3 strategies for double-digit growth
There are three simple strategies that can practically guarantee an accounting firm double-digit growth, according to consultant Adelaide Ness -- but just because they’re simple doesn’t mean they’re easy.
“These are tried and true, in firms as small as a couple of people and for really big firms. They work for any size firm -- they just require intentionality,” Ness, who is an executive vice president at The Rainmaker Companies, told attendees at the group’s 2019 SuperConference, held this week in Atlanta. “But common sense doesn’t make it common practice.”
The three strategies revolve around careful client segmentation, and constant attention to a firm’s top tiers of clients.
“You can do client segmentation even at really small firms,” she said. “The top 5 percent of your clients are, on average, bringing in roughly 50 percent of your total revenue. The next 15 percent -- your B clients -- are bringing in 30 percent. And those 80 percent are bringing in 150 percent of your total profits.”
“You should work on bringing in better business, not just more,” Ness added. “You should learn to accept rejection -- and to reject acceptance. Just because someone wants to work with you doesn’t mean they’re a good fit.”
Once a firm knows what kind of clients it most wants to serve, it can begin to intentionally implement Ness’ three strategies.
1. Identify A clients, and “super-please” them
“These clients should be the focus of your senior managers and partners,” Ness explained. “Don’t focus so much on the squeaky wheels -- it’ll take your attention from your best clients.”
Instead, build their loyalty with attentive service, introduce them to new services, and turn them into strong referral sources.
“Clients often complain, ‘When I was a prospect, I felt the love -- they took me to dinner and ball games -- then I became a client ...,’” Ness said. “Treat the time you spend with your best clients the way you treat the time you spend with your best prospects.”
Meeting with them on a regular basis, bringing them useful information, asking open-ended questions, listening carefully to the answers, and providing thoughtful solutions to the issues those conversations raise will help tie them more closely to you.
When well-treated, a firm’s A clients should be a tremendous source of referrals -- provided the firm asks for them, and clearly identifies the kind of referrals it’s looking for.
“If your best client gives you a referral, it makes them sticky. They don’t want to call someone and say, ‘I know I referred you, but we just left them,’” Ness explained. “And if they won’t refer you, that’s a red flag.”
2. Identify B clients -- and turn them into As
“B clients are the A clients of the future,” Ness said, and moving them along requires making sure they know all your services, making it easy and convenient for them to buy more services from you, and treating them as well as your As.
Rather than dropping a long list of service lines on their desks, firms can indicate the breadth of their offerings and their commitment to their clients’ industries by demonstrating their expertise through sharing relevant information on a regular basis, whether by sending along articles, inviting them to seminars, or simply asking good, informed questions.
It’s also important to remember that grooming B clients isn’t a blanket exercise -- it needs to be customized. “All of your clients have ‘favorite desserts,’” Ness said. “You have to find out what’s important to them; that’s what will change your Bs to As.”
It doesn’t hurt to communicate in a way that’s meaningful to them, and to be transparent about pricing.
“Don’t talk nerdy to them -- don’t talk in jargon. Talk to them in their language,” she suggested. “And talk about pricing upfront -- that’s a differentiator, because most firms don’t like to talk about it at all.”
Find prospects that look like your As and Bs clients
“It drives me bananas that everyone wants to start with this -- it’s the hardest one,” Ness said. “If you do the other two strategies, this will follow. Clients will come to you.”
Moving prospects through a sales pipeline is a long, arduous process. Marketing experts suggest that it can take as many as 27 marketing attempts to close a deal with a client, Ness explained -- and the average CPA firm gives up on a prospect after nine marketing attempts.
To build a pipeline of potential A and B clients, “Understand the size and type of client you want to work with,” she said. “If you’re not enthusiastic about going to a prospect lunch, shame on you -- you haven’t hand-picked the right prospect.”
She also recommended filling the firm’s pipeline with enough prospects that it equals 100 percent of its annual revenue. Many firms aim lower, but if a firm has 25 percent of its revenue in its pipeline, an average client attrition rate of 10 percent, and a growth goal of 10 percent, it will need an 80 percent acceptance rate -- and no one has an 80 percent acceptance rate.
The higher figure Ness suggested means that a firm only needs a 25 percent acceptance rate, which is much more in line with industry averages.