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Who are your best and worst clients?

26th Apr 2016
Brought to you by
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ICPA is a professional organisation for accountants in practice.

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Who are your most valuable clients? Mark Lee explains why it’s vital you know this information.

One key issue for ambitious firms of accountants is the ability to distinguish your best clients from your worst clients. It’s often easier to have clarity over the worst ones than it is to be confident as to who are your best clients. In my talks I explain that different people will have different criteria for determining which are their best or most valuable clients.

The most obvious factor MIGHT be the level of fees charged each year. But is that the only way you assess the relative value or importance of your clients? It may be. When I ask audiences, however, they suggest a range of other factors, including how much they like working with the client, how interesting and varied is the work, the extent to which the client effects valuable introductions, how reasonable the client is, whether they seek and take advice, respond promptly, pay on time, and so on.

There is one factor that is rarely raised and yet it may be the most important of all. How profitable are those ‘best’ clients? Indeed, do you have systems in place that would enable you to determine the answer to this question?

On one occasion I asked a team of tax consultants who their key clients were. They identified a number of pleasant clients who were in regular contact, often on the phone and certainly who were ‘front of mind’.

A little research revealed that ALL of these clients were among the least profitable ones for the firm. They regularly made use of a low-cost service facility but didn’t use the firm for any high value work. They consumed resources that were not matched by the fees earned from those same clients. In effect, they were exploiting the firm’s loss leader service proposition.

Some firms are able to identify their most important clients by reference to the information recorded in their customer relationship management (CRM) system. Others have a gut feel. Whatever works for you is fine. But do make sure that you are not fooling yourself. Clients who are front of mind may not be the most profitable or, indeed, the most valuable.

How do you know who YOUR most valuable clients are?

• Mark Lee FCA helps accountants who want to stand out from their competitors (see www.bookmarklee.co.uk)

This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or by phone on 0800-074-2896.

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