Accountants are judged on the value they provide to their clients. Clients will place one value on a monthly financial statement, and another on the preparation of an annual tax return. While the two services are interrelated, many accounting practitioners continue to view them as separate services and treat them as entirely separate businesses when they could be building their revenues and increasing the lifetime value of their clients by bundling their service offerings to their existing client base.
A recent poll taken by the folks at Secrets of Marketing Accounting Services confirmed that over half of the small, local, accounting practitioners who responded to the polling questions focused their efforts on the acquisition of new clients rather than on selling additional needed services to existing clients while the large, national and international, firms focused over 80% of their efforts on internal marketing to existing clients.
Why this difference, and what can you do about it? One argument that is made for not offering the additional services is that the small, local, practitioner does not have the staff resources to market multiple products or services. Another argument is that the local practitioner does not have the additional skills required to provide multiple services.
Since it costs as much as five times more time and money to acquire a new client than it does to upsell or cross-sell an existing client, the mere switching of the selling focus will reduce costs. Combine that with the increase in the average life of a client from five years when only one service is offered to ten years when a client engagement bundles five or more services, the astute practitioner can expand their expected lifetime value of a client by a multiple of ten (five services and a doubled client average life).
Selling multiple services also gives the accounting practitioner the ability to grow their practice in an era of increased competition. When there are a greater number of firms competing for the same number of clients, then the client will choose the firms that offers the greater value proposition.
The value proposition can be based on pricing or added services. Cross-selling creates the opportunity for the practitioner to meet the clients needs on either front.
In the case of an existing client, cross-selling can increase fees from existing clients and strengthen the relationship between the firm and the client.
In the cases where the practitioner is marketing to a new prospect, upselling offers the opportunity to increase the total revenue, or can be used to bundle services and hide discounted prices while making the bundle of services appear more valuable.
When a practitioner is focused on one service offering, it is likely that 90% of their revenue will come from this core service. However, as the client grows, they will have an occasional need for additional services, and as they do, the astute practitioner will recognize the need and offer a solution.
The corollary is that prospects who are approached with ancillary services that are not being met by their current services provider can use the ancillary service to "test the waters" with the new provider while still retaining the services of the current provider. Practitioners who offer these ancillary services can use this time to "get their foot in the door" with the prospect without overtly displacing the current services provider.
Whatever the reason, and whatever the method used, the offering of additional and corollary services can strengthen client relationships, increase revenues, extend client life and thus client lifetime value, as well as create opportunities to open the doors with prospects who would otherwise not consider making a change.
About the author:
You can continue to learn about Practice Marketing for Busy Accountants by visiting Secrets of Marketing Accounting Services.
Kirk Ward is a retired tax expert, accountant and auditor. He provides the same resources he used in building his practices to startup accountants through his Secrets of Marketing Accounting Services website and creates all sorts of marketing goodies for accountants who really want to build their practices.
His latest creation is the "Bean Counter's Cookbook". And, i's just one of many bright ideas that come crawling out of the warped mind of this retired "Bean Counter!".