Tax practices make some fundamental mistakes in their marketing -- but they can correct them, according to Chuck McCabe, CEO of The Income Tax School Inc., in Glen Allen, Va. Among the marketing errors and the solutions:

Not tracking feedback to marketing or advertising campaigns. Practices also often fail to track sources of new clients, said McCabe, who recommended using a code to track where the client came from. The code, he added, could be printed on a coupon included with a mailer or in an e-mailed coupon. “Identify where the new clients came from and how much revenue they generated compared with what you spent on the marketing campaign,” McCabe said.

• Failing to measure the results of marketing and advertising expenditures. Tracking and measuring marketing results is critical considering that, according to McCabe, a new tax practice could spend as much as half its revenue -- or more --on marketing. “An established practice, at least four to five years old, should spend about 5 percent of projected revenue each year on marketing,” McCabe said. “Even when you’re established, you don’t want to stop marketing.”

• Not seeking the advice of marketing experts. A local business school might have a marketing department and therefore be a source of interns and other advice from future professional marketers. Practice owners can hit marketing books, seminars and blogs. The Income Tax School, for instance, sells The Tax Business Marketing Manual, which has been

updated with more information on Internet marketing (including social media) and local business-development tactics such as networking, cross-referrals, seminars, trade shows, LinkedIn groups, Facebook and Twitter, among others.

 Not marketing to prior clients. This can ensure the highest possible prior client retention rate. “You should be making contact with your clients all year,” McCabe said, adding that a practice heading into tax season might use a postcard or special mailer to prior clients (“It makes them feel like part of a special club,” said McCabe). During the off season, a practice can send newsletters -- McCabe recommended at least two newsletters every year -- as well as off-season tax-planning sessions. Prior clients can also be invited to off-season events such as picnics or holiday parties, or could be sent promotional gifts.

In a discussion on the Tax Business Owners of America group on LinkedIn, practice owners reiterated McCabe’s point in the first TaxProToday article on this subject that the best marketing for practices targets specific age groups, occupations, geographic areas, and other factors. One practitioner on the LinkedIn group said he was going to use a high-quality postcard-sized mailing at the kickoff of tax season, targeting the more affluent local Zip codes and offer a 15 percent discount from last year's tax fee. He also planned to offer pickup and delivery and to focus on prep work for seniors and churches, and hoped to pick up clients from preparers who quit the profession due to new testing and credentials requirements.

“Your blanket mailing is a good idea to create awareness of your new tax service, but will not likely generate much direct business unless you have a very compelling message -- almost everyone offers a discount,” McCabe replied on the group’s board. “Pick-up and delivery service might be appealing, but I think you also need to differentiate yourself from other tax preparers in terms of tax knowledge, quality service, etc.”

“If you can get the endorsement of the senior and church groups you mentioned, that would be a big plus and should bring in some clients,” McCabe added. “Consider giving a donation to the church instead of a discount to the client who is a church member.”

He added that preparers looking for a charity to contribute their prep work to can check with umbrella organizations such as United Way, and should if possible pick a charity that has a cause they feel strongly about.

Among his other points, McCabe noted that the Net has made it possible for even small practices to compete with “the big boys,” with its range of Web site and client-interaction tools. He also recommended that preparers belong to a professional organization such as the National Association of Tax Professionals, the National Society of Accountants, the National Society of Tax Professionals or others.

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