Improve Rates, Retention, and Referrals
Note: This post is part II of our short series on the value of CPAs as Small Business Therapists. As we complete each associated post we will link them here:
Our second in a series of posts emphasizing the value of embracing the role of serving as a therapist for small business entrepreneur clients. In this post, we discuss why taking a consultative approach is so important to the success of your business.
In addition to the value it provides to your clients, there are three practical business reasons that focusing on your “therapy” practice is the best thing you can do with your time. These are Rates, Retention, and Referrals.
Price sensitivity is high for things robots can do.
Price sensitivity is low for personalized, difficult to replicate services delivered by humans.
The bad news is that much of what accountants do is rapidly becoming automatable. Preparing tax returns, reconciling accounts, sharing financial statements, and many other functions that have traditionally been central to your practice. The automation trend is only going to accelerate, and rapidly. Cloud technology, machine learning (ML), robotic process automation (RPA), and simple automation scripts are driving down the cost and hence the perceived value of this work. Automation also changes the competitive landscape for practitioners.
The good news is that robots make lousy business therapists. By making therapy work the foundation of your relationship with your clients, you have greater ability to charge a rate that you can build a profitable business with. Clients cannot easily price shop the time and value they derive from you being their “partner”.
Work a robot can do is not sticky.
Quality human interaction is very sticky.
Retention is one of the most important attributes of a successful firm. We know this: the most profitable customer to serve is the one you already have. The cost to acquire and onboard a new customer is huge. The same things that apply to pricing apply equally to retention.
The bad news is that competition is rampant within the commoditized areas of accounting. In addition to rate pressure on these services, the willingness to switch providers is high if you don’t inject a non-commodity element into your service. Large firms are merging, technology companies are entering the space, and automation and competition will only increase as time marches on.
However, the good news is that your clients care far more about the therapist services you provide than the commoditized work. If these services come as a package, your clients will gladly pay you to do both the “robot work” and the “therapist work”. We will discuss how to optimize this commoditized “robot work” in subsequent posts.
Referrals are the best source of growth. They are cost effective and create high-value client relationships. Your current clients know what you do and how you do it, and those they refer are more likely to be looking for something similar.
When your clients call you “my CFO”, “my finance guy/gal”, or, my favorite—“my business therapist”—you know you are in a good place with them. When they call you “my CPA” you are more expendable. When clients view you this way they will also talk about you more with sincerity and affection, and be much more likely to refer you to their peers.
Like any relationship, clients are reacting to your cues. If you seem burnt out, inconsistent with responses, and on the brink of overload they aren’t going to refer you. Even when they love the business therapy they get from you, they will sense a limit in your capacity to service others. They will fear that by introducing you to potential clients, this limited resource will be less available to them. The best way to avoid burnout and the appearance of burnout is to specialize in the therapy work and make the “robot work" as efficient and as hands-off as possible.
Focus on what you do far better than a robot ever could. You will be far more valuable to your clients and will improve your rates, retention, and referrals.