Mistake 3 of 16 – Failing to appreciate your client base is under more threat than ever before!
This week we continue our series of blog articles ’16 mistakes made by accountants – and how to avoid them’. Attrition rates are rising and competition is increasing as accountants extend the reach and scope of their marketing and clients shop around. In this ever-changing market, you must assume that your competitors are marketing to your clients more often, more intelligently and in more compelling ways than ever before.
Here’s why – and what you can do to stop it
Your customer base will be at more risk than ever before!
Some readers will be old enough to remember when almost all forms of marketing for accountants were banned. The way to increase your client base was through networking. Customers were friends and firms never solicited for work.
Of course, those times are long gone and now it’s ‘essential’ – for accountants to market themselves.
Over the next few months and years accountants will start to market in completely new ways.
The channels they use will be the most diverse and technologically advanced in living history. Some of these will be positioned as direct offers in competition to what you do. Others will be indirect, such as the offer of a free App or similar.
In this ever-changing market, you must assume that your competitors are marketing to your clients more often, more intelligently and in more compelling ways than ever before. Here are just a few a few of the ways.
YouTube, Facebook, LinkedIn, Twitter, Google +
You don’t need to go far to see the speed at which these threats are already gathering momentum. Watch your local rugby or cricket match and you might see it sponsored by an accountancy network; go to YouTube and you will see thousands of videos from accountants promoting their services virally.
Thousands of firms are already benefiting from social networking using sites like LinkedIn, Facebook, Twitter, Google + and Pinterest. The successful firms are using traditional networking skills that they have developed over the years and applying them online.
This approach breaks down the historical barriers in the profession. Small, local firms are gaining a national presence at the touch of just a few buttons. Successful firms are now making a smart investment of time and money to ensure they are using social media properly to get the right results. They either hire one of our professionals for half a day or send staff on
As firms extend the reach and scope of their marketing they will find profitable new clients – the type of clients that are impressed by the approach, message and technological methods employed. They say ‘this accountancy firm is different’ and business owners want advice and help from modern, proactive accountants.
Overseas and franchise-type accounting firms will grow under the sexy veil of Cloud computing
At one time, overseas-based firms struggled to get a foothold in the UK, as clients were reluctant to change firms to an overseas operation. Confidentiality and the perceived risk of accounts ‘going over there’ were strong objections.
Now, as market and loyalty habits change, these objections seem to have disappeared. A good looking, technologically advanced front end, secure online systems and low cost accounting with rapid turnaround times makes it a very attractive model. Overseas operations will no longer be promoted as the ‘call centre’ type model, which so many resisted in the past. They will grow in popularity under the rather sexy cover of ‘Cloud computing’.
Firms slumber blissfully unaware
At the moment, many UK accountancy firms are slumbering, unaware of the potential threats ahead. Even those that are aware seem to be fairly blasé about it. Some are even happy to get rid of their lower value clients; losing them to a ‘cheaper’ provider is considered a blessing.
This advice is OK, until you realise that most of the ‘consultants’ that tell firms to do this are no longer in accounting themselves! When we ask firms where their largest, most profitable clients with the BIG annual fees came from they say “Oh those customers! Well they have been with us for donkey’s years!”(Then you see a smile, fond memories of the good old days come flooding back . . . ) “Do you know I helped XYZ through their first few years – and now look at them!”
It’s so easy to forget that some of the best customers today were the small, low-end customers of yesterday. When you stop putting them into the funnel at the bottom, or deliberately let them go – you could be heading for a slow decline in profitable clients.
What’s more you will be allowing other competitors to start at the perceived bottom of the market and gain a powerful foothold, eventually targeting your A, B and C grade clients. Let’s face it; the threat is not just from overseas. If it’s not overseas the threat will come from growing ‘franchise type’ accounting firms
We have all seen them, spring up from nothing and now they appear on every corner in every major city. These franchise type firms will grow in popularity as the economy continues to struggle and those out of work look for new sources of ‘predictable income’. The ex- Finance Director or Accounts Manager with a pocket full of redundancy money is a prime target.
From Apples to Accounting and Mobiles to MYOB
Turn back the clock a few years and credit card companies, clothing retailers, petrol stations, garden centres and even law firms would have been forgiven for laughing at the prospect of a major supermarket becoming their biggest competitor.
They probably thought they knew the market better than most and could name all their local competitors. They were certain that things would remain the same – at least while they ran the business.
They didn’t . . . . . . . . . . .
The supermarkets came to the party and with them their assorted boxes of tricks including the ability to systematise and process almost everything. What was bad news for the smaller stores was great for consumers with greater choice, free parking, 24 hour opening and reduced prices. They made life seemingly so much easier. Yet, they didn’t stop with apples and chickens; instead they started to approach ‘professional’ markets Such as insurance, then mortgages, loans, credit cards and more recently, legal work.
The question is not if they will go onto accounting, but rather when?
Just as your firm probably offers more services today than 10 years ago, the major supermarkets now offer more too. They have the brand, publicity, infrastructure and technology to go into the accounting market. First they will target the smaller customers, and then gradually work their way up the fee ladder.
Have you got your clients protected?
OK, the threat might not come from a supermarket. A more serious threat could come from the mobile phone providers. They already have dreams of being ‘Everything Everywhere’. As businesses, they already hold financial data on millions of companies. What’s more, they can reach them cost-effectively at the touch of a button.
Is their data cloud in better shape than yours?
What value do you place on your data, the information you hold on your key clients and prospects? I am not asking here for a print out by fees of your client base. I am asking about the accuracy and completeness of your client data. (All of this data can be gained with appropriate permissions through a structured client case process)
- Do you hold mobile phone numbers for you clients and prospects?
- Have you got accurate and up to date email addresses?
- Are you connected with them socially on platforms like LinkedIn?
In a recent survey of leading accountancy firms’ customers the number 1 preferred communication channel was mobile, preferably text messages. These mobile phone giants are able to target your clients faster, easier and at lower cost than you can.
What’s more, they will be using the mode of communication that so many of your customers prefer. Just think about it: they will be perfectly positioned to offer phone-based accounting, real time accounts, App solutions for many general queries, anytime access and 24 hour advice and support.
Client tax returns will be completed when you press hash 9 or on ‘the Cloud’ at any time – and everything could be billed directly to your phone account – no chasing payments or complicated standing orders to set up.
From Banking to bookkeeping
Does that sound far-fetched? Our team doesn’t think so! As the banks struggle (figuratively speaking of course) to find new income streams, how long will it be before they decide to stop referring customers to accountants? Perhaps the only issue holding them back has been large-scale implementation but an outsourced cloud-based solution potentially overseas could well solve that in one go.
Whoever comes first, Tesco, T-Mobile Virgin, or HSBC you can be sure that as technology makes accounts simpler and The Cloud means they can be done anywhere, the timing is perfect for a ‘global giant’ to step in and clean up.