Golden Practices Blog

Recruiting Magnets: Firms of the Future

There's so much more to this story than the recruiting angle. This story is about the future of professional service firms.

But now that I have your attention let me tell you about Brendon Harrex, a senior fellow of VeraSage Institute. He's another innovator turning the professional firm business model upside down!

Brendon, at the age of 31, became the first Chief Value Officer (ever) in his 100-person accounting firm. This means HE was solely in charge of ALL pricing. Read more about this in Ron Baker's post Who's In Charge of Value in Your Firm? where he describes Brendon's role:

If you worked at Ward Wilson, a four-office, ten-partner, one-hundred team member firm in Invercargill, New Zealand, your answer would be Brendon Harrex, who was recently appointed Chief Value Officer, responsible for creating and capturing value across the entire firm. Brendon, at age 31, is the youngest partner in the firm, and is an amazing visionary, bringing leadership not only to his firm, but our entire profession.

Then, at age 33, Brendon was elected chairman of Ward Wilson--the firm had amazing vision. But it also had aging partners who, apparently, were more concerned with their retirement than with the posterity of the profession (my words, not Brendon's!).

Ward Wilson sold to a consolidator. Brendon's window of opportunity opened and he bought out one of WW's offices, the one he led before becoming Chairman. Below is the e-mail he shared with Ron Baker and me about this.

His brilliant ad (pictured, click to enlarge) says:

"If you have get up and go and know you should have got up and left before now, consider the Harrex Group."

Now Brendon has a WAITING LIST of future employees who WANT to come work for him. Read on, the emphasis is mine:

Diving into the Blogosphere? Where to Begin.

Thinking you might want to blog?

In an interview today with a publication, I named 3 main things that are essential to consider before your firm starts blogging:

1) ID your audience(s). You have to know exactly for whom you are writing in order to keep it relevant.  Blog readers like relevance over general info, hands down. If you're considering multiple audiences, that's a big sign you should be considering multiple blogs.

2) ID your writers. If you're solo, that's easy. But if you're a larger firm, you'll probably benefit from having a small team of authors so that you can spread the wealth (i.e. workload). Also, it's extra fun to collaborate with others. If you're thinking your team doesn't always operate as a team, this can help in that direction. More important than having partners write blog posts is having people with a little fire in their belly about blogging. Hint: this probably means non-partners!!  Without the fire, the blog will no doubt fizzle. Why not tap into the generation that GETS social media and let them do what they do well and integrate it into their professional lives.

3) Authenticity and Trust are key. Recognize the requirement for authenticity and transparency in blogs (and all communications these days) and trust your people to "be appropriate." Don't create a specific "corporate blogging policy" but do revisit your whole "corporate communication policy" and make sure it applies across the board defining appropriate and inappropriate behaviors for web content, e-mail and telephone conversations, written correspondence, articles, speeches, etc. Don't single out blogs--they are just another form of communication.

Once you get past these three, you've got some prep work to do. "Don't dive in cold," says Amy Gahran, a conversational media consultant. Amy offers some great tips on how to prepare before jumping into the blog waters.

After you decide which groups you will engage through your blogging (or even to help you decide which), do the following to prepare:

Figure out where those groups already spend time online and go where they are.

• Search blog search engines like Technorati and IceRocket to find blogs that are already succeeding in attracting attention from your core communities.
• Explore other types of online media -- bulletin boards, e-mail lists, wikis, virtual environments (such as Second Life), and citizen media sites (such as YourHub.com) to find good matches. Web sites of local or regional mainstream media also can be useful to watch if they allow comments and foster public discussion in your core communities.
• Create a short list (just 3-5 blogs or other sites) that you should start reading on a regular basis.

Follow their existing conversations - don't just read the posts, but read the comments to understand the community, [see who the players are, and find more links to related blogs.]

Participate in these discussions. Take the time to leave comments on blog posts or forum threads, and respond to others' comments, always being positive and helpful.

Don’t be ‘salesy.’ That is, don’t blatantly pump your business or agenda. When you join the public conversation, your guiding motive should always be: ‘What value can I offer this community?’ Abject self-promotion almost always backfires.

If you do these things (especially the managable suggestion of following 3-5 blogs) you dramatically increase your chances of success when you begin your own blog. Test the waters and get to know your group. Not only that, but you'll learn a lot of good stuff and make good new contacts in the process! Amy says:

It doesn’t matter if you don’t have your own blog yet -- or even if you don’t have much of an online presence. The point is to start right now to build a constructive, helpful, credible reputation among your core communities. If these people get to know you first as “one of them,” they’ll be more likely to keep listening and talking to you when you launch your own venue.

Definitely don't be self-promoting on people's blogs. Frankly, you won't need to be. Just by contributing to the conversation, sharing your mind, you increase your credibility. Don't undermine it with a pitch.

Her post also links to advice on strategic commenting. Be sure to check it out.

Happy swimming.

Hat tip to Kevin O'Keefe for pointing me to Amy's blog with his post: Listen to Niche Blog Discussion Before You Start to Blog.

Marston's On Fire With 'Why Professionals Don't Get It'

My always controversial friend (and fellow VeraSage fellow) Chris Marston musta had an extra shot of espresso on Thursday...he was heated!

30-something Christopher Marston runs Exemplar Law Partners, the Boston law firm touting "no hourly bill, no hourly bull--law practice the way it should be."

He not only graduated from the relatively new schools of value pricing and blowing up the partnership model, he is breaking new ground daily in both of these areas. He shares his thoughts regularly on his Inside the Firm of the Future blog.

In keeping with his 'take no prisoners' blogging style, Chris' latest post, "Top 10 Reasons Why Professionals Don't 'Get It' When it Comes to Pricing and Service" doesn't sugarcoat how he really feels about most of the legal profession (much applies to accounting, too).

Abrasive? Yup. But well worth the read. Chris makes several valid points.

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.

Becoming a Better Speaker or Presenter

Even the best speakers agree there is always room for their own improvement. The rest of us know we can certainly do better.

It's wise to work on your presentation skills even if you don't formally address large groups. Many of us can benefit from becoming more effective and polished in the boardroom, too.

An excellent collection of speaking tips, Speaking as a Performing Art, is offered on Guy Kawasaki's blog. They were compiled by his friend who is a professional singer, music director and...speech coach.

He recommends how to stand to project your voice, how to keep your mouth moist, how to use your hands and how to use silence. Great stuff.

Enjoy the comments, too; one of which is:

One other recommendation I heard which helped me and can give you a boost of confidence before a presentation: remember that the audience is on your side and they want you to succeed. They want to experience a great presentation! Thinking of an audience that way, instead of thinking of them as a group of critics waiting to pounce on your first mistake, frees you up to embrace some of these tips above.

Profitability of the Firm

Increasing the profits of your professional service business seems terribly hard. There's this market-share myth that suggests the bigger you are, the more money that goes into partner's pockets. This is only true to a degree. And, sure, with fewer equity partners and more revenues that number will be slightly higher.

But unless you are doing something to completely different with your firm to break out of the pack, the dollars will never be significantly higher. A primary way to break out is to price better. Another way is to BE better. The best way is to be better AND price better.

US income metrics are pretty much the same across the ENTIRE industries of accounting and law.

Unless you are actually selling your firm and slicing up that pie, don't pay too much attention to profit-per-partner metrics because the divisors--the number of partners--are skewed by the equity/non-equity thing and the retired/semi-retired/should-be-retired thing.

Instead of profit-per-partner, let's consider revenue-per-employee. (You can use a full-time equivalent, FTE, number if you like.) In public accounting or law, when you divide gross by employee or net by employee, the numbers are pretty steady whether your firm has 3 employees or 3000.

Average reported sales in accounting firms are $113.8K per employee and average sales in law firms are $162.0K. Most firms fall within $20-30K/employee of these averages which tend to be more impacted by geography than by firm size.

About the only time income/employee is notably higher is in the massive firms who tend to invest better in processes and training and they are more focused on continually teaching their juniors to "do their job."

This holds true whether you look at gross or net revenues because, quite frankly, your costs are pretty much fixed. Just as income/employee averages are consistent from firm to firm, expense/employee averages are, too.

(By the way, what it means when your costs are fixed is that you don't need to bother TRACKING your time to "determine" your costs. You already know them.)

Fun With Numbers - a Digression
Want more operating insights? Divide revenues by number of clients to see the average earned per client. Try looking at this from one sector you serve to another. And then from one "product area" to another. Interesting.

Then divide expenses by number of clients. Look at this by sector and service (product), too. What does this tell you about where you are spending your energy? Is it clear that you should do a lot more of some things and much less of others? Drop a sector or service, perhaps? Or just increase your prices in a certain area or two?

So why do you spend all that money buying time and billing systems, and all that time remembering and entering all those .1 increments again? You already know what it costs, on average, to serve a client or perform a service.

Okay, now back to the program...

Training Investment Correlation with Results
Speaking of training investment, I'll share a startling statistic from the AICPA.

The average investment in continuing education in firms is about .8% of revenues...about the same amount spent on the firm's internet connection!! Something is seriously wrong with this.

While professional service firms invest in about 40-60 hours a year to "maintain" the high level skills needed to do the job of a lawyer or accountant, do you realize that The Container Store invests in 241 hours of training for a first year associate? And 160/year after that?

The average in retail, by the way, is 7 hours per year. The Container Store is breaking out of the pack. Better employees and happier ones = happier, more loyal, and "spendier" customers.

From The Container Store's website:

One of The Container Store's core business philosophies is that one great person equals three good people in terms of business productivity. So, why not hire only great people?

Customer service is The Container Store's core competency, so hiring people who are self-motivated and team-oriented with a passion for customer service is key.

We place so much importance on service that every first-year, full-time salesperson receives about 241 hours of training—in a retail industry where the average is about seven hours. And training continues throughout an employee's career.

Excellent customer service requires a strong dose of both attitude and skill. If skill is a little sub-par, attitude can make up for it. The inverse isn't so true...that's where the "right" person comes in.

Customer Service Pays (oh, and it's the right thing to do)
This post was inspired on reading Gerry Riskin's blog, Amazing Firms Amazing Practices.

In his post, Client Satisfaction May be EXTREMELY Profitable, Gerry picked up on a story about stock prices for strongly service-oriented companies outperforming the Dow Jones, S&P and NASDAQ:

...the authors of a study published in the Journal of Marketing found that companies at the top 20% of the the American Customer Satisfaction Index (ACSI) greatly outperformed the the stock market, generating a 40% return.

From 1996-2003, the portfolio outperformed the Dow Jones Industrial Average by 93%, the S&P 500 by 201%, and NASDAQ by 335%.

This concept and quote comes from an article on the Consumerist (neat site, by the way) called How To Beat The Stock Market: Buy Companies With High Customer Satisfaction Scores.

From the article, cumulative performance is shown here:

To tie all the elements in this post together--service, training and profitability--Gerry's advice is less talk and more action. He writes:

Don’t bother disseminating this information to your people in order to encourage them to focus on enhancing client satisfaction.

Their consequential improved knowledge on the subject will do little.  It takes results (client satisfaction) to get results (improved profitability). SKILLS rather than knowledge with be essential to achieve the desired outcome.

It is possible to break out of the pack when it comes to increasing the value and performance of your practice. "Leveraging" people and time is "a" way but it has big limitations (number of people x hours in a day).

Between improved pricing approaches and delivering greater customer experiences, there are several firms busting out of those common profitability metrics. Some trailblazing firms' stories are listed on VeraSage's website and we (VeraSage) are learning about others almost daily.

Why Does Social Media Work?

In my earlier post (and press release) about our award for a marketing campaign for a CPA firm that includes a blog, I used the term "social media" a couple times.

I even used the term related to recruiting. <gasp>

So what does social media have to do with professional services? Everything. With the exception of the very largest mega-firms who are hired for their "name," most people agree that law, accounting, wealth advisory, and other such services are relationship-driven businesses.

Toby Bloomberg on her Marketing Diva Blog had a short, sweet, and solid explanation of social media:

Many people don't understand how the internet works as a catalyst to build relationships which can lead to friendships which can evolve into a community.

Why is that important from a business perspective? Simple. People like to do business with people they like. (That extends to brands.) Building a business community is not necessarily about singing Kumbaya but expanding a resource network.

It's true that blogs lead to real relationships, friendships and business collaboration.

In the two years I've been blogging, I've shaken hands with, and looked directly into the eyes of, dozens of bloggers whom I follow and admire, as well as readers of this blog (of course I admire you, too!). Some have referred work (yes, the kind that pays), others have published my work or syndicated it, and several have shared their books, ideas and advice with me. And still others have become friends with whom I communicate daily or close to it.

Blogs and other social media give a glimpse into a person's mind and personality. And you can do this any time of day or night even when that person is on vacation. What better way to preview and select your next Intellectual Property attorney or your company's accounting advisor.

And what better way to be previewed and selected!? A self-selected lead who already knows he or she would want to do business with you. Nice.

Hey, We Won an AAM-MAA Award! (Some Horn Tooting)

My associate Sue Sassmann and I spent last week out in steamy Savannah, GA at the Association for Accounting Marketing conference. We had a blast catching up with old friends and meeting new people. I did a little presentation and we exhibited to launch our new project-oriented training for marketers. Great time.

The highlight, though, was winning an AAM Marketing Achievement Award for the niche-building campaign we've worked on over the last year with Tulsa CPA firm Stanfield & O'Dell.

Part of the firm's action plan included development of a blog...truly unchartered waters (see conference theme...) for CPAs. S&O's blog for ministries was the second "industry" niche blog by CPAs and the first by a multi-partner firm. These guys are true trailblazers and their results have been quite good and swift, too.

We're pretty excited to be part of their success as you can see from this picture (that's Captain Jack Sparrow between me and Sue--she's on the right).

Some snips from our press release:

At the recommendation of Golden Marketing, Stanfield & O’Dell became the first multi-partner CPA firm to launch a sector-specific blog (theministryblog.com). Innovative approach—and demonstrated results—were noted by judges in selecting Golden’s campaign from among several outstanding entrants....

The...campaign centered on growing the CPA firm’s practice specific to Christian ministries across the United States. The campaign included not only the blog written by the firm’s practitioners for national visibility, but also promotion of the blog by mail, trade-show appearances, and trade-publication advertising.

“We’re pleased with the visibility this award brings to the value of blogging for professional service firms,” explains Michelle Golden, president of Golden Marketing, Inc.

“When a firm gets out there on the Web, and demonstrates their expertise and commitment about a specific area of practice, it underscores their commitment and credibility. It also humanizes the firm and helps to create relationships. Stanfield & O’Dell are truly earning the results they are getting from this effort—I’m very proud of their willingness to pioneer this area that is completely new for accountants.”

Golden...notes that there are only 23 blogs authored by licensed public accountants for the purpose of reaching current and prospective customers. Of these 23 blogs, only four are industry-specific rather than service focused (e.g. general accounting, tax or other services). The Ministry Blog was the second of the four to launch.

“In contrast to the legal profession, accountants have almost no presence on the Internet,” says Golden. “There are thousands of lawyers who blog and are experiencing unexpected benefits from the relationships they are creating. Accountants are far more skeptical of this medium of communication and are far behind when it comes to understanding and working with social media.

"I suspect it will be many years before we see a large number of accounting firms with blogs—just the way it took years before the need for a website was understood. It’s a shame because the playing field is wide open for firms to be first-to-market with blogs in almost every industry sector save the three that exist now: ministries, health care and construction.”

To read the full release: Download aammaa_2007_media_release.pdf

Website Shelf-Life: How Often Should a Firm Update?

Q

Fellow consultant, Marc Rosenberg—nationally known in CPA management issues—e-mailed me this:

"A client asked me the following: 'How often should we be refreshing our web site?' How would you respond?"

A

The question actually has a multi-pronged answer...

Content

To be most effective, a website's content should be added to or changed on a very frequent basis such as weekly or at least a couple times a month.

The intent being that continually renewed content gets a site indexed frequently by the search engines. Search engines also like information tagged with more recent dates versus older dates.

If search engines catalog content with the keywords users are likely to query on, the returned results that will come up highest are those with some combination of a) the most dead-on match, b) the most recently posted information, and/or c) the most popular (highly viewed) pages that contain the words.

Design

A website's design should probably be revisited, at least a little bit, every 2 or 3 years. Design trends and technology change so fast that after about 2 to 2.5 years, sites begin looking dated. Sometimes the "dated" aspects have to do with navigation (next element to be discussed, below) but usually they are appearance-related. I was just thinking about the fact that my own site design just had its 2nd birthday and is in need of a refresher.

The good news is that it may not take much to update the look of a site if the site structure is really well-planned to begin with.

Navigation

This is where good strategy comes in. If the site structure (the way all the pages interconnect) is really logical and well-thought through (and functioning intuitively!) then the navigation can remain the same even when a redesign is needed.

This requires the site to have been built in a good program, and not programmed by someone who did it in such a way that no one else can figure out what they did! When the navigation and programming are sound and follow web development standards, then a "refresh" can be likened to changing the clothes on a manikin, or putting new siding on a home. This enables a refresh to occur easily every few years.

An important consideration in navigation is to make your site scalable which means to set it up such that there is consideration for where new service lines (your products) or new niche areas will be added. Anticipating the need to do this makes it easier to launch these new things and promote them on the web quickly without an urgent redesign of your site.

So, as with most things, a good strategy initially will allow for more smoothly changing and growing in the future.