The road to hell is paved with good intentions. Growing your practice is a strategic objective for 2016. One of the best ways to grow is when satisfied clients send potential clients in your direction. Sometimes this can go horribly wrong.
Speedbumps along the referral motorway
Let’s consider several unintended consequences when a well-meaning client intends to send you business:
- Confidentiality risk: Your client is well connected. Although you never divulge the names of clients or personal details, your client travels in the right circles. They learned from others you are their accounting professional
Well-meaning intention: They want to build you up by association. They name drop
Disastrous outcome: Their prospect assumes you talk about your clients. They avoid you. They might tell friends in common (who are your clients) about their concern
- Compensation risk: Your well intentioned client understands your practice grows by referrals. They really want to help. They speak to a few friends. Unfortunately they follow-up and keep following up. They become annoying
Well-meaning intention: Perhaps their background is in sales. They believe success is about delivering results
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Disastrous outcome: Prospects assume they are being paid a finder’s fee for delivering new clients. They feel professional accountants don’t resort to these practices
- Desperation risk: Your client understands you want to grow your business. The last thing they say is: “Don’t worry, I will get you plenty of new clients.” They build a list of likely prospects. They call them, meet face-to-face and follow-up by e-mail. They are annoying
Well-meaning intention: Their sales background governs their behaviour. They are going to bring each prospecting situation to a conclusion
Disastrous outcome: Because your client is so insistent, the prospect assumes you must be desperate for business. Why? Because you are unsuccessful. Successful people usually don’t choose to work with unsuccessful people
- Pricing risk: Your first client was your first roommate at university. When you were both starting out you gave him rock bottom pricing. The rate never changed. They assume you charge all your clients a similar rate
Well-meaning intention: They tell a friend about you. They quote how much you charge them, saying: “I’m sure he will give you the same deal”
Disastrous outcome: Your client has negotiated pricing on your behalf. The relationship starts with delivering bad news
- Expertise risk: Your client owns a local own retail business. It’s pretty straightforward. You do a great job for them. A friend of theirs owns a business selling a specific form of electronic technology to the British government and several foreign governments. It’s a highly regulated, specialised business. They need a new accounting firm
Well-meaning intention: Your client explains you are perfect for the job. Although their friend explains their field requires specialised knowledge and experience, your client promises you handle these situations all the time
Disastrous outcome: Because your client assumed “You know everything” you need to explain to the prospect this isn’t your field of expertise. You refer them to several colleagues. Your client looks bad because they overstated your capabilities.
- Account size risk: You’ve had this client since day one. Their single car dealership has grown to dozens around the country. They are now a large client. During this time your practice has grown. You specialise in businesses connected to the automotive industry
Well-meaning intention: Your good client wants to send you business. They have a friend, perhaps the son of a business partner or vendor who needs help with their personal taxes. The account is very small
Disastrous outcome: Your practice doesn’t focus on this type of account. If you don’t take them on, your client loses face. The account doesn’t fit into your business model
- Forced referral risk: Your business is operating at capacity. Adding new clients means adding new staff. You’ve never asked for referrals. Actually you’ve told people you are at full capacity and service would suffer if you expanded
Well-meaning intention: Your client has a friend who needs an accountant. They explain you are good. You aren’t accepting new clients, but you will take them on because your current client asked you
Disastrous outcome: You risk offending the client if you decline. The client might not fit your practice. Your client has made a promise you may not be able to honour
- Personal service risk: You run a firm. You incorporate technology. Others do the majority of the day-to-day work. An established client refers a friend. They explain you will handle their account personally. They assume it’s your quill pen that is preparing their returns
Well-meaning intention: They have positioned you based on your personal expertise and attention
Disastrous outcome: Your client has promised you will handle their account personally. You need to explain the business doesn’t work like that today
- 24/7 service anytime risk: The client is your brother-in-law. You are friends. He calls at all hours with questions
Well-meaning intention: They recommend a friend. They explain you are available 24/7
Disastrous outcome: You must explain you keep normal business hours and they must conform
Start by determining if you want your business to grow though referrals. If so, you need to let your clients know the rules of the road. This starts with confidentiality. Your ability to attract new clients is constrained by your inability to talk about current clients. They are not bound by the same rules. If they are happy, they can tell as many people as they want. Next, your client needs to understand the capabilities of your practice, specifically the type of clients where you can bring the most value. They also need to understand pricing is based on many factors, starting with the amount of time required to complete a project.
Prior preparation should help to avoid the disastrous outcomes mentioned above.
About Bryce Sanders
Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania.