Tax business owners, as well as small businesses in general, are focusing more on such Internet marketing techniques as e-commerce and social media even while relying on such traditional methods as networking and targeted advertising to attract new clients, according to Chuck McCabe, CEO of The Income Tax School Inc.

“The problem for preparers is, that of the taxpayers out there who might use a tax prep service, half do their own returns,” McCabe said in an interview with TaxProToday, “and most of the rest have their own tax preparers. You have to get someone to change their preparer, and their tax preparer is like their barber.”

Preparers are readying their marketing plans now before the next tax season kicks off in 2013, and January is when preparers need to hit the ground running with their marketing, McCabe said. “People take time to make a decision, and you want time to make an impression. You want two to three weeks of impressions before they get their W2,” he said.

“In tax season, every day that goes by means the preparer is dealing with a diminishing market,” he said. “The more people you can reach before they file, the better.” He added that the public often too recalls seeing preparer ads long after they finished running during tax season.

Among his other points:

• Networking is probably the most used because it’s probably the method most preparers are comfortable with and it’s easy to use. “More progressive owners are focusing on Internet marketing, such as search engine optimization and other strategies, to reach local markets,” added McCabe, whose Glen Allen, Va.-based company sells the Tax Business Marketing Manual.

• Mass media is no longer effective for most independent tax business owners because of the fragmentation of the media and the cost to compete with national tax firms for media buying. In most significant size markets, mass media is not cost-effective unless the tax firm has offices convenient to the majority of the viewing or listening audience. In a small town, however, a local TV or radio station or newspaper could still be effective for a single-office operator.

McCabe warned that local media sales reps are astute about pitching their commercials, and recommends pitting one station against another for preparers’ ads, remembering to specifically target the audience of filing adults. He added that stations also routinely have more “inventory,” or available advertising time, early in the calendar year, just past the holiday season when retailers have usually finished their advertising.

• Have a targeting mailing list. Preparers are advertising to 100 percent of the people, and only maybe 10 percent are listening. Best prospects for tax preparers include new homeowners and others new to a geographic area, and people who have had a life-changing event. He recommended that preparers contact direct-marketing trade groups like the local chapter of the American Marketing Association, as well as the local Chamber of Commerce and Small Business Development Center.

(Part II of our marketing story will cover the biggest mistakes tax practices make in marketing and generally accepted formulas for budgeting marketing for a tax practice.)

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