Taking a professional approach to niche building
Cross-selling may not be the first word that comes to mind when you think about expanding your CPA practice, but it should at least be moving up on your list of priorities.
Not that having to compete is new — after all, the pool of potential clients has always been finite. But whereas in the past you might have found yourself vying with other practices in your geographic market (or even with colleagues in your own firm), you now have to contend with the burgeoning presence of resource-intensive, widely advertised multinational firms.
And there's increasingly sophisticated software out there that may be leading some clients to believe they don't need your services at all.
Consequently, you may no longer be able to rely solely on your good reputation, knowledge of regulations and referrals and the occasional discreet ad in your local business publication. Rather, you may have to seriously address the question of how to market your practices and to whom. We are now in the era of business advisory; firms must be unique and focused on client needs and wants.
And that may be your marketing square one: To whom? And what? This will take a little research, but you can start right in your own office. Begin with the 10 clients you consider your best and analyze why you rate them so highly, with an eye to what they have in common besides the fact that they're good clients.
Remember, you're not looking for geographical definition here; you're searching for other common ground. Are they from the same or similar industries? Are their occupations the same or very similar?
If those top 10 don't share any characteristics that you can use for cross-selling purposes, try another tack. At first glance, you're probably inclined to describe your practice as general. But get into your client files and take a closer look. Is there one industry or type of business or professional group that makes up a significant part of your client base? Or is there a group that's perhaps less well-represented in your files that you nonetheless particularly like working with — one that has potential as an expanding market for your practice? Perhaps a need for a nontraditional service like asset management advice or insurance may pique interest to that group.
These tactics work equally well if you're just starting out, or just starting a solo practice with a limited client base. In this case, examine the options available in what you define as your core services and what else clients need and want. Narrow the possibilities down to one field that you find interesting or already know something about, that needs the services that you can offer and, most important, that isn't already being well-serviced by a competitor, such as high-net-worth clients or estate and trust planning.
Find your niche
The point is to identify a specific occupational niche and focus your efforts on developing a niche (or target) marketing strategy. It is, after all, a great deal easier to understand and address the needs and concerns of a homogeneous group than those of a heterogeneous group.
You can begin focusing on these needs and concerns by talking with the clients you already have in that niche. Meet them for breakfast or lunch and ask them about their market culture, its organizations, its problems outside the strictly business realm, its concerns for the short- and long-term future — in short, information about your target that's qualitative as opposed to quantitative. If you hope to become an expert resource for this market, which is one of the most credible ways to reach it, you have to know what constitutes an expert in their eyes.
Plan on some outside research as well. What are you looking for? More information about professional associations and organizations? Journals of record and other publications? Articles on your target market, its history, its current operation, its future objectives and potential problems? Basically, you need to become familiar with anything and anyone that regularly speaks for or to your niche, and stay aware of what they're saying.
To do that, you'll probably need to subscribe to the publications and, if you can, join the organizations as a professional affiliate member or attend meetings as an invited guest.
Initially, of course, you'll be doing that primarily to gather information and to establish yourself as a presence. Later, when you know more about your niche's concerns and have developed some credibility as a knowledgeable and sympathetic advisor, you'll be publishing articles in those publications and giving presentations to those organizations.
You should also consider running regular, appropriate advertising in those publications emphasizing your awareness of, and identification with, your target market's particular needs. While it probably won't net you any new business directly, this kind of advertising serves to reinforce your image with your niche market and make you more recognizable. Telling a story can be a powerful influencing tool.
It's a good idea to have these ads prepared professionally. You won't need that many of them since repetition is the key to this kind of image advertising — and the difference in the impression you'll make will be well worth it in the long run. It's true that people are increasingly inclined to respect specialists, but if you plan to become one, you also need to look like one.
Staying in your niche
What else can you do to build your niche market, and maintain it, besides offering the high level of advice and service you'd provide any client? Quite a lot:
- Add value to your service by expanding your knowledge of each client's specific situation and making suggestions. For example, should your client consider a different operating structure? Perhaps it would now be to her advantage to consider incorporating. Does her company need a retirement plan? Should she be more serious about an estate plan? Does her partnership have a well-executed buy-sell arrangement? Are she and the company adequately protected against a serious disability?
- Help your clients make more money so that they can easily afford those additional services by referring business. After all, you expect your clients to make referrals to you.
- Be an advocate for your clients. Actively support the welfare of their industry/profession by writing letters to elected officials, editorial pages and other appropriate outlets.
- Become a genuine resource for your clients by offering them not only your advice but also access to your other resources. Be prepared to refer them to attorneys, insurance professionals and other advisors whom you know and trust.
- Introduce a group of your clients to new ideas through breakfast or lunch seminars. You can host these yourself, or offer them jointly with an insurance professional, attorney or other financial resource. Your clients will appreciate getting useful information with no obligation attached.
- Keep in touch with your clients and prospective clients through the mail. You don't need a formal newsletter; you don't even need a fixed mailing schedule. Just make sure your mailings are always relevant to their industry and to their concerns, and not readily available from media that they're likely to see regularly. They'll come to anticipate hearing from you.
- Be opportunistic in the true sense of the term. When an unanticipated opportunity to raise your profile in your target market comes along, be ready to seize it.
If all this seems like a lot to take on in addition to actually serving your clients' needs, consider assigning the responsibility to someone in your office and offer an incentive for success in helping you grow your practice in its new direction. And by all means, utilize professional talent to prepare your promotional material: This material may represent your one chance to make a favorable impression.
Outside the pale
Once you've established yourself in your niche market and feel reasonably comfortable with the rate and cost-effectiveness of the growth of your new client base, what do you do about non-niche clients? There's a good chance that you've already decided not to accept new clients who fall outside what now is your specialty. Why dilute the focus you've worked so hard to acquire when you can refer these people to your colleagues and gain some goodwill and referrals of your own?
But what about those non-niche clients that you already had? That may be a tough call. It's true that they represent a dilution of your ability to concentrate on your target market, but they may have been loyal to you for some time, they may be quite profitable and, no less important, they may be personal friends.
Many professionals who make the decision to specialize their practices find themselves retaining a small group of non-niche clients for one or more of those reasons, counting on attrition to gradually phase them out. Any clients who don't fall into those categories can be diplomatically turned over to colleagues. You may find that you wish to take this latter course with all your remaining non-specialty clients - that's really a choice only you can make.
In this age of increasing specialization, many professionals are finding that the niche marketing approach is the most cost-effective one. Consider: Clients represent not only their current billable value, but also the billable value of future services and the future billable value of the referrals they give you.