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It’s all about investing in the long term client

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August 30, 2010

Before I partnered with my father in our current firm, I was introduced to the concept of “return price minimum”(RPM). In other words, potential client work was assessed to ensure a decent return on investment—an agreeable “minimum.” While I agree that this is smart business practice, RPM isn’t always applicable, especially where there is a grander vision. That vision? Capturing a profitable, long-term client niche. Consider one of my personal experiences…

While still at my former firm, a young medical resident (and friend) approached me about the FICA Tax Credit for medical professionals in residency. He had heard that other residents were filing amended returns to receive the credit and wondered if he was also eligible. Eager and enthusiastic to help, I researched the credit thoroughly. I verified that we could submit an amended return and Form 843, but made no guarantees that the credit would be approved.

Word spread and soon several medical residents were contacting me for help. I saw an opportunity! I approached the director of tax and explained the situation. I also explained my vision: that we could capture and mature these niche clients by filing the amended returns. It was a lucrative niche with the potential for long-term, high-grossing clientele. I was shot down. I was told it wasn’t worth the firm’s time and effort.

I took the idea to my father, and he agreed to file the returns within his practice.You know where I’m going with this, right? Even with no guarantee of receiving the FICA Tax Credit, the majority of the young doctors remained a client of my father’s firm—where I am now a partner. And they are still clients today—twelve long years. By supporting these clients with basic tax return support, we were able to capture and mature a profitable niche client base.

From this original group, some have gone into private practice and are among my small business clients. I had a vision and stuck with it—which landed our firm a cadre of valuable and loyal clients (who by the way have long surpassed their return price minimum). And for the record, just last week I was notified that after years of being tied up in court, my medical clients received their FICA Tax Credit refunds…twelve years later.

You get the main point. It’s all about investing in the long-term client. But there’s another lesson as well. Don’t underestimate the visions of your younger staff. You never know when you might land your next big niche clients!

Jody L. Padar, CPA, MST, is a Certified Public Accountant experienced with Complex Federal & State Income Tax Compliance for Business & Individuals. Jody is an adjunct professor at Oakton Community College, where she teaches Taxation and QuickBooks Courses. She is part of Intuit Trainer Writer Network and speaks nationally on various Technologies and Taxation. Reach her at jody@matousekconsulting.com.

Comments (2)
While I've never had an opportunity to get that kind of niche, I agree with taking advantage of opportunities as they come. I've been growing my practice by always providing the service the client needs, sometimes at a sales price lower than other clients, because I can see either 1) potential for growth with this client and/or 2) the possibility of their network for referrals, just like the doctors mentioned above.
Posted by cweissman | Tuesday, August 31 2010 at 12:09PM ET
You are not alone Jody. I have had ideas shot down, only to spearhead them myself and watch them bloom. Firms of the future vs traditional firms, we know who will be ahead in the end. Great post, stay an inspiration.
Posted by cfarmand | Monday, August 30 2010 at 11:01AM ET
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