“Marketing’s Role in Killing the Profit Vampires,” AAM High – Just the Gist!
All accounting firm professionals have an internal voice that reinforces beliefs governing how much they feel they can charge, what constitutes good client service and what clients really want, and some of those beliefs are bleeding profits from their businesses.
So says INSIDE Public Accounting (IPA) publisher Mike Platt, who presented a free webinar Nov. 29 on how marketers can help kill what he calls “profit vampires.” In the Association for Accounting Marketing’s (AAM) webinar, sponsored by IPA, Platt says, “Marketing professionals can help with profitability by doing some basic ‘blocking and tackling’ to help bust some of the myths that eat into your firm’s margins.”
To set the stage, Platt notes that IPA data shows very little increase in net revenue per employee figures since 2011, especially in larger firms. While overall revenues have increased during that time, profit margins have been shrinking.
Platt puts some of the blame on beliefs held by many accounting firm professionals that may not be serving their businesses any longer. Marketers, he says, can learn about the profit vampires most prevalent at their firms, discuss them with firm leaders and staff, and help develop plans to counteract them.
Consider these common beliefs, which can be debilitating profit vampires, when it comes to firm revenue:
- “Clients won’t pay for that.” – Firm leaders make assumptions, which may not be true, about what services clients are willing to pay for, and they don’t want to ask and risk rejection and the resulting discomfort.
- “One dollar is the same as another dollar.” – “A” clients are less stressful and less costly than “D” clients, Platt says.
- “One service equals one price.” – Firms do not have to charge every client the same fee for similar services.
- “We’ll leave money on the table if we set minimum fees.” – Firms that insist on never turning away clients are operating under a “scarcity mentality,” Platt says.
- “We’re in a fixed fee so we can’t charge more.” – Even fixed-fee engagements can be increased if change orders are effectively managed, Platt says.
- “Answering questions immediately is better for us and the client.” – It’s OK to tell a client that you will do some research and get back to them in the morning, he says. “The value of the answer at 9 a.m. is significantly higher than the answer you give them in the next two minutes.”
- Doing more work than the original scope of the engagement without charging more is another profit vampire, Platt says, because professionals believe it makes them appear unable to accurately forecast the job and is often an uncomfortable conversation.
In a poll Platt conducted during the webinar, 46% of attendees said one of the most pervasive vampires at their firm is the belief that “clients won’t pay for that.” Answering immediately and scope creep were identified by 42%.
On the cost side, Platt pointed to several other common beliefs that result in firms spending more than they should. For example: Charge hours don’t matter for fixed-fee engagements, high staff turnover is inevitable, we’re too busy to debrief, we absolutely must be perfect no matter what, and no one can do this job as well as I can, so I won’t delegate.
In another poll of attendees, Platt remarked that he was not surprised to see that two-thirds indicated that partners are not delegating their work effectively.
He says marketers can discuss the profit vampires with a group of partners or others in the firm, recognize how they manifest themselves and try to put a dollar amount on lost profits. “That really helps get your arms around how big this issue is.”
From there, identify actions that can be taken to reverse the effects of the profit vampires, Platt advises. “Shine a bright light on the belief systems and stories we tell ourselves so we can determine if they are helping or hurting the business.”
About Christina Camara
Christina Camara is the managing editor of INSIDE Public Accounting, which publishes two award-winning publications: the IPA newsletter and the annual IPA National Benchmarking Report, along with in-depth reports focused on IT, HR, and firm administration.Christina Camara is the managing editor of INSIDE Public Accounting, which publishes two award-winning publications: the IPA newsletter and the annual IPA National Benchmarking Report, along with in-depth reports focused on IT, HR, and firm administration.
Welcome to CPA Growth Trends — your source for information, insights, tools and best practices to drive growth within an accounting firm.
Compensation Changes in Accounting Firms – Intersection of HR & Marketing with Andrea Sardon, PBMares
with Andrea Sardone from PBMares
Join host Mike Jones with Andrea Sardone from PBMares as they discuss the changes in compensation within the intersection of marketing and accounting in accounting firms.