Guest practice editor Mark Lee reports on last week's 2020 conference and shares some of the ideas presented during the day.
'Hope is not a strategy' is the title of a book by Rick Paige. The book, which is subtitled ‘the six keys to winning the complex sale’, was the focus of last week’s 2020 Group members day out in Coventry. The main speakers were the traditional unholy trinity of Chris Frederiksen, Ian Fletcher and Gordon Gilchrist and, as they always do, these guys shared a wide range of commercial, practical and topical ideas that the audience of over 100 lapped up.
I think I first heard Frederiksen speak almost 20 years back and he's no less compelling now. We were regaled with stories, examples and advice covering both day to day changes accountants can make and longer term strategic considerations. Regular attendees will have heard some of the suggestions before, but no one can doubt the common sense nature of the approach that 2020 advocate. Some of this appealed to the larger firms present, but equally many of the ideas are easier to implement if you run your own show.
I know from personal experience how tough it is to convince accountants of the need to change; indeed, I've stopped trying to persuade them. As the saying goes, ‘you can lead a horse to water but you can’t make it drink’. However, those who do want to drink have a veritable reservoir to sip from in 2020’s well of experience.
2020 were providing consulting services to accountants at the time of the last big recession. At the event, Gilchrist reminded us that 90% of these small businesses survived, albeit in leaner, meaner and more flexible form than when they went into the recession. Of those businesses that failed last time round, 95% had no cash flow, forecasts or projections. Could it be that there's a lesson there? Below I will outline some further highlights from the conference.
Five major relationship transformations
This term concerns how firms are set up, and the speakers suggested that the more successful firms will change the way they do these things.
- Basic recurring work has been commoditised and the cheapest service provider wins. Successful accountants will focus on other non-commoditised services.
- An increasing number of facilities will continue to arrive that allow for disintermediation, whereby clients can cut out the accountant and do the basic work themselves.
- Encourage greater use of e-commerce, whereby clients interact with their accountant over the web.
- Use good client relationship management software to enhance systems and client relationships.
- Recognise the value of business partnering: we can't do it all ourselves.
Accountants need to be accountants
Gilchrist argued that the number one skill that clients need in the downturn is accountancy, a fact that has become all too clear in recent months. Those who have heard me speak on related subjects recently will recognise this message. If you claim to be accountants and business advisers, now is the time to be doing some of that business advisory stuff!
During a downturn, businesses make decisions that they should probably have been making anyway, which makes accountants more important now than ever before. It may sound mercenary, but Frederiksen noted that: “Where there's fear, there’s a fee”. This could be misinterpreted as accountants taking advantage of the current situation, but evidently this was not what he was encouraging.
The speakers also put forward a five point action plan for firms looking to grow during the downturn:
- Keep clients happy and build loyalty.
- Ask for referrals.
- Add value.
- Look for additional opportunities.
- Get some new clients from larger firms.
Keeping clients loyal
This section of the talk offered highlights from an 11 point checklist that many of those present committed to implementing in their office.
One key suggestion was to call your top clients at least fortnightly to keep in touch. The purpose of this was not to sell, but just to be nice, to ask how business is going, check up on how they're doing and to offer help if needed. It also massages clients' egos. Outbound accountants do better than inbound ones. Outbound means going to visit, to see and to help clients, rather than insist they come to you.
As previously reported on AccountingWEB.co.uk, a 2020 survey revealed that almost half of all clients want their accountants to be pro-active and to do something, rather than simply processing the paperwork and numbers.
Getting new clients for the practice
Not everyone is looking to grow their practice, and in my own talks I recognise this. Equally, in a recession, most accountants will lose more clients than in a typical year. This means that either profits will fall, or accountants will need to do something different to secure more new clients of the type they want.
Again, 2020 shared lots of commercial ideas on this and a surprising statistic: apparently 31% of business owners are looking for a new accountant. This probably justifies the plethora of telemarketing services for accountants that seem to have appeared in recent years. The best prospects to target? Apparently the smaller clients currently dealt with by one of the biggest firms are the best objects. This idea was clearly very popular. Another suggestion was checking the local paper for positive stories about local businesses and then dropping them a note of congratulations 'from a local accountant who goes that bit further'.
The ultimate question: Driving good profits and true growth
This is the title of another book recommended by Frederiksen, written by Fred Reichheld. The ultimate question, according to Reichheld is that of client loyalty. How do you measure loyalty? Two methods were suggested: satisfaction surveys and monitoring the number of client referrals.
Gilchrist suggested that the number of client referrals received each year contributed to an important KPI, and said it was worth considering how many referrals you get per client per year. Apparently, the industry average is one in 35, which means that typically, each client refers one client every 35 years -so much for those who claim to be building their practice through client referrals!
Frederiksen suggested surveying clients and asking just one question, ‘how likely are you to recommend us to your friends, colleagues etc.?’, and offering a scale of one to ten, with one being very unlikely, and ten being very likely. (Personally I would also ask a supplemental question, 'what could we do to move you closer to 10?'). Chris pointed out that the detractors who rate you just one are probably more effective than the promoters who give you ten. In fact, he suggested that only those clients rating you nine and ten are promoters; seven and eight are passive, and one to six are all detractors. This could be very telling.
Survival of the fittest
This section involved the speakers running through a 15 point checklist of specific sensible (if not critical) actions and strategies. I loved the idea of helping clients by reviewing exactly what you do and passing some of the work back to the client if they want to pay you less. I could also see the value in the idea of encouraging a member of staff to sit with you as you review a file so that they can quickly learn to be more efficient.
Fletcher pointed out that, having set new targets for reduced costs, faster cash collection and new client wins, a key question in the downturn is, 'what have I done today to hit those targets?'.
Successful initiatives and key current challenges
During the latter part of the day, attendees were split into six workshop groups to share ideas and (hopefully) to benefit from hearing about what other practices found successful. The workshop leader then fed back key points derived from their group. This was clearly of immense value to delegates, especially those who might have been a little cynical, as many of the successful initiatives were those previously advocated by 2020.
Technical Director Kevin Salter gave a quick update of some of the new IT gadgets and gizmos he'd noted at the recent Consumer Electronics Show in Las Vegas. Of particular interest were the USB mini monitors, wireless USB connectors, netbooks and mini projectors - the latter gave cause for laughter at the 2020 monstrosity that was being used to project all the slides! Kevin writes a useful monthly update on www.accountantspowertools.co.uk
Anyone who left the conference simply 'hoping' that everything will work out ok in 2009 wasn't listening. We all need to put strategies in place that go beyond simply 'hope'.
Mark Lee is Chairman of the Tax Advice Network and guest practice editor of AccountingWEB.co.uk