Sometimes Bad Things Just Happen

Nobody ever wants to lose a client.  The foundation of client retention is avoiding the perception that what you provide is ordinary, widely available and easily replaceable.

There is a partner in one of my San Francisco client firms who is really, really accomplished.  She’s great at accounting marketing, technically competent, diligent, organized and provides great client service to a large book of business.

So why was she just informed by a long time client – seven years – that they were going to go out to bid for their future accounting services?

She immediately spoke with them and was told there were no service issues and that they “loved working with her” and the senior staffer also assigned to the client.  As she phrased it, “It’s like they suddenly woke up and decided we’ve been over charging them.”

She has an excellent client retention percentage, so this situation is a statistical outlier.  But it happened and losing the client represented a serious loss of revenue over the next seven years.

The lesson is that this can happen to anyone, including you.  Nobody wants to lose a client, especially a significant one.  So, is there some preventative medicine to shorten the odds?  What can you do?

The foundation of client retention (unless your marketing emphasis is low price) is avoiding the perception that what you provide is ordinary, widely available and easily replaceable.

Because, if it is – and remember, the vast majority of clients think all accountants can competently prepare taxes – then (the thinking goes) there are lots of other accountants who can do their taxes and surely one of them will offer a lower price.

The most high profile commonly available accounting service is 1040 preparation.  Approaching April 15th is it any wonder that we are bombarded with price-related pitches for tax preparation services?

On the other hand, you will NEVER see price pitches for consulting, advice and project work because these are distinctly not commodities.

Unlike 1040 preparation, which can be remotely accomplished with a simple exchange of raw data between client and preparer via mail, fax or email (or even with TurboTax or other no-human-involved software), consulting, advice and project work require contact, communication and human interaction.

This provides the foundation for an actual personal relationship.  And, these services bring you closer to understanding what’s really going on with the client.  They afford you the opportunity to become a trusted adviser, board member or strategic partner in the client’s success.

When you attain this status, your services are more highly valued and cannot be measured by simply focusing upon fees paid.

This statement is underscored by the results of a comprehensive survey conducted in 2008 by Hinge Consulting that examined the number of accounting-related services vs. 10 year client retention.  In a nutshell, here are the results:

  • Provide 1 service to a client and you will retain 12% of these clients 10 years later;
  • Provide 2 services and you will retain 24%;
  • Provide 3 services and you will retain 63%;
  • Provide 4 services and you will retain 81% and
  • Provide 5 services and you will retain 98%(!).

If she had been providing 4 or 5 services would she still have been informed by her client that they were going to go out to bid?   We can’t know the answer, but it would have almost certainly reduced the odds.

The lesson here is to always seek out additive services you can provide your good/best clients.  Planning, what-if analyses, projections, forecasts and becoming an advisory board member are just a few of the many things besides tax preparation you can provide that bring value to your clients.

Not only do these activities generate more current revenue, they will enhance your retention percentage.  This is because while it’s relatively easy to replace a preparer based primarily upon price it is much more difficult and risky to replace a valuable adviser who has proven her worth over time.


About the Author

Craig Weeks, after years of practicing law and then holding executive positions in various companies, Craig became a senior member of a large SoCal Business Consulting firm. Because of his professional services experience, he worked frequently with accounting, law and engineering firms. Craig realized almost immediately that most of the firms were relatively ineffective at business development, and discovered he had a talent for helping them grow and elevate their practices. For the past ten years he has worked exclusively with accountants and accounting firms to teach them effective business development skills. 

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