want new business? avoid these errors.
by bill penczak
it’s an understatement to characterize cpas as process-oriented, with prescribed steps for financial statement audits and tax return preparation that follow a specific regimen. among the many jokes about accountants, the one that resonates here is:
why did the auditor cross the road?
because he looked in the file and that’s what they did last year.
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but the “funny” thing is that while cpas are typically pedantic about the processes for client work, it’s often a case of the cobbler’s shoes when it comes to running their firms in general, and practice development in particular.
practice development is both an art and a science, although, with the plethora of new technologies and process improvements in the past five years, much of the guesswork has been eliminated; we’ve never had a greater ability to determine the true roi of marketing and sales investments. but the accounting industry, for the most part, is sadly behind the leading practices curve.
here are the most common deficiencies in the growth approach among cpa firms:
- no roi model. the average firm invests between 1-1.5 percent of revenue in marketing, exclusive of headcount and t&e. few firms calculate the return on that investment. while a percentage of marketing budgets are allocated to “maintenance” such as keeping a website current or reprinting sales materials, the majority of investments should be tied to incremental new growth, i.e., new engagements, which pass the “but for” test: that new engagement would not have occurred but for the market investment. improved scrutiny of expenditures and a process for tracking results are vital in that effort, yet few middle-market firms have such processes in place. so they “invest” in marketing efforts with only anecdotal evidence that these expenditures actually produced results.
- missing the link between marketing and sales. i conducted a survey among the top 50 non-big 4 firms a few years ago to benchmark organic growth against the alignment of marketing and sales efforts. the result was clear: firms with the highest collaboration between these disciplines grew at twice the organic rate of the firms that didn’t. most marketers don’t truly understand sales, and most business developers don’t truly understand marketing. and in most organizations, even outside public accounting, those functions are managed separately as if they are not part of the same success continuum. aligned management of these two functions produces tangible, incremental growth, whether it’s the managing partner guiding the process or a senior-level proxy.
- lack of a sales pipeline discipline. raise the topic of a sales pipeline, or god forbid, a customer relationship management (crm) system and most cpa firm partners will at best nod politely, likely “g-f” the notion, or outright rebel about the inherent accountability that comes with such an approach. a pipeline discipline includes:
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- proactive pursuit targets
- cross-functional (audit, tax, and consulting) pursuit teams
- a sales pipeline that supports a revenue goal
- lead-generating activities to fill the sales funnel
successful companies use sales pipelines for greater certainty that revenue goals are achieved; this discipline sheds light on what activities are needed to either generate new leads, nurture identified leads or improve close rates. and it provides a platform for constant improvement over time.
- marketing tactics not tied to revenue goals. the most effective cpa firms create an annual marketing plan that supports defined growth goals. their marketing does one of three things: generates more new, incremental leads; provides another touchpoint for prospects already in the pipeline, or enhances the relationship with current clients. if a sponsorship, ad package or other marketing tactic doesn’t achieve one of those, then it’s likely a waste of time and treasure. and if your marketers talk more about “branding” than “sales” or “leads,” then it’s time for new marketers.
- tepid or no partner accountability. the most significant challenge in developing new business is partner engagement. if more than 20 percent of your firm’s partners are actually market-facing, you are both in the minority and quite fortunate. firms must lever their best business developers to do what they do best, even if it involves them offloading client duties. i’m also of the opinion that some partners simply are not built for the market and shouldn’t be forced to get out of their comfort zone. let them be the technical experts and let the hunters hunt. that said, every partner should play some role in growing the firm. one recent example is a tax partner in a midsized firm, whose development plan included co-managing one of the firm’s industry groups. after the first year, the team literally won no new work as a result of their proactive efforts. the following year, with new group leadership, the team was the most successful in terms of beating its revenue goal. the tax partner was still part of the team, but in a role in which her technical skills could shine.
- a growth plan based on hope, not data. to quote an old phrase, hope is not a strategy. during the typical annual planning process, firm leadership will examine last year’s numbers and spitball a new number. the more prescient firms weigh market conditions, competition, new product opportunities, cross-serving current clients, or any number of other more strategic approaches. and then they cascade the growth numbers to departments and individual partners and hold them to those goals.
high-performing firms have these disciplines in place to at least some degree, as a cohesive go-to-market strategy is always a work in process. but i can say with great certainty that these firms will continue to capture a disproportionate share of new business, per-partner billing and margin contribution compared to the firms that make the six aforementioned mistakes.