a role you are invited to act within for a new client. Either way, It's not something you promise to the general public.

The same with the trusted advisor thing. (My original post lists more things to avoid...)

I couldn't agree more with Charlie's post. Be sure to read his blog post comments, too.

Visit Your Clients

Surprisingly, when we urge professionals to spend more time thinking intentially and proactively about their clients (instead of just working on bringing in new biz), we are often met with looks--or even heavy sighs--that suggest, "you've got to be kidding."

As we coach professionals of all levels on their individual marketing efforts, it seems like we constantly need to emphasize the importance and benefits of spending a greater percentage of energy or effort on nurturing existing clients (versus new biz development). Existing clients should receive this heavier focus for many reasons:

1. increasing the level of service to increase the level of satisfaction/delight;
2. affect longevity in customer relationships;
3. inspire referrals from current customers; and, oh yeah,
4. increase the number of project opportunities relative to meeting customer needs--needs you won't know about or be able to help them with if you aren't TALKING with them.

I write today because I just saw Tom Collins' post over at More Partner Income discussing the results of a survey by The Remsen Group. I tend to take surveys with a grain of salt but look at these percentages reported in answer to the question:

Which of the Following Marketing Tactics Has Your Law Firm Found to be Most Effective at Generating New Revenue?

Meeting with customers AND specialization (reflected in organizational involvement) reign.

Well, now, isn't that what we've been telling you all along? :-)

Lost Clients? "Reasons" are Symptoms, Not Cause

Ever have a BFO? A Blinding Flash of the Obvious?  It's my sincerest hope that this becomes one for many readers. It was for me a couple years ago.

What are the reasons professionals think they lose or upset clients?

• price/fees
• not "proactive" enough
• poor service
• relationship changed/deteriorated (chemistry)
• etc

Sure, those are all valid complaints. And the REAL, underlying problem, for every single one of these, is that the customer expected to get something different from what they got.

I'll bottom-line it: Clients name these factors when conversations that should have occurred, did not. 

You could call it lack of proactivity or lack of service. It's lack of setting and meeting expectations(adjusting when needed). Think of it as "scope" for the soft-stuff.

There is a pretty easy solution. It involves 3 steps:

1. Listen/ask/listen more
2. Mutually establish expectations (written is good)
3. Meet them

If something usurps #3, conduct a conversation as early as possible to alter #2. If you cannot catch it in time, apologize profusely and fix it (without assigning blame, please).

To improve profitability, increase prices, retain clients, have happier team members (who know what expectations to meet), and solve most "service" related problems, apply the magic 3-step system above. It will change your firm forever. I promise.

If you want to see what inspired this advice, read Rick Telberg's post Finance Execs See Service Lagging at CPA Firms (excerpt below) and think about it relative to what I've written above.

What might cause the client to switch auditors?

Bay Street Group's recent studies of accountant-client relationships...got a surprising dichotomy of answers. CPAs tended to say one thing, while CFOs said another. Surprised?

Public practicing accountants (47%) seem to be under the impression that they lose clients due to "price, fees, costs, budgets and affordability."

But finance managers and CFOs have a different take. A solid majority (79%) point to "poor client service and lack of attentiveness." Fees and costs ran a significant second, at 66 percent.

Back on the CPA-firm side of the question, service was the third most commonly perceived reason for expected loss of clientele....

There's something wrong when twice as many CFOs as CPAs see service as the determining factor in client longevity. That might mean that a lot of CPAs are failing to offer what corporate accountants want....

The other reasons CPAs fear they might lose a client were distantly less common. Twenty percent thought "bad personal chemistry" might be the problem; 19 percent recognized that they might not be proactive enough; 17 percent figured they'll beat the client to the punch by firing them for business reasons; and 11 percent worried that the client might take the function in-house.

The third most common gripe among financial officers was "not getting enough time with CPA firm's best people" (again, a matter of service and attention) at a significant 38 percent. Bad chemistry followed next, at 34 percent. Lack of proactive advice came close, at 33 percent. Twenty-two percent said they might need new or different services.

Every time I see these "reasons" hashed out, again and again in study after study, I just want to shout the expectation mantra. It really works.

No matter how small the job or client, the "scope" of these issues is every bit as important to the customer (as demonstrated by defection and complaints) as the scope for the technical aspect of services.

Clarify your buyers' price expectations and parameters and use change orders as needed (better to identify fee sensitivity on the front end!). Ask about their preferences for communication frequency, delivery, staffing, level of "extra" advice/consulting expected, and so forth.

You will be shocked at how much less they expect than what you think they will "require." Either way, it gets everything on the table. Document it in the client's file and in your contact management system, if you use one.

Wouldn't you appreciate the same when you buy professional services?

So, was this a BFO?

Research Calls More Effective Than Asking for Referrals

Still at the Assoc. for Accounting Administration conference in Indy, today. Ran into Gale Crosley who just gave a well-received session on Turbo-Charging Lead Generation. In her session, she introduces the "research call" concept which, compares favorably to more commonly-used referral source techniques involving "asking for" referrals.

Her research call method is very different from the sometimes uncomfortable referral request. "Instead of asking for business," Gale says, "business is revealing itself." She says that it helps people "ramp up their book of business faster, in about one-third the time, as the old way."

This method sounds ideal for mid-level people who are perhaps on the partner path and need a solid book to be well-positioned for partnership. It also works for established practices, though changing ways of doing things is more difficult for people the longer they've done something another way. Either way, these are really good concepts to go back and teach your team!

Gale is giving this presentation again at the upcoming Virginia Society of CPAs 2006 National Practice Management Summit in beautiful Hot Springs, Virginia in August. Dates are Aug 23-25 at the Homestead Resort & Spa. Details at the VA Society site.

Overcoming the Negative Image of a Salesperson

A great heads' up post on the Selling to Small Business blog by Anita Campbell pointing readers to a podcast on selling by Greg Balanko-Dickson. Anita recaps Greg's podcast:

"Selling used to be about closing.  But it isn't anymore.  It used to be about handling objections or about preventing objections from coming it.  Selling isn't about being confrontational."

His point is that selling is about influence, trust, respect, rapport — those kinds of positive attributes.  Why? It's because we have all been jaded by all the advertising and hard selling that has come at us over the years.

Greg's 12 minute podcast (at his blog: Business Performance Coaching) offers, in a pleasantly relaxed tone, some terrific advice about selling and what skills/approaches work and, conversely, what selling is NOT. He also talks about "buyers' rules."

His advice is relevant to professional service providers.  Enjoy a nice listen...

Proposal Win Ratio

We always want to know if we are winning new business as much as our competitors.

But because all proposals are not equal--even from the same firm--comparing overall win/loss ratios across firms is not worthwhile.

Why? Because there are too many variables.

Consider different vertical markets. NFPs or governments almost always require formal proposals with most going out to bid at regular intervals, but businesses, especially the highly-desirable closely-held business market will often close a deal over a lunch or golf game and the "proposal," if it exists at all, might be a formality that accompanies the engagement letter.

If a comparison had to be made, I might suggest comparing a vertical market (construction, NFP, etc) to other firms' success ratios in those markets. But I still don't think it will be very meaningful without knowing highly result influencing factors for each proposal such as:

• Was the firm the incumbent?
• Was a personal relationship already in existence? If so, to what level was the relationship?
• Did personal contact take place before answering an RFP?
• If so, how much? And what was the quality of that contact (i.e. was it private, one-on-one? In person? By telephone? At a widely attended pre-bid conference? etc)?
• How focused was the proposal on the prospect versus the firm?
• Did the proposing firm demonstrate they really understood the prospect's situation and needs?
• Did the proposing firm meet all requirements of the RFP
• Did the firm have the experience to truly qualify for the work? If so, was it effectively conveyed?
• Was the firm already widely known as dominate service provider to that industry? Or was it a stealth provider? Or had the firm recently entered that vertical market?
• Was the proposal professional looking, user friendly, and free from typos and other signs of negligence in preparation?
• Did the person(s) presenting the proposal do an excellent job of personally demonstrating competence and trustworthiness?

Any or all of these things weigh significantly in the outcome and that is why I don't think an industry-wide comparison is worthwhile.

The only truly meaningful benchmark is to measure the firm against itself now and later.

Compare results under various circumstances seeking to find the best formula for each type of business or each industry the firm is pursuing. And study proposal processes to determine where the firm could use improvement.

Value Pricing Isn't Easy, But Neither is Writing off a Bill

I was writing to Bay Street Consultant Rick Telberg today on another matter and mentioned that I’ve been enjoying conversations with Ron Baker and our other VeraSage colleagues about this recent reply submitted to Rick about his CPA Trendlines blog post “You Are What You Charge” about value pricing.

Personally, my suspicion is that the gentleman didn’t implement value pricing (VP) properly in his firm. Or fully (which he openly states). First, it is really hard to see it work if you don’t implement fully. I can say this with conviction because of my own personal experience.

I started implementing a couple years ago and just went “all the way” (i.e. no timesheets) very recently. I can really see both sides of the pro/con argument when it comes to operational barriers to implementing VP. 

I implemented VP in my practice for ethical, practical, and customer satisfaction reasons. It is the right thing to do both with regard to customers and employees. And if I believe that, and believe it is best for other professional service firms, then I absolutely have to practice what I preach.

HERE IS WHAT I LEARNED:

It IS a lot more work up front to thoughtfully consider the scope and document it before just jumping into the work. But on the back end, there are NO ugly fee discoveries (we spent HOW MUCH time on it??) or those horrible conversations with the client (after the fact and when pricing leverage is completely gone) about why the bill is so high (meaning “time got away from me").

This is really the way it should be...respecting the customer’s choice to buy or not buy at a price you are comfortable with.

If the customer isn’t willing to pay a price at or above what you’re willing to do the work for (your lowest walk-away price) both you and the customer know it up-front. No time invested or written off, no hard feelings. Better expectation management, more enjoyable doing the work because you don’t need to fret over the ever-growing WIP.

And when Baker says your “gut” knows what to charge, he is absolutely right.  Anyone who’s been in business for any length of time knows roughly where to start in discussions with clients about what “it takes” and what it is “worth” from a value standpoint to the client. I maintain that the biggest hurdle to overcome is the temptation to equate your past “hourly” price with the current “value” price. Big mistake. Easy to do and I’ve fallen victim to it myself, but it IS curable!

The thing is, this level of thinking about the scope should be done ANYWAY in order to provide excellent service and properly understand/manage customer expectations. But this usually isn’t done. Instead, we delve into the work living in this false sense of security that the customer will pay us that hourly rate “because that’s how long it took to do it” — it being whatever we thought the customer wanted but we never really took the time to define.

THE IMPORTANCE OF SCOPE

On April 9, professional service firm management guru David Maister shared an excellent blog post called “What Do You Want From Me.” His post addresses what should occur no matter how you price. It is excellent advice:

Whether you are being given work to do by a client or a boss, it’s common that people will assign work to you badly, and that will cause you problems.

How can you do what they want if they don’t tell you clearly what they want? The key is to take responsibility and ask permission to ask questions.

When someone gives you a task to do, say something like ‘I really want to do a great job for you, so can I clarify a few things?’ Most people will say ‘Yes.’ You can then be sure you understand the following details about your assignment —

1) The context of the assignment — ‘Please could you tell me what you are going to do with this when I get it done, tell me who is it for, and where does it fit with other things going on?’

2) Deadline — When would you like it, and when is it really due?

3) Scope — Would you like me to do the thorough job and take a little longer, or the quick and dirty version?

4) Format — How would you like to see the output of my work presented? What would make your life easier?

5) Time budget — Roughly how long would you expect this to take (so I can tell whether I’m on track or not?)

6) Relative priority — What’s the importance of this task relative to the other things you have asked me to do?

7) Available resources — Is there anything available to help me get the job done? For example, have we done one of these before?

8) Success criteria — How will the work be judged? Is it more important to be fast, cheap or perfect?

9) Monitoring and scheduled check points — Can we, please, schedule now a meeting, say, halfway through so I can show you what I’ve got and ensure that I’m on track for your needs?

10) Understanding — can I just read back to you what you’ve asked me to do, to confirm that I got it down right?

11) Concerns — before I get started can I just share with you any concerns about getting this done (e.g., other demands on my time) so that I don’t surprise you later?

Yes, your client...should be good at delegating or assigning work and giving you this information anyway. But the truth is that many people won’t have thought through what they really want from you until you guide them through their ‘either-or’ choices.

If you have not received answers to these questions, you don’t yet know what to do, and the risk of being judged a failure is high!

Don’t rely on your...external client...to give you all this information. Pull it out of him or her.

Scope definition is essential to VP. And it should be just as important to apply even when pricing by the hour. The point is to create accurate expectations for your customer and then meet them. No matter how you price, no customer likes billing surprises or service disappointments.

(originally posted at VeraSage.com)

GC Sense That 'Building Relationships' Is A Euphemism for 'Give Us More Work'

Case in point.

Just read the first in the Protecting Your Crown Jewel Clients series (a little behind in my "must read" stuff) by Edge International and WHAM, the perfect example -- from the client's own mouth -- as to why selling and satsifaction questions must be completely separate (a point with which Tom Kane strongly concurs).  The article discusses:

Firstly, Too Many Law Firms Have Launched Far Too Many Teams, Far Too Quickly....

Secondly, Too Many Of These Client Teams Invest All Of Their Available Time In Formulating Plans Designed Only To Secure More Work.

As one General Counsel confided, “most of these efforts are defined and managed to serve the firm's interests. To us, they are nothing more than thinly veiled sales campaigns. Someone comes in, asks how their firm is doing and, if we dare say okay, they then want to immediately introduce us to a number of their other attorneys.”

Client service teams mean much more than marketing. Indeed, the term “service” should provide a clue as to what the primary focus should be. But, all too often, we look at our client's situation through the lens of our own offerings and our desire for another sale.

Little wonder that in law, for example, increasing numbers of General Counsel sense that when your firm talks about “building relationships” it becomes nothing more than a euphemism for “give us more work,” while “providing added value” becomes interpreted to mean, “at higher rates!”

Don't miss the 10 Question Test the authors offer for determining if you're really showing your best clients the service behavior they should receive.

Selling and Listening and Meeting With Clients, part 367

If I were half as eloquent as Gerry Riskin, I would have posted his comments (reflected on the Law Firm Business Development blog) on my blog yesterday, instead of this.

NOTE: Accountants, please substitute "CPAs/accounting" for "lawyers/law" as you read.

Gerry discusses his perspective of client visits comparing it to the Womble Carlyle sales campaign approach. Of the views of Steven Bell (of Womble) and himself, he writes (emphasis mine):

Both of us are well aware that top rainmakers in blue chip law firms report that they rarely visit a client’s place of business without growing existing work or getting new work. Both of us agree that this is a desirable consequence of client visitations. The key issue is whether selling ought to be the focus of the visit....

Few lawyers understand their clients’ businesses or industries as well as the clients would like and we agree that this is a critical objective for the visit.

The delicate question is this: What is the appropriate reaction in a client visitation when it becomes obvious that there is a legal need that your firm is not currently fulfilling. My view is that the primary purpose of the visit must not be abandoned (or appear to be abandoned). At the same time I agree completely with Steven Bell that the doctor must help the patient. I don’t believe that Steven is advocating throwing the patient onto the gurney and tossing our note pads into the trash. I used the word “delicate” because there is some judgment to be exercised here.

How can we be appropriately responsive to the need without being unfaithful to the primary purpose of the visit. I can think of several possibilities:

• Briefly defer the discussion of the legal matter to a follow up with the lawyer(s) who are best equipped to attract the work and do it with quality.
• With the client’s blessing, allow a digression from the meeting’s agenda to address the problem or opportunity at hand but be disciplined enough to return to the original agenda.
• There may be different and perhaps unforeseeable options which make sense in the context of a particular meeting. The visiting lawyer(s) must have the discretion to exercise appropriate judgment and make the best choices in the circumstances.

This is excellent advice and Gerry hits the nail on the head. I particularly agree with his statement that:

Perhaps what I have described here is indeed selling at the highest level

Enjoy the rest of Gerry's comments within which there are many pearls of wisdom.

Further on this subject is an excellent comment (scroll down on the page) by Robert Millard (another Edge International guy with a fantastic blog) made on Jim Hassett's post that I referenced yesterday.

These discussions, by the way--the whole thread of the purpose of client interviews--has engaged many lawyers and consultants (including Patrick Lamb, Dan Hull, Tom Kane, and more) for the past couple of months. It is nicely recapped on Jim Hassett's blog.

It's Not Busy Season, It's "Prime Time"

In accounting firms, the term "busy season" is synonymous with the period of January to mid-April.

These are the months when professionals talk to clients, referral sources, friends, family, and sometimes just about anybody who will listen, about being swamped, exhausted and "really crazy" right now.

Some professionals are good about not complaining, but you may not know because you simply cannot reach them or get them to call or e-mail you back!

That the firm -- or at least the individual -- is at or above maximum capacity** is a dangerous message to send.

There's a difference between healthy-busy and out-of-control busy. I'm talking about the latter. When winter pallor, dark circles under the eyes, and a shortage of cheerfulness accompany the complaints or lack of responsiveness, it's a real marketing problem.

Clients think, "wow, hope they will find time to take care of me..." or, "hope they don't make a mistake due to haste..."  Worse, they may also decide, "I'm not going to refer anyone because then they really won't have time for me."

Another problem with voicing the complaint about the excessive hours for these 3-and-a-half months is that the business owners they are talking to work excessive hours, too, but do so all year around and have little sympathy for their counterparts who enjoy much slower hours through the summer months.

For many years, marketers have worked hard to encourage their CPAs to remember that, while facing their most intense workload in these months, they simultaneously face their peak opportunity to interact with their clients and remind them of the many ways they can assist them.

CPA firm marketers dislike the term "busy season" because it sets the wrong tone--even when it's just used internally. It reinforces anti-marketing mentality at the very worst time.

But Goodman & Co.'s marketer, Dan McComas, says his firm coined the term "Prime Time" to describe these active months. The firm held an internal contest to come up with a less off-putting term than "busy season."

Their winning term is excellent: Prime Time is a simple yet solid reminder that people must perform at their very best to stay accessible, friendly, and helpful.

Prime Time is when you and your firm are most visible of all. Don't use it to tell the world you are over-worked and have no room left to serve clients. As they say, "never let 'em see you sweat."

The smartest firms use Prime Time to demonstrate that their service and attitude is so great, clients & referral sources should want to refer all their associates.

**Most firms ARE seriously above capacity regarding smaller tax return clients and far too many still do returns at prices lower than H&R Block. Firms I talk to know some of these clients should be shed, but are reluctant to do anything about it. Meanwhile, firms wear employees down, weaken morale, and observe "turnover" season just after April 15.

This observer recommends there are important choices to be made about which work is most important and which work firms cannot afford to keep if employee retention problems are to be corrected in firms.