Pruning the Client Base

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CPAs and resellers learn that you can keep clients happy by keeping only happy clients.

By Richard McCausland

When NextLevel Information Solutions consultants show up at a prospect's site, they're trained to size up the office furniture, check out what's in inventory, and see who's using a laptop or Palm. No, they're not casing the joint. They're looking to see if this is someone they want to do business with.

Partner Insights

The consultants have already learned a lot about the prospect's business from the Web. "During the [subsequent] on-site visit, we continue to identify those attributes that assist us in classifying the client--the size of their physical location, the overall condition of equipment and furniture, the amount of telephone activity and customer traffic, management style, even whether they are early implementers of technology," says Manny Buigas, CPA, a principal with Miami-based NextLevel.

"We have actually turned this process into a competition among our consultants, because we always bring two persons to our first visit," continues Buigas. "On the way back to the office, we compare notes to determine who noticed the most number of attributes."

This is no mere game, however. As he explains, "The client selection process is critical to NextLevel's success, since 80 percent of our revenues will be derived from a small group of new installations. We want to weed out any prospects that we feel will not be a good match with our service and product offerings."

As the economy shows signs of picking up, lots of CPAs and consultants are casting a more critical eye toward the client base, evaluating who is and isn't up to snuff. For resellers, in particular, industry consolidation is making new product lines available, with the potential for entering whole new markets--and a swelling of the customer rolls.

So how fiercely should resellers patrol against client sprawl? It all depends.

"If you're getting maintenance revenue from your publisher because you're the business partner of record, you're not going to cut customers because you have too many," says Taylor Macdonald, senior vice president in charge of business partners for Irvine, Calif.-based Best Software. As he points out, "Over the last two to three years, what kept people in business are their existing customers."

On the other hand, says Macdonald, "Whether you've got 10 customers or 100, when they don't pay you on time, or when they argue about every item on every bill, or when they have unrealistic expectations of what the software should do or what you should do, then you have to sit down with them and say, 'Hey, I don't think it makes sense for us to keep working together.'"

There's no time like the present, he suggests. "As the economy comes back, now it's time to say good-bye to the jerks."

Sam Allred, CPA, whose Helena, Mont.-based Upstream Academy advises both accountants and resellers on best-practice strategies, urges firms to formalize their client acceptance process. After all, "History has shown us that it's much easier to get a client in the front door than it ever is to get them out the back door."

And sometimes, a firm needs to do just that. For instance, "When a client will not let you provide them the level of service you are committed to provide, then you have to let them go," insists Allred. Otherwise, "You will provide the level of service that matches the level of client"--which does nothing for the firm's reputation in the case of C-level clients.

With 250 active clients (out of a database of 750), Dallas-based Nelson & Pickens doesn't have all top-quality clients. Stephen Nelson, CPA, advises, "If you're not willing to hire more people to take on these C and D customers, by definition you have to get rid of them." It's his view that, "In order to grow quality, some people have to go. We do not lower our service to A and B clients because of C and D clients."

Exercising Quality Control
Like so many CPA and technology consulting firms, especially in their early years, "we were more focused on gaining market share," recalls Buigas. However, we realized we were missing opportunities with [existing A-level] clients because we were too busy moving into a new implementation."

Over the last two years, NextLevel has consciously focused on recruiting and keeping what it regards as high-quality clients. "We try and do most of our pruning up-front by not taking on clients that are incompatible with our business culture," especially as demonstrated by the reseller's implementation methodology.

Danger, Will Robinson, Danger!

NextLevel principal Manny Buigas has compiled this list of warning signs that might indicate a new prospect could quickly become a problem client:
1. Prospect's inability to clearly define or communicate technology needs.
2. Unrealistic expectations with respect to the investment required to meet stated goals.
3. Inadequate planning to achieve a successful implementation within the period specified.
4. Poor due diligence procedures exercised in the selection of the software vendor or the reseller that will implement the solution.


Star Pharmaceuticals, which markets and distributes prescription and over-the-counter drugs targeted to the urological and ear-care markets, radiated A-level vibes when it first crossed paths with NextLevel in mid-2002. For one thing, Star's own CPA had strongly recommended NextLevel. Also, Star's business was a natural fit for the reseller's core vertical competencies.

Perhaps most important, Star was completely open to shelving its MS-DOS system in favor of new software that would allow it to better track its nationwide network of sales reps and the 6,200 physicians with whom they are in regular contact. As Buigas explains, "Star's business model was designed to leverage technology by maximizing operational efficiencies in order to control labor costs."

Melanie Finley, director of strategic marketing and operations for Fort Lauderdale, Fla.-based Star, says, "We explained that we needed a computer system that would allow us to grow." Working together, the two companies arrived at a solution that encompassed Accpac Advantage Series Enterprise Edition, Accpac CRM, and hardware. Sales reps and telemarketers can now directly input orders into the system. Also, NextLevel was "able to customize everything to our needs," such as the specialized documents required by the Food and Drug Administration, notes Finley.

She has only good things to say about NextLevel. "They sit down and work with you every step of the way," comments Finley. Buigas return the compliment. "They always keep us informed of their strategic plans so we can continue to meet their business needs," he says.

Not all such relationships go as smoothly, of course. But there are reasons to stay with certain clients, "even though we may not be billing them in large amounts," notes Buigas. For example, some contribute a steady maintenance annuity. Also, "These [smaller revenue generators] may be our best referral sources, since many of their personnel end up in new companies and re-establish contact with us."

However, no matter how rigorous the client selection process, a clinker can slip in. Buigas says, "What sometimes happens during lean times is the tendency to dress up a C client and convince yourself that it is an A or B client." He advises moving quickly to correct the mistake, preferably by recommending another reseller who might be better suited to working with that customer.

"We try and conduct these [severance] meetings face to face," says Buigas. "They are never easy, but if you treat people with respect and you stick to the facts, you can agree to disagree and both parties can move on."

Market, Market, Market
So what should consulting firms be doing to ensure that they attract and keep a largely A-level clientele?

Firms that have an ongoing marketing presence have given themselves an edge when it comes to enhancing their client registry, according to Allred. He explains, "If a firm is always running at or near maximum production capacity and has strong marketing skills, then they should evaluate what work they are currently providing--or clients they are currently serving--that is not very profitable. It will likely make sense to replace that work with more profitable work." Their ongoing marketing efforts will give them the necessary leads to make that replacement.

An Expectations Document Checklist

To prevents misunderstandings down the road, Taylor Macdonald, senior vice president in charge of business partners for Best Software, strongly encourages resellers to have clients sign off on an "expectations document" before implementation work begins. The document should address:

  • Payment terms and expectations
  • Handling billing disputes
  • Support hours
  • Support turnaround times
  • On-site availability
  • Project management
  • Project documentation
  • After-hours work
  • Change orders
  • Other issues important to the prospect.
More than the bottom line will benefit from shedding clients that produce heartburn. For one thing, "less time is spent dealing with emergencies," because the practice is focusing more on conscientious clients, points out Allred. That shift translates into improved morale among the staff, "when they begin to believe that they really are the firm's No. 1 asset."

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