how to break out of the commodity trap

challenging the new normal for selling high-value services.

by rick telberg

it won’t come as a surprise to finance executives, but it may be news to some accounting firms: the new normal for the post-crash economy is changing the rules of new-business proposals.

increasingly, accounting firms seeking enterprise-sized engagements are running into more difficult hurdles and more sophisticated rivals in the high-ticket, high-stakes request-for-proposal sales process.

you might as well get used to it and get good at it, according to a leading sales strategist for top accounting firms.

“the increased competitiveness is not going to go away,” says tom sant, ph.d., head of san luis obispo, calif.-based hyde park partners.

“one of the lasting legacies of this recession is that people will take a much more aggressive look at their purchasing and acquisition processes. as a result, cpas have to become even more skilled at the selling process,” according to sant, the author of persuasive business proposals. sant has worked in sales training and strategy for accenture, bkd, moss adams, pricewaterhousecoopers and a dozen other accounting firms.

the buyers of accounting firm services, especially audits, already look at their purchase as a commodity, according to sant. to the prospect, commodities:

1. have little intrinsic value,

2. no strategic impact on the business,

3. can be interchanged without consequence and

4. should be purchased as cheaply as possible.

but accounting firms have so much more to offer.

so, how do you escape the commodity trap?

sant advises:

1. change the message. emphasize value, not merely compliance. from the outset, understand and address what value means in the mind of the buyer.

2. change the evidence you use in your proposals to demonstrate competence. instead, emphasize partner backgrounds and client-track records that are particularly relevant to the prospect. don’t make the mistake, as one law firm did, of emphasizing its matrimonial practice while bidding on a job involving construction of an oil pipeline.

3. change the audience. there will always be a number of prospects that will only buy on price. but to survive and thrive as an accounting firm, you need to focus on the buyers who, whether they know it yet or not, may be seeking a trusted adviser.

this is no time, sant says, to make rookie errors. the time and money invested in request-for-proposal bids is just too important to waste on misfires.

for example, in considering an rfp bid, the first question should be “do we have any kind of relationship with anyone in that organization.” the reason: while at accenture, sant calculated that the firm won only 10 percent of the shootouts when no one on the pitch team knew anyone at the prospect organization. but when just one, even casual, relationship was added to the mix, the firm’s win rate rose to 40 percent.

or worse, if you receive a blind rfp in the mail, the odds are only one-in-20 you’ll get the business. you’re probably being played as a stalking horse for someone just going through the motions of due diligence. “with odds of one in 20, it’s already 95 percent certain you’re going to lose,” sant says. “wasting that kind of money and time doesn’t make sense, even these days.”

on the other hand, with the right preparation and approach, accounting firms can level the playing field, if not turn it in their favor.

even though 31 percent of buyers go into the process thinking they will buy on price, only 20 percent, in the end, actually do. clearly, the right proposal strategies can make a difference.

copyright 2010 aicpa. used with permission.

posted on october 12, 2010