Understanding Business Growth
While running an accounting firm requires myriad tasks, functions and decisions, in truth, everything you do to build or grow your business can be classified under one of four different and distinct areas or categories. If you learn these simple concepts and how to apply them, your competition won’t stand a chance.
1. Get more clients. But How?
It’s that simple: Build your client base. Get more prospects to buy from you and become your customers. You know how it works. When more people hire you, you take in more gross dollars and, as a result (depending on your margins and overhead), you make more bottom line profits. As a spin-off benefit, the more people you add to your client base, the more people you can approach for additional sales, and the more people referring you to others. While many businesses have just a few methods for attracting customers – Yellow Pages, TV advertising – there are truly an unlimited number of methods to attract new customers to your firm – your imagination is the only limiting factor.
Some of the best, most productive, and cost-effective marketing methods can be adapted from what others are doing in totally unrelated businesses. Look around at what other businesses in unrelated fields, industries, or professions are doing. Have you seen what’s working for them? Is there one business that just stands out in different or unusual way? Or, do they all pretty much use the same marketing methods? How creative are you? Can you take what is working for them and adapt (with a few minor changes) their methods to your firm?
What about you and your firm? What marketing methods are you using right now to attract new clients and to build lasting relationships with them so they’ll do business with you for a lifetime?And second, how many different marketing methods do you presently, and concurrently, have working for you?
Diverse Customer Acquisition
There’s a real danger in having just one or two main methods of attracting new clients. One of my consultant friends told me about one of his clients who depended almost entirely on a telemarketing team to acquire leads for the salespeople to follow up with. When a well-funded competitor opened for business not far away, they hired nearly all that business’s telemarketing staff and nearly shut the business down. The business was nearly a total disaster. When they called my consultant friend, he could see he had to do something quick just to save the business. So, they got to work and hired and trained a whole new telemarketing crew, and got the business up and running again. But then they looked at other marketing options and put together an effective direct-mail program, started a proactive referral-generating system, and worked out some joint ventures and host-beneficiary relationships with other, complementary, but non-competing businesses. Now, if something happens to any one of their marketing methods, they have other strategies or “pillars” in place that can keep the business from collapsing and keep it running smoothly.
What about your accounting firm? How can you apply this? Make sure you’re not dependent on only one or two main methods of attracting new clients. New clients are important to your business, there’s no question. But, they’re not just important, they’re absolutely vital … not only to the growth of your firm, but to its very survival. It’s critical you have multiple systems in place to ensure your firm continues running and growing, uninterrupted, if anything unexpected happens. Because of the limited amount of space in these pages, we can’t talk about all the methods of acquiring new clients, but in the training materials and workshops we conduct, we go into great detail on effective ways to attract prospects by the bushel, and convert them into loyal, long-term clients. As important as getting more new clients is, there are still three more methods you can use to grow your business. And each of these methods is more profitable, more effective, and gives you greater potential for leverage than the first method.
2. Get your clients to make larger average purchases.
This just happens to be the quickest and easiest way there is to increase your profits. A large number of businesses have extensive and expensive plans in place to acquire more customers, yet, very few have paid much attention to this highly profitable and highly leveragable step of increasing the size of the order; it’s getting more money from each of your clients every time they hire you. If you think for a minute about how easy this is and how profitable it can be, you’ll see why it’s such a powerful concept. And, you’ll also see why nearly every fast-food restaurant has embraced, has mastered, and requires that every person who takes orders understands and is proficient in the use of the “up-sell” and “cross-selling” principles. Think back about your own fast-food restaurant experience. You drive up to the speaker and place your order … a sandwich and a drink. And then what happens? A voice comes back over the speaker and asks if you’d like an apple pie or fries with your order. That’s an example of cross-selling, selling an additional product in addition to or beyond the initial purchase. Or, they might suggest you “super-size” your order or upgrade it in some way. That’s an example of an up-sell, increasing the size of the initial order. In any case, if you take them up on their suggestion, what they’ve done is increase their profits substantially because they made an additional sale, but had no acquisition or marketing costs. You see, they realize, that a certain percentage of their customers will say, “Yes.” And the only reason they say “yes” is because a suggestion was made to them. So they play the numbers game. And the result? Well, by being aware of what their customers might want, but not ask for on their own, and then by asking questions or making suggestions, they bring in a substantial number of dollars. And other than the actual cost of the product, those dollars are pure profit.
Here’s another technique fast food restaurants frequently use. It’s called “bundling” or “packaging.” It’s where they combine a sandwich, a drink, and fries, and then throw in a couple of “bonus” items, like maybe a cookie and a toy. They put it all together in one package and give it a name like “Happy Meal.” They’ll charge you less for that package than what each of those items purchased separately would have cost, but the total dollar amount you spend will be higher. And, since there were no marketing costs involved, other than the cost of the items themselves, it is pure profit, and it goes straight to their bottom line.
What does that have to do with you and your accounting firm? Well, you aren’t in the fast food business, but the same principles still apply. Just ask yourself this question: “What additional products or services do I have to offer that would be natural complements to what my clients initially buy from me?” You have an obligation to your clients– the people who trust you to provide them quality services, give them sound advice, and who hand over their hard-earned money to you – to make sure they get the very best value, the best use, and the most enjoyment from their original purchase. If you have additional items, either products or services, that can enhance their value, their use, or their enjoyment, then your obligation is to do everything that’s reasonable and ethical to see that they at least have the opportunity to take advantage of those items. Again, it’s playing the numbers game. Some will take advantage of your offer, and some won’t. But, at least you will have given them the opportunity, and you will have fulfilled your obligation to them. Up-selling, cross-selling and bundling … these are only three of more than a dozen immediate, profit-producing methods you can use to skyrocket your business to the next level.
3. Get your clients to hire you more often
Increase the frequency of your clients’ purchases. Get them to come back. Give them reasons to want to come back and to continue doing business with you. The longer your clients go between purchases, the more chance they have of engaging with your competition. Stay in front of your clients consistently with educational information, and notices of changes in the law, or updates regarding the products or services they’ve purchased from you that can affect them. Tell them about new services, special incentives, and other offers that might benefit them. The idea is two-fold: One, to “lock” your clients in, so they can’t afford to do business with anyone else, and secondly, to make it so attractive to do business with you that they wouldn’t even consider going anywhere else. What you really want to do is lead your clients to the inescapable and undeniable conclusion that they would have to be completely out of their minds to even consider doing business with anyone else but you, regardless of the selection of products or services you provide, the prices you charge, your location, or the relationship they may have with whoever they’re currently doing business with.
Airlines offer upgrades and mileage bonuses for those who fly with them on a regular basis. Countless other businesses offer similar programs, as well. Now, let’s apply this concept to you and your accounting firm. What can you do that will endear your clients to you? To lock them in and get them coming back more often – and even inspire them to refer others to do business with you? Do you have an educational newsletter or special informative reports you periodically send them that keep them updated? Do you send postcards or have a Web site that keeps them informed of new items and promotions? Do you hold special client appreciation promotions or events? How about a perk or designation for your most loyal clients? What about a Referral Reward system that recognizes or compensates your clients for referring their friends? You must let your clients know you value them, appreciate them, and want them to come back. You want to make doing business with you fun, risk-free, rewarding, and easy.
4. Extend your customers’ “average buying lifetime.”
How long, on average, do the people who hire you remain your clients? In other words, how long do they continue doing business with you before they move on? Are they one-time customers? Do they stay with you for a year, five years or 10 years? Have you ever stopped to figure it out? Next, what are you doing in your accounting firm right now, to make sure your clients continue doing business with you? If you don’t have a strategic plan, a working system, in place, you are going to lose a certain percent of your current clients to the competition. There’s no question about it. Your competition … right now … right this very minute is making plans and taking steps to take your clients away from you. The question for you is not, “What are you going to do about it?” The real question is, “What are you currently doing about it?” “What are you doing about it right now?” What plans, what systems do you have in place to keep your clients from defecting to the competition?
Let’s talk about your clients for a minute. Are they thrilled enough with the services they receive from you to continue doing business with you year after year? What if you answered “yes” to that question? My next questions would be, “Are you sure?” “How do you know?” “Where did you get your information?” “How reliable is it?” “Can you explain, in detail, the system you have in place for finding out?” Notice that I said, “Are they thrilled enough?” Not “Are they satisfied enough?” You see, there’s a big difference between being thrilled and being satisfied. Last year, more than 200 million Americans stopped doing business with companies they were “satisfied” with. And 60% of so-called “satisfied” customers switch companies or brands on a regular basis. As a business owner, you can’t afford not to thrill your clients or to build their trust in you and your firm. The cost is too high, and unfortunately, most business owners simply don’t understand it. Let’s take a look at what the potential cost could be to you if you fail to do these things: The point is, clients are important – all clients. In fact, they’re critical. There’s no question about it. You and I both know that. A business couldn’t remain in business unless it has someone to buy its products and services. Here’s an interesting point: Most business owners know exactly how much they have tied up in furniture, fixtures, and equipment. They can tell you, nearly to the penny, how much each item costs, how old it is, how much it’s depreciated, and what the remaining life expectancy is. That’s absolutely important information for any business to have. But, what’s amazing is that very few business owners have any idea of what the value of their most important asset is: their customers. Think about how this whole concept relates to your accounting firm. What is it that you can do, specifically, to extend your clients’ buying lifetime with you? Answer these questions:
- First of all, who are your clients, those who are hiring you now?
- Who are their family members?
- Do you know the names and ages of their spouses or children?
- How well do you know their business?
- What about their spouse or children? What are their hobbies or interests?
- Do you know why they purchased a certain type of product or service?
- Do you know who their friends, neighbors, or relatives are?
- What about your staff or employees? Do you know how they treat or feel about your clients? Do they, or do you, for that matter, have favorite clients?
- What makes them a “favorite?” Is it how much they spend? How often they come in? Their personality? And how do you treat those clients? Any different from the others?
- Do you have regular staff meetings and talk about how to think like a client?
- What would you want if you were a prospect considering doing business with you for the first time? Or maybe an existing client who is considering giving recurring business to your firm?
- Or, perhaps considering referring a friend, a family member, or an acquaintance?
- Do you have a training system in place to teach your staff how to handle or deal with difficult clients? Short-tempered clients? Analytical clients?
- Do you have a plan for moving people up the “Loyalty Ladder?” From Suspect to Prospect to Shopper. Then on to Customer, Client, and Advocate. And, finally to convert them into Raving Fans?
- When a client stops doing business with you, do you know why? Do you have a system in place to find out?
- What would you have to do differently to get your clients to buy from you for, say, five and a half years, instead of just five years?
If you will actually take the time to go through these questions and formulate answers, and then incorporate that information into your business practices, you can work wonders toward extending the buying lifetime of your clients. And as a result, you’ll add significant profits to your bottom line.
If you enjoyed this article, learn more about PASBA. Since 1982, PASBA has helped accounting firms become the premier providers in their communities. PASBA membership gives accounting firm owners everything they need to succeed.