Growth consultant Gale Crosley talks about how firms can build truly client-centered approaches to growth that go far beyond cross-selling.
Transcript (prepared by artificial intelligence; in case of discrepancies, refer to the recording):
Dan Hood (00:03):
Welcome to On the Air with Accounting Today. I'm an editor-in-chief Dan Hood. This year, a lot of our Top 100 Firms are focusing on cross-selling as a way to boost growth. But is cross-selling enough? Is cross-selling past its sell by date? I hear to talk about all that as Gale Crosley. She's one of the foremost advisors on growth in the accounting profession. She's a columnist for Accounting Today. She's one of our Top 100 Most Influential People for many, many years, and is well regarded as an expert in this area, Gale, thanks for joining us.
Gale Crosley (00:26):
Thank you, Dan. It's great to be back here
Dan Hood (00:28):
Actually. Yeah, I should say, and a frequent guest on the podcast.
Gale Crosley (00:32):
Yeah.
Dan Hood (00:32):
Let's start, what's wrong with cross-selling? Why is cross-selling so terrible? Every time we talk about cross-selling, you laugh like that or something.
Gale Crosley (00:42):
I react
Dan Hood (00:42):
Violently, right? Yes. Not in a positive way. And actually, you're not the owner. I've heard a lot of people say, "Oh, I don't like cross-selling as a phrase," or they'll say, "I like some other phrase," or something like that. What's the issue then?
Gale Crosley (00:52):
So there are certain words that have baggage, and that's one of them. And when you have a word that has baggage, then when you spout it out there, it's like people think of the good, then the bad and the ugly and so forth. And the problem with cross-selling, there's a couple of problems. Number one is that it connotes that you're going to go in there and sell something, right? So it doesn't connote what is really required, which is a more strategic approach toward a client. And more strategic means that you don't go in there and look for stuff to sell to them. And you don't even ask them what their problems are, although that's part of it. But what you do is you step back and look at the power and politics and decision making within an organization and you figure out from there how you're going to accomplish your objectives.
(01:41):
So that's item one. The second reason that it's got baggage is people have been trying to do it. Well, I've been back in the profession for 25 years and for 25 years, it has been unsuccessful as a concept. So let's just call it what it is. It's like, get all those partners out there, crack the whip and go cross-sell stuff and go grow your book. And that just is not a workable long-term solution. It may be short-term, a tactic that people will try and it has a beginning and an end. While I tried that, it didn't work. So they'll go on to the next thing. So there's nothing sustainable about it.
Dan Hood (02:19):
Gotcha. All right. So it's general failure. So let's just leave it aside. You have a proposal for something better. This is part of, I should say, part of you have a broad overarching strategy for firms to take when they approach growth. And we're going to talk about some of that towards the end. But one element of it is sort of your improved version, let's put it that way, of cross-selling, which is, I think you call it 'Land and expand.'
Gale Crosley (02:41):
Land and expand. And I wish that I had made up the term, but I did not. I brought it over from the technology world, which I was in for quite a while before I came back over here. And 'Land and expand' connotes exactly what it is, which is we have landed, now we're going to expand. And so it doesn't have baggage associated with it. And it also connotes a most more sophisticated approach because this is what we did in tech world, is that we stepped back and looked at what the organizational structure and the decision making authorities and processes and so forth were and what the business strategies were. And then at the top level, and then we could figure out how we were going to navigate around a larger conversation about where is your company going, what are your key initiatives over the next year or so?
(03:32):
And you can immediately go into and have conversations into what's on the mind of the buyer, if anything. So it's more about exploration of potential than we're going to come out and sell you more stuff.
Dan Hood (03:46):
Right. Gotcha. Well, two things I want to ask you, if you say what's on the mind of the buyer, if anything. So I was just going to quick say, do you find, are there clients who have nothing on their mind? And what do you do in that case? If they're like, "Yeah, we're just going to keep doing the same old thing. We don't know. " Is there an approach there or is that a client you get away from because you're like, "Well,
Gale Crosley (04:06):
What's up with that? " Okay. So that is never the answer. The answer could be that answer if the question is posed in the context of what is going on out here and they're thinking about something that's within our wheelhouse of accounting. But when we ask the question about the broader business objectives and what are your top three priorities for the year, I don't know a C-level person who couldn't answer that question. Yeah. So we're broadening it. So we're getting answers that shape the context of where we go with it. For example, well, this year we want to buy two new companies and upgrade our manufacturing operations. Okay, great. Now that we have an anchor point and we have context, then we can go down the road of tell me a little bit more about each of those initiatives and you start drilling down. So yeah, there's always, if we don't have the top three things that a C-level executive is looking at, I would wonder whether they are the right person to be in the job that they're in.
(05:07):
So I've never had an answer that says, "Oh, we're doing well. I don't have anything to accomplish." That's
Dan Hood (05:12):
Because they never asked me. That's always my answer is everything's good, leave us alone, but that's why no accountant is trying to sell me anything. So you talked about getting to know the internal structure of the company. It's not just in terms of what they're doing and their operational structure, but literally some of the politics and the people behind it, who's thinking about it. How do you do that? What's the why first off? And then how do you do that kind of thing? It's very like there's almost a spying element to it's like you're gathering intelligence, human intelligence about your client or your prospect.
Gale Crosley (05:42):
Absolutely. It starts with something that I brought over from my days at IBM was account planning and this is one implementable element of it that's very powerful. And at IBM, we would sit down internally and spend X number of hours on our large clients and talk about the first thing we talk about is the organizational chart. Let's start at the board and who reports to who? Or in the case of the mid-market, you've got two brothers that own a company. Okay, let's talk about these two brothers and who's underneath them. Do they have an advisory board? This opens up a conversation around the internal team around what is the politics and power involved in which we are operating. So I took, actually it was an eight or 10 page account plan template many years ago and I boiled it down to a page and a half because that's all that we can tolerate in our profession except for the very, very large firms.
(06:44):
And I call it client opportunity planning. And what we actually do is identify about eight clients to start off with that we could do an hour each and bring in the account team as well as like the industry leader and the service line leader or two or whatever and sit down and someone beforehand fills out the template and then we start the conversation and someone facilitates the conversation. And it has from there then we're at the higher level of these executives. What I found, Dan, in most of these meetings is that we don't know the decision makers or we don't have clarity around what the decision maker's top priorities are. And when we start there, that is a beautiful way to look at the gaps and discover the gaps within the account team that people don't know about stuff that absolutely has to get known.
(07:41):
For example, we have a new CFO that's been on board for two months and nobody's really talked to them. I mean, stuff like that. There's a brand new subsidiary that they acquired and no one went out and said, "Who are the decision makers and the subsidiary and should we be talking to them?" So it's all about the conversation around politics and power dominate most of the conversation. And then we also have the statistics about how much revenue, how large they are, how much revenue they give to us. One really important element is what share of wallet do we have? That opens up a whole conversation about who else is in there that we could be doing that stuff. And that's called share of wallet. I brought that over from the corporate world. So those are some of the key ... That's a good starting spot for this.
Dan Hood (08:34):
You mentioned share of wallet, I'm going to jump ahead a little bit in some of the things. Is there a point at which you look and say, "Yeah, we've got all the wallets." I mean, assuming, let's say you've landed and you've expanded and it's working well, you're managing it properly, right? You've identified the right decision makers and their needs and their priorities and you're serving them, right? You're starting to serve them, which means you're starting to get more business for them. You're starting to expand your share of wallet. At what point is there ever a point where you say, "You know what? We've sucked this client dry. That's a terrible way to put it, but we've literally, we've got all the opportunities we've got." Does that happen?
Gale Crosley (09:07):
That does happen. And I had the first of it happen to me when I was at MCI and we were up against AT&T and Sprint and the concepts apply as much over here as it does there. And we had a 25% of a share of wallet, but the point about this is that we were always having our eye on our competitors and what they had. In this case, we have valuations being done. We have litigation support that could be done. We have client accounting services that could be done. We got a whole laundry list of stuff that could be, that we never even necessarily thought about or we knew about it, but that was lower priority. Well, then what happened is we got a five-year, $38 million contract to get 100% of the business and kicked AT&T out to the curb. It was wonderful. So therefore, yeah, we didn't have any more wallet share.
(10:05):
I haven't seen a situation yet, however, in our profession where we actually really, really had 100% wallet share. And the reason is because there's so much opportunity and expansion in our current clients.
Dan Hood (10:21):
Gotcha.
Gale Crosley (10:22):
However, the bigger issue is, is this client in a position where they're going to make a change or expand in any way, like they could have a five-year contract lockdown with some business valuation firm and that would be ... I mean, it's not penetrable. And then you make decisions about all those clients and where the priorities are in terms of resource deployment. So it informed how we were going to deploy resource around expansion and where we were going to do that because we all only have limited bandwidth.
Dan Hood (10:58):
Right. I mean, because it's interesting, right? If this is one of the priorities of growth, if you reach a point where there's no more growth to be had from a client, how does that impact your thinking about that client? I mean, I guess it's just one of those things for the management to be saying, "Listen, just because we can't grow this client anymore doesn't mean we don't love them." Exactly. I mean, that's sort of an issue, right? Yeah. If your priority is growth, you're going to be looking to say, "Well, there's no more growth to be had there." And then it just becomes a service responsibility.
Gale Crosley (11:24):
Exactly. And that's the perfect example of you put your really good technical people who aren't involved and they don't have a mindset of driving demand, so to speak, but they can do excellent client service so that you have all the things that are needed in that account, which basically are, they're on the fulfilling demand side. So it's fulfilling demand, 100% of our resource, driving demand zero, at least for now, right? But they always have the eyes and ears on the ground so that when something happens in that company and something new takes place, we're still doing account planning and they say, "Oh yeah, I noticed that they've expanded into China." Oh, and then someone
Dan Hood (12:10):
Goes- Or that five year contract is coming up for renewal.
Gale Crosley (12:13):
There you go. And some of the technical people, and especially if they're not partner level, they're at the junior level, they may notice something, don't even know that it's something important. And they'll just mention in an account planning session because the facilitator is really driving exploration in that session. And it's something that's way over here and somebody goes, "Oh my goodness, my goodness, me. " And that turns out into something that can increase our wallet share.
Dan Hood (12:41):
Gotcha, gotcha. You talked about a facilitator, you talked about having account managers basically for these accounts as opposed to saying each of the individual partners are responsible because that's one of the things that's made cross-selling difficult is the partners are like, "I'm working here. I don't have time to be cross-selling or to be managing accounts or be managing this client as a client, as a broad firm client." And so I think you call them account managers, I may be wrong about that.
Gale Crosley (13:04):
Well, they don't have a really good name in our world because we use the word moniker manager for a manager. So I usually, and what we call them in the corporate world were account executives and those are the partner level people who are at the level of experience, business experience that really should be on point to drive it. So you can call it anything you want, but basically I would not use the word manager only because of that. But yeah.
Dan Hood (13:35):
So what's their skillset? I mean, are they coming from a technical background or is it more just they're good at working with clients or managing
Gale Crosley (13:43):
Clients? Oh, great question. So they can be, first of all, they can be trained and developed. And so they could be a good technical person who really has good business savvy and sense and communication skills, or those can be developed in them. They could also be an excellent rainmaker kind of a person, or they could be a professional salesperson. And any mix of those three is appropriate within a firm. And as these larger firms are now building out and standing up sales organizations, these account executives are a really excellent resource because this is what they do for a living 100% of the time.
Dan Hood (14:24):
Gotcha. And then it's just a matter of training them up on the other aspects, the technical aspects. If they come from a sales background, they may need technical aspects. If they come from a technical background, they may need more sales or client management.
Gale Crosley (14:36):
Absolutely. Absolutely.
Dan Hood (14:39):
Great. You mentioned just larger clients. Is this primarily a focus for a large approach for larger clients? I mean, can you do this for small clients? Can you do this at a small firm?
Gale Crosley (14:49):
Oh, you asked such great questions. That leads me into the whole concept of stratifying your client base and sub-segmenting it. So when I hear the word client experience, that's another one that's got some baggage there and limitations. Okay. Why? Because the client experience, you just throw the clients in a pot and let's deal with client experience. No. You take your clients and you subsegment them from large and strategic, medium, and small. Now we start with a large account program, okay? And that's the place where you want to start because that's X number of clients make up Y percent of revenue and it's concentrated and you can get that thing right and have the biggest impact first. And so if I were running a program like this, I would say there's a CX for the big and strategics, there's a CX for the mediums and there's a CX for the smalls and they have similarities in terms of what they need and want and the resources that need to be deployed and in what way and what kind of programs are around them.
(16:00):
But I would start with the CX and the large account program, if you will, at the top.
Dan Hood (16:07):
Is there any risk ... I'm just thinking about this because there have been some stories recently about not in accounting, but in adjacent areas to accounting, people running into problems where they have a small number of large clients and they lost a number of them all sort of in row. And that was dangerous for them. If you put a lot of ... If the 80% of your revenue comes from 20% of your clients, if those clients are large, if some of them go, you could take a big hit if they get acquired, for instance, and the acquirer already has an accounting provider or someone who provides all those services. Is there any risk in that? Is there ways to hedge against that?
Gale Crosley (16:40):
There's significant risk in it. In fact, I'm working with accounting tech companies also in addition to CPA firms and I provide river guide services, which is when they're coming into our space to help them with market intelligence, strategy development and all the other. And what I'm finding is that more than once they are banking on the high end of our profession, and I am pointing to them that they've always got to be looking at percent of total revenue relative to the client mix. It doesn't mean that they have to go down market, but what it does mean is if they have large accounts in our space, they need to be looking at corporate America as well. So they need to be looking at some other industries that have large accounts, and the same thing applies to CPA firms. I haven't seen too many CPA firms that have that problem.
(17:41):
I find it more in the work that I'm doing with accounting techs. They systematically have a problem because they get all excited that they've landed one of the big 10 firms, and then it's 80% of their revenue. And I'm like, okay, let's stop here. We need a large account program, and the operative word is accounts.
(18:03):
I'll say a large accounts program, right? Yeah.
Dan Hood (18:06):
And I have not seen much of accounting, though I know a couple of accounting firms that have occasionally said, "Ooh, we had bad this year because we lost a big client and it was 15% of our revenue or something like that. " Got it. Not often, but enough that you can say it could happen. And it's the more you do this, if you get better at this, suddenly you're finding a lot more large accounts among your client base, so the risk grows.
Gale Crosley (18:30):
Well, the interesting thing about this comment is that that's why the account executive concept is so critical because you're not blindsided by politics and power, which tend to, if you're not really good at that and you're not out there scanning the landscape at the account level all the time, that you can be very surprised. And that's another thing that at IBM, they taught me back in the day in my good potty training days of IBM, is that we were always-
Dan Hood (19:04):
All the IBM alumni going potty training. It wasn't potty training. It was executive education.
Gale Crosley (19:11):
Well, then I was back in my 20s and it was my formative years, but at any rate, we were always looking at the inventory of large accounts and our large account program had a fence around it. And what we did is on a big spreadsheet in the sky, here are the clients and here are the revenues. And we would have risk assessments at the individual client level so that if 80% of our revenue was coming out of these 20 accounts or whatever, we would be very circumspect and purposefully focused on who was the account executive running each of them and having this large account program with client opportunity planning, always, always having our eye on where the risks were. So that we mitigated a lot of the risk in our large account program that way.
Dan Hood (20:00):
And that's a big part of your account executive's responsibility. That's
Gale Crosley (20:04):
Exactly right.
Dan Hood (20:05):
All right. There's a lot more we can talk about this, but we're going to have to take a quick break. All right, and we're back. We're talking with Gail Grossley. We've gone into the nuts and bolts of the land and expand approach to a better and approved and more valuable way of thinking about things than cross-selling. So why don't you say cross-selling more? We say land and expand. But I want to sort of step back a little bit, as I think I mentioned at the top, and you've talked a little bit about how this fits into your broader approach to growth for accounting firms, but I do want to take that sort of a little bit of a more of a 10,000 foot view on the broader approach to growing accounting firm that you talked to a lot of firms about. Let's start with maybe how do you integrate this land and expand approach into that broader growth strategy?
Gale Crosley (20:56):
Got it. So the expansion of current clients is one of the two pieces. The other piece is at the market level, are we going to go out and storm the market and own it? So these are not clients, but they're prospective clients. And so when you look at a program, you're looking at not only current clients, but prospective clients. And I was talking to you, I think a couple weeks ago about your latest article about client in the center and so on and so forth. And it got me to thinking about what's going on with strategic growth, because strategic growth is growth that's looking in the future, right? And it's sustainable and it's profitable and it's forward looking. But we've had our eye on the ball with M&A and tech now for the last half a dozen years, and that whole strategic growth thing kind of has been on the back burner.
(21:52):
But I will tell you that when I was reading the article about how these various firms are implementing these various programs, and this was really in the bigger comprehensive context, all of them may look a little different in how they implement, but they all have what I'll call generally accepted growth principles that are underpinning it.
(22:13):
So for example, there are three different models that come to mind. One is that any firm has two elements around the client experience, and one is driving demand, and the other is fulfilling demand. And so client in the middle is, okay, that is those two pieces of a firm and how they think about their firm and deploy resources around it so that you've got balance in how you're deploying your resources on driving demand and fulfilling demand. We have been naturally tilted toward fulfilling demand for years and years and years. And we keep getting this muscle of driving demand to get stronger and stronger and stronger so that when you have both of those together, that's when the client experience attaches into both those pieces. So that's one of the models.
Dan Hood (23:02):
Gotcha. All right. What other elements go into a growth strategy? How do you make sure you've got all of ... I think you've got a, is it SCT I think is your ... Yes. We need to have a little bit into that. I know I'm giving you the ... I'm just pointing at the acronyms. Okay. What's that approach all about?
Gale Crosley (23:19):
So the other thing to look at is the functional elements of growth. And the functional elements of growth are always a three-legged stool with growth being the seated stool and the three legs being the marketing function, the sales function, and the innovation function, the new shiny stuff on the shelf, and the spokes of that connect so that the things that you implement will connect all those three together. Like for example, sales and marketing, well, pipeline implementation at the firm-wide level would be an example of that. So if you're down at the floor level with the bottom of the legs of the stool, this is tactic land. Let's pull a marketing tactic out of the bag. Let's pull a sales tactic, random acts of marketing, random acts of sales, no innovation, and we're chugging along. But the more sophisticated that you need to be because of competition and/or size, you go up the legs and get better and better so that you're at the strategic level.
(24:25):
And when you're talking about strategic growth, then you don't have tactics looking for a strategy. You have the strategy up at the seat of the stool, driving the tactics. And up there is a framework called SCT. And that is every single piece of strategic growth ends up in one of three elements. The service itself, which, and if you think of a combination lock, and maybe we have a picture of three circles left to right, and the combination lock is like you had a locker when you were in junior high, right? And it's 315.22, and you spin it, and S is the three service, and the channel is in the middle, and then the T is the target, okay? And so you can spin these and open up the strategy safe and then revenue flows. Now, the service is what you provide over on the left-hand side, and then the target is the targeted buyer group.
(25:30):
Typically, it's industries, but if you're in a B2C, it may be a non-industry, but nonetheless, it's a target group. And then in the middle, distribution channels is how you and buyers find each other in great quantities. And when you know that those are the three elements and everything flows up into them, then you're very clear about what your strategy is.
(25:50):
And then what happens is over time, because markets change and shift all the time, you can shift the dials as one of your targeted buyer groups is not in a good place. So you have to pivot to a new buyer group, or your service is long in the tooth and you have to pivot and innovate it, or the channel dried up, or there's a new channel in town or whatever. So it's constantly dealing with these three dials to get the strategy right and up at the strategic growth level, then everything that you implement flows down through these three legs and they connect together. And so as I was reading your article, I said, yes, I can see where they implemented SCT over here and how, but it always had that three-legged stool foundation
Dan Hood (26:40):
Underneath
Gale Crosley (26:41):
It.
Dan Hood (26:41):
And you got to be aware of all three and paying attention to it. Again, this is an account executive kind of function to be keeping an eye on making sure these things are all in the right place for each individual client, or is this a higher level function? How is it ...
Gale Crosley (26:52):
I think it's a higher level function. This tends to be more of at the market level. So that now, if you take a look at the S, which is the sales leg of it, that's where the account executive piece lives, and that's how the execution of that manifests itself.
Dan Hood (27:09):
Makes sense, makes sense. I will say these all make a ton of sense, but they're often ... The problem with all good things is that they tend to require a lot of work. And a long-term focus on things, we talked one of the reasons why cross-selling is ... Why it has such a bad name is that it requires you to constantly be cross-selling and to do it over the course of years, if you're going to do it right. It's paying attention to all the things you've been talking about. And that's difficult for people to keep track of long-term initiatives and make sure they go. So I want to pivot a little bit from that and saying, these all mak sense. Firms should devote the time and the energy and the discipline to implementing these kinds of plans and keeping them going over long term. But is there something they can do right now?
(27:50):
Is there a way to kickstart this kind of more thoughtful growth? Is there a quick thing they could try tomorrow and make it happen or an attitude they should change or an approach they should get rid of to help them kickstart this long process of developing a proper growth engine?
Gale Crosley (28:06):
Yes. There's one thing they can do opportunistically, which is the most powerful thing that they can do. And that is something that a lot of firms may or may not know how to do effectively, but it's implement a firm-wide pipeline process for open and active opportunities. And what this does is it's probably the most popular thing that I've implemented it. And I have implemented it in firms that are over a billion dollars and firms that are at $5 million and everything in between. And for example, one of my firms was a hundred million when we did this today. They're now 800 million and we got it booted up in about three weeks. So it's not like a long-term, two-year CRM implementation or anything. It's called get a piece of software, good old Excel will do for now, and get the process in place. And then once the process is up and running, and it's very low elbow grease kind of a thing, like people don't have to go to school and all that business.
(29:13):
And what it does is it opens up the visibility to all the opens and actives and the managing partner can drive or whoever the office managing partner can drive this whole thing. And in my larger firms, we do it geography by geography. By geography, it rolls up into the firm-wide pipeline of a billion dollar firm and the managing partner of the billion dollar firm can see all the large opportunities across the board and where they are. And you can actually see movement in it. So that's the really quick hit item.
Dan Hood (29:49):
That's awesome. I remember talking to somebody at some point, long long time ago and they're saying, well, I would talk to firms and they would say, "What do you want to do next year? What's your plan?" And they go, "We want to grow 10% next year." And they'd say, "Okay, so what's It's who do you have lined up that will get you 10% of your revenue? And let's say it's 15 because there's going to be attrition. How many potential clients do you have that would make up that revenue? And the blank look from the blank step. I just want to go 10%. I don't know what you're talking about. It's like, well, then you have to have prospective clients worth 10% or 15% of your revenue to account for attrition. So setting that up makes a ton of sense. And it should be, as you say, relatively low, not so much hard work should be.
(30:28):
It's who should we be talking to? Who are we talking to? What stage are they at? And what kind of contract are we talking of? What size contract are we talking
Gale Crosley (30:34):
About? Yeah. And what our next step is.
Dan Hood (30:35):
Next step.
Gale Crosley (30:36):
Next step and next step due date. Those are the two things in the pipeline document itself that's critical. The other thing that's critical is that it's a half hour with all the partners every other week. And so it's a half hour where everybody sees the stuff and it's Joe, what are you doing at ABC Industries? What's your next step and your next step due date? And it just is an accountability tool that's so, so powerful. And we know however many dollars are in that pipeline at any point in time. I know the percent that they need in order to get this particular percent growth. So after having implemented this in over a hundred firms, I know exactly what those statistics are and we can see it. We will know whether they're going to be growing 10% or not.
Dan Hood (31:22):
There you go. Excellent. All right. Gail Crosley, thank you so much for joining us.
Gale Crosley (31:25):
Thank you. I enjoyed it
Dan Hood (31:27):
As usual. I wish we had more time, but we'll just have to have you back several hundred times.
Gale Crosley (31:30):
Great. Thanks. All
Dan Hood (31:31):
Right. And thank you all for listening. This episode of On the Air was produced by Accounting Today with audio production by WenWyst Jeanmary. Rate or review us at your favorite podcast platform and see the rest of our content on
