Accountants undergo post-Covid client cullingby
In the wake of the pandemic, an increasing number of firms are re-establishing their client base. We spoke to expert accountants to explore the best ways to tackle a client culling.
After a year of fear, furlough support and free advice, there has never been a better time to reflect on your client base.
As we emerge from the pandemic, accountants have been seizing the opportunity to filter out the client relationships that are no longer serving either party.
Whether you’re wanting to up your fees or just clear out those people you dread calling, refining your client base can be a great way to re-establish your focus as a firm.
Step 1: Diagnosis and selection
Figuring out which clients are the ones to go is the first step.
Founder of CRC Accountancy Calvin Cooper recommends focusing on the people who understand your value: “What we found was that the bigger clients who needed more support had the budget to get more support. They were really grateful for all the extra work we were doing during Covid.”
Cooper compared having 1000 £1,000 clients to having 100 £10,000 clients. Rather than having 1000 people fighting for your attention, focusing on 100 people allows you to better manage the level of support they receive, for the same value.
“I have had a big clear out of people who don’t tow the line and have had chance after chance to sort themselves out,” commented owner and CEO of Avery Martin, Glen Martin. “I cut about 30% of my client base in April/May. When I was doing the clearance requests I was a little concerned at how many we had cut, but the time I got back instantly was huge.”
For the Director of Smooth Accounting Jeri Williams, the culling process served as a financial boost: “We reduced our client numbers from 600 to 400. This was a strategic move, despite signing up lots of new business during the past 12 months. Our average fee per client has gone from £1600 pa to £2600 pa in the past year. We are now focused on having the right clients, paying us the right amount.”
Refining your ideal clients can also benefit your staff. Managing director of Kinder Pocock Sharon Pocock felt this needed addressing after a client recently pushed a team member to tears: “We've got really strong values, and one of them is to act with happiness and love. One of the things that stands for is not doing any work that doesn't make you happy. My team deserves respect and to be valued, and that wasn't happening.”
Pocock has found that a lot of accountants are in this tricky position after spoon-feeding their clients throughout the pandemic, often giving away services for free.
“We did so much for free last year from March onwards, because it was the right thing to do,” she said. “But obviously, we didn't have any foresight as to how long it would go on. Financially it's had an impact, and we've got a backlog because a lot of our other work didn't get done.”
Addressing which clients have left you drained throughout the past year and which have expressed gratitude for your support is a positive way of signalling which relationships are the ones you’d like to keep long term.
Step 2: The culling process
Once you’ve established which clients you’d rather leave behind, the next step is to disengage.
“My approach is to write a letter spelling out exactly what someone needs to do to remain a client, and by when. This puts the ball firmly in their court. 80% of the time nothing changes and I resign with a happy heart. 20% of the time it transforms behaviour and some have gone on to become really good, long-term clients,” commented AccountingWEB member mr.mischief.
For Cooper, the process was based on value: “We’ve been repricing the ones that we felt were on too low a fee, and they’ve actually seen the value we’re bringing to their business. They’re happy to pay that extra money. The little guys that didn’t appreciate it just see that as an extra cost for no deal returned, so we’re left with profitable clients.
“For some clients we’ve said we’re looking at our own business model and what we're trying to deliver – we say we’re probably getting to a point where we can't see that we can add that much value to your business, and maybe you're better placed with another firm that can tick all the boxes that you need ticked.”
He has found that people appreciate the honesty and are happy to seek services elsewhere – it allows clients to align with a firm that gets what they need.
Cooper also advised positioning the prospect in advance to give them time to adjust: “We always tried to place them with other firms, because I think it’s important that you don't just boot them out the door. They might grow and want to come back, and then they'll have a need for everything that we do down the line, so you want to leave it on good terms.”
“We’ve done a client matrix before and graded all our clients,” explained Pocock. “How much do we like working with them? Is the fee right? Do they pay on time? The last 18 months has felt like the wrong time to let go of people, but now we are undergoing a grading again and there are going to be people that we’re going to politely disengage from.”
Previously, Pocock disengaged from all her paper-based clients through a letter that explained they were going completely online. At the same time, they provided an accountant who liked dealing with paper that would be perfect for them.
This time around, the reasons are more fee-based: “We didn’t do any service reviews for the whole of 2020. They involve questions like, what are we providing? What can we provide? What should we be providing? And how much should it cost? Then we can say this is what we could be doing for you, but it means this is what the fees are going to be.”
Step 3: Maintaining a secure client base
Undergoing a client culling is also useful in paving the way forward for future prospects.
For Cooper, it’s allowed him to understand the kind of client he’s looking for: “We'll work with a business once they've had half a million turnover and five employees. They have enough equity and variables within their business and there's enough stuff that we can go in and help them with – definitely in terms of the finance department services, but more of the strategic stuff such as growth and culture development.
“What we’ve found is they've been through the struggles themselves a bit, so they get it. They've obviously got a good enough business head on them to have gotten to that size.”
Establishing a clear picture of prospective clients has also given his team more competence in pricing their own services to existing clients too.
“We don't want to upset clients or get a reputation that we're letting people go, and we're not looking after them. But at the same time, we've got to be looking after people that we enjoy working with and that we've got a mutually respectful relationship with,” said Pocock. “It's your business and you make the decisions, and you should be happy.”
To hear more about refining your client base in the post-Covid era, catch up with this episode of AnyAnswersLive on demand.