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Clients, or just customers?

4th Aug 2010
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I have thought this for some time but never formalised the notion. If you look at your client list, I am sure, like me, you can identify a number of people and businesses that can really be called clients. But you will also have others who are really just customers for one or two of your more comoditised services.

The business owner who seeks your advice, either regularly or just ad hoc, I would call a client. Likewise people and businesses who buy tax planning advice from you, or strategic planning advice. The business for which you just do the payroll, the retired director whose tax returns you prepare, and never see them from year to year – they are just customers.

I'm not saying that's a bad thing, but you might want to re-think how you deal with these two different types of engagement. For a start, your practice have mainly or wholly what I would describe as customers, because your principal business is offering compliance services. This can be good regular, bread and butter fee income, but what do you offer your 'customers' that they might not be able to get cheaper from someone else in future? Compliance work can typically be automated, and the latest computer software – coupled with online filing – makes this area a potential target for providers with lots of IT and much lower wage costs.

Clients, on the other hand, need more TLC. They want personal attention, they want to speak to someone with good technical skills and experience. And they tend to seek advice and help on a wide range of things – tax, financial reporting, capital raising, personal finances, etc. You can't computerise this type of work. We all have some of these clients. The question is: do you have enough of them? If not, what are you doing to get more of them?

The key is to see if you can't turn more of your 'customers' into 'clients'. Are you actively seeking to get the accounts and tax work of your payroll-only customers? Can you get tax planning or financial planning fees from your annual tax return cases? Could your routine annual accounts and tax return businesses be tempted to engage your services on some sort of one-off assignment, such as exit or retirement planning, due diligence on a new business acquisition, assistance to move to a new bank or raise finance? Do they even know the range of services you offer? A mailshot or telephone calls to these 'customers' might be a good idea, or just drop in for a chat sometime. You never know, you might just pick up some new work, and even if you don't that personal approach might dissuade them from taking their business elsewhere when one of your competitors calls them.

In reality, you probably need a healthy mix of both clients and customers in your practice. A firm that has only high-maintenance clients has to devote considerable time and money on marketing and seeking new work. After all, if the bulk of your work is one-off assignments, you always need to be looking for the next one, but compliance engagements represent nice annual recurring fees for – you hope – many years to come. They can be handy in generating a reliable annual income stream to pay your overheads and a big chunk of the wage bill, while 'client' work generates more interesting, higher fee work for you and your more senior team members.
 

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