Profitability and being client-focused go hand in hand. Intellectually, all accountants believe this, but they have a hard time identifying specific actions they can take to maximize both profitability and client service. Over the years, I’ve observed specific client-focused activities that correlate to firm profitability.Here are 12 specific things you can do:
1. Make sure the firm’s objectives are aligned with those of the client. This is the most important step you can take to create a profitable practice. What do your clients need and want? While the question is simple, the answer often is not. Do your clients want customized solutions or turnkey answers? Do they want speed and efficiency? Do they need someone to hold their hands or challenge their decisions? What are your firm’s objectives? While all firms want to make money, this is not the primary reason for being in business. Profits flow from achieving your objectives.
2. Know your clients. Clients can be categorized in one of four groups. There are profitable clients who fall into your core client category. There are profitable clients that are not part of the core clients’ group. There are non-profitable clients that are part of the core client group, and finally there are non-profitable clients that are not part of the firm’s core clients. Non-profitable, non-core clients don’t belong in the firm.
3. Focus on making your clients more profitable. Think about the things that you can do this year to improve your clients’ net worth or the overall profitability of their businesses. The more you do this, the more value-added services you will be providing and the more loyal your clients will become.
4. Focus on client profitability. Too many firms focus on client revenue. It’s not what you take in, it’s what you keep. Change your focus from top-line revenue to bottom-line profit for each client. Determine your acceptable gross profit margin before you accept the next new client. By doing this you will focus on the right clients.
Say two clients want your time. One generates 80 percent gross profit and the other 35 percent gross profit. Which client will you want to service first? Finally, remember that realization is not the same as profit.
5. Don’t focus only on billing more time. Client-centered firms focus on solving client problems and issues, not on building up chargeable time. The more successful you can make your clients, the more successful the firm will be. Learn to bill on the value of your work, not the time that you spend.
6. Communicate with your clients. Determine the most efficient way to communicate with your clients. Some clients may prefer e-mail, while others still like to receive a letter or memo in the mail. A client-centered focus demands that you find out how each client wants to be contacted.
7. Create systems to eliminate inefficiencies. Develop one way of doing things in the practice. Four partners should not have four different ways to set up a file. The more you develop systems and processes, the more time your staff and partners will have to spend with clients.
8. Reduce your costs of providing services. Salaries make up the largest portion of a firm’s cost. Make sure your compensation system rewards those who produce the most for the firm. Move away from large annual salary increases and create a system that pays performers more than non-performers.
9. Make client satisfaction a key element of your compensation system. You need to put some teeth in the client satisfaction element of your compensation system. There is nothing more valuable than a satisfied and loyal client. Reward partners and staff for achieving superior client satisfaction. Constantly survey clients on how well you identify and solve their problems.
10. Train your associates. Professionals are good auditors or tax accountants. That does not make them good client service people. They need training in developing listening, writing and probing skills, and in learning how to respond to client objections.
11. Designate client relationship managers. Identify the best people in the firm who will serve as client relationship managers. Give them the responsibility of communicating with clients in order to identify their needs and wants.
12. Cross-service clients when it makes sense. If you know your clients and try to make them more profitable each year, you will know when to provide them additional services. Clients will be thankful for the additional services and you will be helping them achieve their goals.
For more on client service, see August Aquila and Bruce Marcus’ “A manifesto for a new era in firm-client relations” from the Jan. 29, 2007, issue of Accounting Today on WebCPA.com.
August Aquila is CEO of Aquila Global Advisors (www.aquilaadvisors.com) and Chantrey Capital Advisors. Reach him at (952) 930-1295.
