Are accountants as ‘stupid’ as lawyers?

I read this article at 11.45am and it was not posted until 2.00pm!!!

Pre-scheduling on drupal + a keen Gina working at 2pm yesterday = wrong time today. All fixed now. Nuff said!

We often hear how we should be using existing clients as ambassadors to promote our services to their contacts, friends, and family. For me that has one serious drawback: we've all of us set precedents with existing clients; and those precedents will be carried over to anyone that comes to you via recommendation of existing clients.

I first came across this some years ago when I put a business plan together for a client who I liked and put myself out for. The plan was pukkha because the client was worth £10k a year to me and I wanted to keep him alive; the fee was only nominal because it was the only way I could get the client interested. The bank manager recommended me to a number of his other customers, start-ups included, all of who expected an equally good piece of work for the same low fee.

We all of us have existing clients who have struck themselves a better than average deal, either via some sort of preferential treatment, old fee-levels that we'd really like to increase, or simply because they are time-bandits. Once the precedent is made, the die is cast for anyone they might recommend, who will expect the same standards. In my experience it is just those clients - those that in Paretto principle terms fall into the 20% band that take up 80% of your time - who issue recommendations to their pals. The 80% band (that take up 20% of your time) have little reason to recommend you as they haven't struck themselves, whether by negotiation or by precedent, an exceptionally good deal.

Many businesses, in other walks of life, seek to improve by recruiting new and "better" customers to replace their existing client base, dropping their worst customer each time a new customer is taken on board. For that to work effectively the new customer must not be tainted with the bad habits or unrealistic expectations of the clients you are seeking to sack.

I entirely agree that you should only seek recommendations from those clients who you want to refer others like them.

I often talk about dumping the duff-D list clients who are more hassle than they are worth, aren't paying a fair fee (often for historical reasons) and who make your life miserable. I totally agree that it would be crazy to ask them to effect referrals.

All too often we assume that we have to treat all clients the same and give the same message to all clients. We don't. The main thrust of the article is on spending time with THOSE CLIENTS WHERE IT COULD BE WORTHWHILE. The ones to avoid are those where you're satisfied that they will not pay a decent fee for the work you do.

Having said that I often hear counter-intuitive stories from accountants who have tried to 'sack' duff clients by telling them that their fees are being doubled. (Yes, there are ways you can do this professionally). Most such clients vote with their feet. However many accountants will talk about how some clients stay on board as they realise they've had a good deal upto now and they are willing to pay a more commercial fee once the accountant insists on this. Again though, and this goes back to the main point of the article, such outcomes are far more common if the client believes that you care and are willing to spend time with him without switching on the clock. I would stress though that this is quite different to giving valuable advice away for free during such meetings.

Mark Lee
Tax Advice Network

"I often talk about dumping the duff-D list clients .... I totally agree that it would be crazy to ask them to effect referrals."
That's the thing, Mark - they do it without being asked. I guess what you say is right - you have to figure how to get your A-listers to recommend you.

Back to your article, I think lawyers are far more adept at not solving problems for free - they don't get sucked in as a lot of accountants do. eg when, during a conveyance, I asked mine about a relative's will he invited me there and then to tell him more. Having giving the essential facts a brief airing, he said something like: "Yes, I think we could help you with that. Would you like to make an appointment to discuss the matter in detail?". Plainly a detailed discussion, and any advice, would not be free.

Why can't accountants manage that? Ok, some can and do - but I think for the majority of us are sometimes pushed into solving clients' smaller problems for free for two fundamental reasons:

1 Supply and Demand. There's always an accountant waiting in the wings willing to advise your client for free, and clients know this. That over-supply of keen and willing accountants is fuelled by the low entry-barriers to the profession. Of course, solicitors have no such problem.

2 We like to show off our knowledge. I guess that's why A-web exists. I'm not sure a forum of solicitors would be inclined to dish out anything beyond general advice to each other, and certainly not to Joe Public.

I think there is some very good advice here. Interestingly, it seems that a marketing letter highlighting other services you may offer during tax return time can be effective, as it reaches clients at a time when they are very focused on their finances.
Some of my clients say they don't get enough referrals and when I probe a little deeper, it is often because they haven't actually asked existing clients to recommend them to others. You can't expect your clients to read your mind.
It is also worth asking what other service providers they use, such as lawyers and IFAs, and getting to know them too. If you have a happy clients, you have the best introduction, after all.

Nicola Draper
Draper Hinks is a broker firm specialising in handling the sale and purchase of accountancy practices.
n.draper@draperhinks.co.uk
www.draperhinksco.uk