the 4 marketing disciplines

how to deploy them as a framework for cpa firm practice development.

by marc rosenberg
the rosenberg practice management library

all marketing activities fall into one of four categories:

1. protect and grow revenue from existing clients.
2. identify and nurture referral sources.
3. focus on a well-defined group of prospects; get new clients.
4. support activities that complement those above.

we call these the four disciplines. auditors follow certain steps of a predetermined program to perform an audit. it takes discipline to stay the course and execute the audit process.

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marketing is no different. it requires discipline to engage in all four categories, execute the action steps continuously and avoid taking shortcuts or skipping steps altogether.

the four marketing disciplines cannot stand alone:

• firms need to do some first things first. certain foundational questions need to be answered and activities completed before forging ahead on the four disciplines. we’ll expound on this later, but examples are (a) determining the firm’s overall vision, including the target for revenue growth and (b) deciding what services to offer clients.
• throughout the process of implementing the four disciplines, certain activities ignite the process, propel it forward and keep it on track. we’ll discuss these later, but examples are the need for (a) someone to be in charge of practice development and managing the process, (b) holding people accountable and (c) providing financial incentives for achieving marketing goals and bringing in business.

before we dive into the four disciplines, first things first

several fundamental questions, activities and acknowledgments by all firm personnel should be addressed before you implement the four disciplines.

what is your firm’s vision? if the firm’s annual revenues are $5 million, what revenue growth is desired in the next five years? if the firm will be content being a $5.3 million firm in five years (about 1 percent growth per year) that’s one thing. if the target is $8 million in five years (12 percent annual growth), that’s completely different. (caveat. when we talk about growth, we mean organic growth, which excludes revenue increases from billing rate and fee increases.)

forming this vision for revenue growth requires honesty by the partners. the easy part is deciding what they would like the revenues to be. it’s natural to want the firm to have higher revenues. but how realistic is the growth target selected?

the more difficult part is deciding how serious the partners’ commitment is to achieve the revenue growth. partners often succumb to peer pressure when discussing various issues. in the $5 million firm discussed above, if there are five partners, some of them are likely content with their revenue responsibility and would prefer not to put in the efforts to build their client base further. they may not want to do any more business development, or they don’t want to work any harder they already are. partners will never admit to being complacent because it is obviously not an admirable trait they wish to broadcast.

if the other partners’ vision is to grow 12 percent annually, peer pressure may cause some partners to shake their heads “yes” when they are really thinking “no.” this is where honesty comes into play.

the tactics selected by the firm within the four disciplines will be totally different depending upon the size of the desired growth.

other vision elements need to be clarified up front because the partners’ positions in these areas will have a strong impact on the firm’s practice development initiatives:

• what if the firm is likely to merge into a larger firm in five years as part of its vision? this will obviously put a damper on the firm’s pd activities.
• what if the partners all agree that they don’t wish to be held accountable for business development? that will certainly affect growth results and perhaps how income is allocated. interesting: we have worked with a few firms that discussed at retreats whether to have partner accountability and decided – god bless them – not to have any accountability. at least they were honest with one another.
• what if the firm’s partners love being generalists and/or wish to focus primarily on compliance rather than consulting services? this will clearly curtail the firm’s ability to grow through cross-selling and may jeopardize client retention.

people bring in business, not marketing plans. do your partners truly understand this? cpa industry pd practices have come a long way from a couple of decades ago, when firms relied almost totally on individual business development efforts by the partners and unsolicited referrals. firms now embrace true practice development as a powerful way to drive client selling opportunities to the firm and support selling efforts.

but one thing should be made clear: people bring in business, not marketing plans. you can lead a horse to water, but you can’t make him drink. at a critical point in the marketing cycle, a human being must meet face to face with a client, prospect or referral source and ask for the business.

how is your firm different from other firms? is your firm prepared to do the things that actually make it different instead of just saying you are different? there are a lot of very good cpa firms that are just the same as all other firms. no question, it’s great to be a “good” firm where partners are sharp auditors and tax pros, work hard and provide clients with great service. but when your firm is the same as everyone else, it’s more difficult to market and sell. ask yourself:

• why would a prospect hire your firm when they can go down the street and hire a firm that technically is just as good as yours?
• if you want to charge aggressive fees, why would a prospect hire your firm when they can easily hire someone cheaper?
• why would talented staff want to accept your job offer when they just interviewed with a firm that’s truly exciting because of how different it is from the competition?
• when your reasonably satisfied clients meet a cpa at a children’s soccer game or rotary meeting and are really impressed by that person, will they stay with you or switch to the new cpa?
• when your clients grow and their needs expand beyond traditional accounting and tax, what will stop them from moving to another firm that offers additional services that will improve their business?

we convene a bi-annual staff forum in chicago. we ask 20 cpa firms to send us one young staff person (ideally with just one or two years of experience). for two hours, we ask these 20 staffers a wide range of questions about their firms, their jobs, the partners and more.

one of our questions is: “what made you choose the firm you joined?’ virtually everyone responds: “the people i interviewed with.” don’t get me wrong. that’s a super response, and firms should be pleased that their interviewers make great impressions on staff candidates. but should personality always win over substance? almost no one at our staff forum points out anything that differentiates their firm from others they interviewed with. this of course means that the interviewers described their firm in a way that was the same as the other firms the staffer interviewed with. very sad, but easily fixable.

if undifferentiated firms don’t change, it is easier for other firms to compete with them.

we mention this adage because too many partners, uncomfortable with selling, look for quick but ineffective business development solutions that protect them from having to sell proactively. here are some examples:

1. let’s send out a newsletter so clients call us with business.
2. let’s hire a business developer to bring in the business so we don’t have to.
3. let’s engage in blogs and other forms of social media so new business comes to us.
4. let’s join an organization, not say a word at the meetings and pray that someone will approach us. even if i don’t get any business from organization membership, it still looks good on my resume.

does your firm have a marketing champion? many firms create great marketing plans with lots of innovative tactics. at some point, the detailed action steps behind these plans must be assigned to a person or a team. but all of this is a waste of time, and harmful to morale, if nothing gets implemented. what can firms do about this? easy: make sure the firm has a marketing champion who owns the marketing plan and works with the key players to implement.

there are enormous, interrelated obstacles to business development:

• nobody has enough time.
• a key person hates selling and makes up every excuse in the world to avoid business development.
• cpas love doing accounting and tax work. they are only human: they will prioritize the work they love and procrastinate on the things they dislike.

a marketing champion works with the firm’s personnel (at least those with marketing goals) to overcome these obstacles and help them be successful.

who should be the marketing champion? it could be one of three people. possibly more than one of the following could work together to champion marketing:

1. the managing partner (the most common and usually the most effective).
2. a partner in charge of marketing, if the firm has one.
3. a high-level marketing director (the least common because it is the rare non-partner who can hold partners accountable for marketing).

does your firm have a large enough portfolio of services to satisfy your clients’ diverse needs and give you enough to cross-sell? quite simply, it’s hard to bring in business if you have little to sell.

a huge part of selling is (a) having a diverse portfolio of services that help clients, (b) identifying clients’ and prospects’ needs and (c) sharing with them how your firm’s array of services can meet those needs.

has your firm developed specialties and niches that make selling easier? when firms make no attempt to develop specialties and niches, it’s like trying to do manual labor with two hands tied behind your back.

specialties and niches provide these benefits:

• clients, prospects and referral sources seek you out, so you don’t have to pound the pavement.
• firms like to hire experts.
• firms are willing to pay more for experts.
• specialization makes your marketing more effective because you target your audience instead of using the shotgun approach.

baseball and business development

it’s been said that the most difficult skill in all professional sports is hitting a baseball. a player who can safely hit the ball a mere 30 percent of the time is considered a star. this fact led to the business development adage: “the more at-bats you have, the more hits you get.”

let’s reduce this to math:

• if you have four sales opportunities a year and you close two, your batting average is .500 (50 percent). but you have only two new clients.
• if you have 24 opportunities a year (only two a month) and you close six, that’s a batting average of only 25 percent. but you have six new clients instead of two. it’s the hits we’re after, but we can get them only if we get enough at-bats.

posted on january 10, 2020