How low would you go?

 

Hi,am trying to get an accountancy practice off the ground - I have 1 year to do it (before funds run low). Have a partner who is more or less established so have an office. I sent out 600 letters to small businesses in the area offering a guaranteed 20% off their last accounts bill as a minimum but that the reduction could be up to 50%. Got 1 cal call back. I called 150 of which i got 5 meetings, all of whom cancelled before the meeting. I think they went back to their own accountants and renegotiated-I imagine a lot of prospects did this. Okay, if at first you dont succeed, etc etc. Am going to give it another try - the original letters went out in early July. My query is how low should I go in order to get a decent response - my objective is not to make money in the first year to but to get market share that i can build on, and make some money in the second  As such I was going to offer a more substantial discount guaranteed in the first year and a smaller reduction in the second year. The question is how low.  50% first year?, 25 % second year that would be maintained?.  All comments welcome, ThanksWill 

Comments
petersaxton's picture

Offer to pay    2 thanks

petersaxton | | Permalink

Why don't you offer to pay potential clients?

NetAccountant's picture

Hi William,

NetAccountant | | Permalink

Hi William,

July might not have been the best of times to send your mailshot, with the holidays etc... Have you got a follow up mailshot in the pipeline for mid-september? Did you call the 150 yourself or did you use a telesales company? Did you have a pre-written script that you could test response rate on? Did you re-schedule the 5 that cancelled or was it a definite 'no'?

I believe @Peter's comment might have been a bit sarcastic (apologies if it wasn't Peter :)), but by targeting businesses willing to switch for a lower fee at the first sales letter, you might not get the solid base that your business needs to prosper (tomorrow another accountant might offer them another 20% - even if that means subcontracting the work outside of the UK). Did you tell them why you could give them 20% discount, did you guarantee same level / quality of work etc...

What you want is try to sell yourself, your personal approach, your expertise and the reason that make you a good (better?) accountant.

Hope this was helpful,
Leo - Accountant Websmiths

petersaxton's picture

Leo    1 thanks

petersaxton | | Permalink

I suppose there was an element of sarcasm but it was also highlighting the problems.

The OP is displaying a level of desperation that isn't attractive to potential clients. He will only get low quality clients. Maybe he is happy with that. If he really wants to get a large client base quickly paying for clients is acceptable. That's why fees are sold in blocks. Why not cut out the middle man? You are paying people to let them see how good a job you do. Why not give it a go?

Quality Impact Marketing's picture

A few tweaks?

Quality Impact ... | | Permalink

 

Hi Will, To answer your question “The question is how low” I personally feel you could be barking up the wrong tree, depending on how you have worded your letter. Offers are great, but don’t completely sell yourself out! Contrary to popular belief the amount of people looking for a cheap accountant verses those looking for a high level of service is a huge landslide to the latter. It’s about perceived value. I had been telling a client for months to put his fees up as I knew that he was too cheap in the market he is in and for the level of service he gives should be asking for more. He (understandably) was very nervous at the idea until asking a prospect why they had made the decision to go elsewhere. The potential client had gone with a far more expensive firm as he felt he was getting more value. The reality was that they offered exactly the same services, but the mentality was, you get what you pay for. He has since increased his prices and seen a 15% increase in his conversion rate over the last 4 months. I’m not saying that you won’t get clients this way, of course you will; plenty of people think they are paying too much in fees, but then also plenty of people are wary of Accountants who draw them in with cheap fees in the first 1st year and then hike them up in the 2nd. So I guess the answer is, not too low!       You seem to have the right attitude to make this a success. The fact you are following up your mail campaign is great. Many people would just send the letter out and sit and twiddle their thumbs hoping that something will happen. My only critism is the time it has taken you. You want the letter to still be fresh in their minds when you call them and a prompt follow up shows you’re proactive. All is not lost! Get back on the phone! 150 calls is nothing in the grand scheme of a campaign. Do you have experience of telemarketing? If not let me know and I’ll happily give you a few pointers on pitch, objection handling and pipeline management. There is also lots you could be doing to start building your brand if you aren’t already; again give me a shout if you want to chat about that.    If I don’t hear from you, good luck with your new venture :-)  

mr. mischief's picture

something is definitely wrong

mr. mischief | | Permalink

Something is definitely wrong with your strategy.  I set up in October 2009 and so far a one-pager followed up by a telephone call has been my second most successful marketing approach as follows:

Letters sent                                 751

Quotes made to prospects            56     7.5%

Clients signed up                         29     3.9%

Note that in some cases I have decided not to offer quotes - because I am pretty selective, so I'd say the true response rate is more like 10%.

My one-pager message is summarised on the first page of my website.  I emphasise fixed price because in my local area the competitors are pretty sneaky with extras, and my market research told me clients did not like this.  This has turned out to be true, as many of my best clients were turned off their accountants by small sneaky charges.

Networking has been more successful, though.  At Chamber of Commerce or similar events, you get to have a decent conversation with people about their businesses, I can ususally come up with some decent ideas for them just in those chats.  Marketing is then easier as it's not just about the accounts.

On average I am cheaper than the larger local firms but pricier than most local sole traders.  It's not just about price.  I saved one client £15k per year on foreign exchange fees, why would he be bothered about £200 here or there on the accountancy fee?

If your offering is based solely on price, in my view you are more likely to end up with clients you don't really want, with businesses going bust or at the very least slow pay issues when it comes to your bills.  I offer in effect a 17% discount in year 1 for clients who sign up to a standing order - 48% of them do.  If a prospect whose fee will be more than £1k does not want to take up this option I am wary, and have in some cases asked for 50% of the fee up front.  If they don't want that option I resign.  I have one bad debtor out of 106 clients which is not too bad for a recession.

Improve your client capture strategy and in 2 years' time you'll have clients you really enjoy working with you cause you few problems!  (HMRC will cause you lots of problems, but there's not much you can do about that!)

 

 

 

 

 

 

accountsdragon's picture

Call back?

accountsdragon | | Permalink

I am interested to see that mail shots have worked for one person, but failed for another.  I struggle to make the follow-up phone calls, as I was recently an FD and hated being on the receving end of those calls.  My attitude was 'I've received your information and I would have been in touch if I was really interested'.  I also get the same feedback from people I know in small businesses - they are too busy working to deal with marketing calls. Previous comments about learning to handle objections are valid, but I just find that pushy.  I suppose I need to go on some sales courses to learn how to wear my new hat.

I also wonder if there is a difference in location.  I am in a rural community, and it is often said that if you can make a business work around here you can do it anywhere.  I have not worked out if that means I need to be persistent or just patient!

petersaxton's picture

Flyers/letters

petersaxton | | Permalink

"I am interested to see that mail shots have worked for one person, but failed for another.  I struggle to make the follow-up phone calls, as I was recently an FD and hated being on the receving end of those calls.  My attitude was 'I've received your information and I would have been in touch if I was really interested'.  I also get the same feedback from people I know in small businesses - they are too busy working to deal with marketing calls. Previous comments about learning to handle objections are valid, but I just find that pushy."

People always say that you should address letters by name and phone the decision maker.

If you have given them the information, as you say, it's not a good idea to phone them.

Although you will most likely slightly improve your success rate by phoning I don't think it is worth the extra effort. Compare two scenarios: 1 You walk down a street full of businesses and put a letter addressed to "The Owner" through every likely letter box, and 2 You buy/obtain a list of owner names, business names and addresses and post a letter and then follow up with a phone call. How quick is 1 compared to how long 2 takes and costs? How many more of 1 can you do in the same time it takes to do 2. What better response rate do you receive from 2 and does it justify the extra time and cost?

 

Further info

william.reilly | | Permalink

Hi All,

thanks for all your comments, they have given me a lot to think about. I agree that the real long term and quality client will be those to whom you are adding value and providing a personalised professional service and charging accordingly. But first you have to get them in to provide it,  develop the relationships and build the reputation and client base. I mean you have to start somewhere and reduced fees seemed to be a way of starting. We were going to insist on 50% upfront and 50% on finishing  to try and filter out potentially bad clients.

Word of mouth seems to be the most effective way of getting new clients. We sent out letters to all my partners clients offering 20% of whatever fees they bring into us as well as a 20% off for the new clients. These need to be followed up with calls.

Not sure if I agree that the offers sound like desperation, there are a lot of people hurting out there and we wanted to take advantage of it by offering more value by way of reduced fees. I have spoken to a number of other accountants and they have said it is next to impossible to distinguish yourself from the next accountant through advertising on the basis of better professional service or expertise.

 

"Why not cut out the middle man? You are paying people to let them see how good a job you do. Why not give it a go?

This comment is interesting-what did you have in mind- do the accounts for free and pay them a percentage of their fee in year 1? If so how much? Has this been done before? I certainly have not heard of it in my area. It would be a risk though, would it be advisable to try and get them signed up for a fixed term like 3 years?

 

As regards follow-up calls, I agree they are important. The general impression people gave me was that the letter was well received. Perhaps my selling techniques need a bit of work- the text is as follows

"Hi X, this is Will calling from X accountants. Its just a quick follow up call to a letter we sent you a couple of weeks ago offering a guaranteed minimum 20% off your last accountants fee. I'm just calling to see if you had any queries or if youd be interested in meeting up for a quick chat, - we could call out to you if that suited you better.

 

All comments/advise welcome on the above script. Go easy though, am an accountant not a telesales professional. Also I did not want to be pushy. I would be very interested to see Mrmischief follow up call text? 

To be honest, follow up calls are not my favorite activity, would telesales really be an option? I would have thought not due to the personal nature of the service.

 

Again all comments welcome

Thanks

 

 

 

 

 

 

what did you have in mind

william.reilly | | Permalink

 

"Why not cut out the middle man? You are paying people to let them see how good a job you do. Why not give it a go?

This comment is interesting-what did you have in mind- do the accounts for free and pay them a percentage of their fee in year 1? If so how much? Has this been done before? I certainly have not heard of it in my area. It would be a risk though, would it be advisable to try and get them signed up for a fixed term like 3 years?

Hi, thanks for the post-all

william.reilly | | Permalink

Hi, thanks for the post-all your comments were quite true. I think that the problem lies in the follow up calls. Could you give me the general gist of your offer and follow up call script? It might highlight something silly I am doing, thanks

 

MarkAOrr's picture

Discounting is a terrible business strategy

MarkAOrr | | Permalink

I find this very depressing.  Accountants often like to be regarded as business advisers too.  Would you really advise your clients to reduce their margins and turnover?

First question is, what was in the original letter?  Did you write it or did you pay a professional copywriter to do it for you?  Please can I recommend that you find a good copywriter and let them do it for you.

Next question is, if you don't like doing the follow up calls why don't you get a professional to do that for you too.  They will get better results which will pay for their time and they won't sound like they don't like doing what they are doing.

By the way following up is a essential.  Research shows that on average you will increase the response rate by 1,000% so it really is worth doing well.

Do you have a proper call to action offer or is it just we're cheaper than your current accountant?  You could avoid the 'percentage cheaper' problem by simply offering a headline monthly fixed price menu and highlight the fact that no matter what happens in the first year there will be absolutely no other charges guaranteed.  The potential customer will see the fee and will probably already know what they pay the current firm and if yours is cheaper that's great. If it isn't much more but they like the 'no hidden extras' message they will still be interested.  You could even add things that other accountants don't provide as standard.

Be brave and selective and don't ask for any money up front.  Just put them straight onto a monthly fee, preferably by direct debit and not standing order so you can increase your fees each year without waiting for them to change their mandate.  This no up front cost will start you off in a position of trust and won't present a cash flow barrier to them changing.  Why would anybody want to pay a 'fine' to move accountants?  I wouldn't do it.

Lastly, somebody said it was difficult to differentiate one accountant from another.  The good news is that this is so true that it is really easy for an innovative accountant to stand out from the monochrome crowd in glorious high definition colour for all the right reasons.  Do something different and that will attract people.

Good luck

Use a Professional and Don't Forget Year Two

agknight | | Permalink

Most things have been covere here, but I have a couple of experiences to add.

I have done my own letters and calls - not really persistent enought, and with nil results.

I called up one and had good conversation. They said they were with XYZ and had been for 20 years (and were happy). I agreed with them and put the phone down - then reflected on the 5 answers I could have had to what they said.

A professional telemarketing organisation will get you through this. That's not being pushy. I would have been a genuinely good option for these people. Yes I would have learnt for the next call, but how much time and enthusiasm do you have for personal rejection - with a ratio of 3 to 100 quoted as a success?

Secondly, my personal feeling is against this bold discount route. Have you thought about year two? How will you put your prices back up to what you think is the right figure, when these people (the ones you succeed with) have just proved to you they are cost driven?

So I would do a letter, get a professional to follow up, and by all means do more letters.

 

 

mr. mischief's picture

thoughts

mr. mischief | | Permalink

Of the 751 letters sent, just 2 called up on the basis of the letter.  Follow up calls are NOT an optional extra - don't bother with the letters if you're not up for the calls.

I like mailshots in fact.  Mine all go to a named person at a business i have identified as being in my target market, so in general the clients I get from my mailshots are more the sort fo clients I want than those who first approach me.

My script is simple "I wrote to you about local, fixed price good value accountancy.  Is that something you could be interested in?"

Either you quickly find out they are already happy with the current accountant, or you get a decent discussion going about their business goals and their accounting needs.  Even if you don't get to the quoting stage, you're getting useful information about their sector and the sorts of things they like or son't like about their accountant.

If the caller is receptive to the call, then I am asking myself whether I want their business enough to set up a meeting.  I'll be asking them detailed questions about their bsuiness strategy and record-keeping, if they are the sort of people who go into business with a "don't give a toss" approach to this sort of thing then I won't be quoting.  Sometimes just in the course of a call I havve identifed meaningful tax or cost savings the existing accountant has missed, this gets you off to a great start with a client.  I just can't imagine anything like this happening in a telemarketing call.

But I like communicating by phone.  I call my clients a lot more than most accountants, keep track of the calls by spreadsheet so I know who is due a call each week.  if you are not OK on the phone then clearly either don't do the mailshots or use a telemarketer.

 

 

 

 

 

MarkAOrr's picture

good thoughts!

MarkAOrr | | Permalink

I think that is the right attitude.  If you are not going to follow up don't waste money on the letter and the stamp.  By the sounds of it you either took some advice or you read a good book.  Obviously the number one quality on the phone is confidence.  If you have that and good communication skills you will get results.

You are also right that in a way, you are interviewing the potential client to see if they are right for you.  People sometimes forget that the customer supplier relationship is a respectful partnership for mutual benefit, not 'master and slave'.  None of us really want every piece of passing trade.

From the other side

ringi | | Permalink

As past user of accountants rather than an accountant, you would have to offer me

  • Fixed price
  • good book keeping system included in the price that can do VAT,PAYE and give an on-going estimate of cooperation tax.  Maybe make this a loss leader, e.g. £25 a year for access to the web base system and then discount four times this cost from any client that used the system (and hence saved you work).
  • An easy way for me to get my data out, (if you don’t make it easy for me to leave, I will not come!)
  • Evidence you understand the issues I have
  • It must take me a lot less time to prepare the info for you and check the accounts/tax returns you create for me, and then do it myself.   (This is hard, but can be help by a book keeping system both sides can access)
  • You must tell me what questions I should be asking you before it is too late to act on the answers.
  • I should never be billed for phoning you to check on progress etc.
  • And I would have to be unhappy with my current accountant (if any)

I think you should target new companies, get a mailing list of newly created companies in your area, then give some something of good value for free to get their interests.   Something like a fee 2hr “mock” record checking visits, so they can see if they are keeping records at the level that HMRC would like.  Once you have learned the real problems in your target market start blogging about the solutions.   

Free evening events where you explain VAT, PAYE, record keeping to a handful of possible local customers while they drink your “free” coffee, is also a good option.

I think new companies will be better than getting companies that are not happy with their current accountant, as they may not like you for the same reason, if it is easy for you to take someone else’s client on, it will be easy for someone else to take them from you.

(PS  I will try very hard never to give any money to anyone that phones me with a marketing call, so a follow up call is the quickest way of losing any possibility of having me as a customer)

mr. mischief's picture

mmm

mr. mischief | | Permalink

I also am very resitant to marketing calls, but as I look through my Suppliers Listing there are quite a few who initially telemarketed me!  If you're not going to call, don't mailshot you're just wasting your money.

I have been getting a list of all the "start-ups" in my post code and 5 surrounding ones for the past 18 months.  This has worked, but nowhere near as well as simply targetting prospects I'd like as clients who run established businesses.

If a new business is a limited company, there is a good chance it was set up by an accountant for a client.  You're not going to win that one unless the guy has somehow mucked up on creating the comany.

If it is not limited, there is every chance you'll get the client but much greater chance the client will not be that great.  This may be the first time in business and they may be pretty clueless.

So by all means target start-ups, but realise they should be 25% or less of your clients.

 

 

 

petersaxton's picture

I would only take on a client who is realistic

petersaxton | | Permalink

 

“Fixed price”

As long as you are willing to pay extra for my work if you don’t provide me with what was agreed.

“A good book keeping system included in the price that can do VAT,PAYE and give an on-going estimate of cooperation tax.  Maybe make this a loss leader, e.g. £25 a year for access to the web base system and then discount four times this cost from any client that used the system (and hence saved you work).”

That would depend if you could use a bookkeeping system.

“Evidence you understand the issues I have”

At what stage?

“It must take me a lot less time to prepare the info for you and check the accounts/tax returns you create for me, and then do it myself.   (This is hard, but can be help by a book keeping system both sides can access)”

Many people can’t do bookkeeping.

“You must tell me what questions I should be asking you before it is too late to act on the answers.”

That should be commonsense. There are too many possible questions to list them all.

“I should never be billed for phoning you to check on progress etc.”

As long as you are not one of these people who waits 8 or 9 months to provide any information and then panics about the impending deadline.

I’m not saying you are one of these people but I am willing to try to help anybody just as long as they are realistic about their own limitations.

petersaxton's picture

Mailshot a waste of money unless you call?

petersaxton | | Permalink

"If you're not going to call, don't mailshot you're just wasting your money."

Why? I have taken on suppliers who have sent me a letter and no follow up. I have also received phone calls from people who try to find out what current prices I am charged so they can make a cheaper offer. I have Staples, Currys and PC World nearby and the convenience is worth more than saving a pound or two.

If you go for bigger companies they may want more than compliance but most business people only want compliance from an accountant who is helpful and efficient.

A marketers opinion

william.reilly | | Permalink

In response to the advise given about not calling yourself I called a marketing company who claims to have 7 years experience in selling the service. The gentleman stated the following

Forget letters offering cheaper services-will not get quality clients

Positioning is the way to go in the long run - people who are happy with their accountants are not going to change. If people are going to change it is better that they know your practice from your marketing strategy and will be more inclined to contact you.

 

Their service would be to target quite small businesses, cafes,pubs, small retailers etc, not larger as they are mainly getting treated better by their current accountants since the crisis started so stronger relationships exist. They call these small businesses and basically do exactly what mrmischief said he does, ask them are they happy with their current accountants and if not, get as much information for them as possible, assess whether they would be decent clients and try and get an appointment.

For their trouble for calling 200 businesses 3 times (in case they dont answer) over 10 half days:  £2000 + VAT. Of course there are no guarantees of anything. 

 

Other marketing techniques advised by them

Target new companies as stated by others in the last few posts

Send a newsletter

 

 

 

 

maxxy's picture

Are you sure this strategy is right for you?

maxxy | | Permalink

Hi Will

I presume you have put some thought into this strategy to decide if it is right for you and there are certainly some strong arguments in certain circumstances for taking your marketing budget and cost to acquire each customer in the early days and set it off against fees but I think this works better if it is done alongside an element of positioning. 

The main hurdle is that these early clients are only likely to perceive your value as being cheap and this is the basis that they will refer you to other people. This may be great if you can make profit from low fees by having very efficient processes and costs to serve but might not be so great if you struggle to make a satisfactory margin. 

Someone mentioned year two and I think it is important to think about this (and year 3,4,5) right from the outset in line with the rest of your marketing and business plans. 

It sounds to me as if you are going to be working extremely hard to make very little profit and the "market share" you acquire in year 1 will be of low value as a) they won't stick around and b) they are not your ideal type of client.  

Possibly a two pronged attack may be good for you:

1) Carry on doing what you are doing in order to pick up immediate work at a discount that you have already said and don't go any lower than you already have as it should be good enough.

Make the follow up calls but not in a pushy "did you get my letter? When do you want to meet?" way.  Instead make the calls in a way that says "Hopefully you got my letter offering 20% of your current accountancy fees but the reason I am calling today is because I wanted to tell you about a client that I have in a similar industry who recently saved a lot of money with me because of my experience in their field. I can give you some brief information on this now if you have 5 minutes or perhaps we should meet so that I can share advice personal to your own business to save you money."

My main tip with making follow up calls for appointments is to sell the benefits of the meeting itself. Take is stage by stage and it will naturally flow to new clients.

Mr Mischief's tip of getting conversation going is absolutely key as this is your golden opportunity to shine and differentiate yourself. Here you can show personality and expertise. Ask lots of questions about the business and it's goals and use your experience to demonstrate competence in your advice. If you are aiming for a meeting then you can hold back a bit of information to go through face to face.

I would shy away from using the phrase "quick chat" as it doesn't imply value or of any real benefit if done in a quick and casual way. 

2)  Identify your ideal clients matched to your strengths and which are likely to be the most profitable for you and have a different approach for these. These may have different types of letters, maybe more personal and tailored to their business. Follow up calls can be more persistent, regular, and take more time with these. Put lots of effort into listening to what their current situation is and ask questions to gauge what would persuade them to change accountants or what they would perceive as better value for money. 

Couple of last bits that I have picked up from this thread

*  Did you go back to the 5 cancellations and ask for feedback?

*  Rural calling is certainly far easier than city calling :)

*  Direct mail gets opened by people other than decision makers and put to one side or filed in the bin on the assumption that they already have an accountant. Sometimes the post handler won't know what the decision makers thoughts are on their accountancy relationship so calls are a must. 

*  Handling objections is a horrible term as it implies it has to be pushy when it is absolutely not the case. It can be conversational, helpful, polite and professional and all the while qualifying a prospect in terms of needs, timescales, budgets, and what will compel them to act. 

Hope this helps and let us know how you get on :)

Max

 

You're focussing way too much

Azolla | | Permalink

You're focussing way too much on price here. Although price is a factor customers want quality of service, expertise and knowledge. You won't get the clients you want with your whole sales pitch being based on price.

Focus on solving potential problems or issues clients may have and re-address your approach.

London Bookkeepers

Return on letters

Cruncher42 | | Permalink

My experience gives me a return of 1 client per 5000 postcards delivered.  By my reckoning of value of the client and cost of postcards and delivery costs it works at a ROI of 33% in year one and 900% over the life-time of the client.  I have never tried to compete on price.

Accountants South London

MarkAOrr's picture

The great news is that it will be easy to improve that...

MarkAOrr | | Permalink

...conversion rate.  If you can get a reasonable rate of financial return from just one successful response out of 5,000 then image how good it would be to get 10 or 20.

I you send me the post card in the post I will happily give you some free advice which may help you improve your response rate.  My address is Response House, 4 Copperhouse Court, Caldecotte, Milton Keynes, MK7 8NL.

Good luck

dbowleracca's picture

Are you a member of a professional body??

dbowleracca | | Permalink

I don't think this is actually permitted under the rules of ACCA and I presume the other bodies are the same.

How can you offer to knock 20% of their current accountants fees without all the facts?

You will end up making no money and working your backside off for clients who are only interested in cheap fees and are unlikely to pay for anything extra.

Don't take this the wrong way, I admire your efforts at getting new clients but if the only strategy you can think of is to offer cheap fees then I think you'll struggle to get a decent fee base.

Try finding a niche that you can target and show them you are better than their existing accountants at meeting their specific needs.

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