systems enable your plan to reach its potential.
by marc rosenberg
the rosenberg practice management library
we’ve explored key components of the overall framework for cpa firm practice development.
- we launched the process by examining the overarching decisions that need to be made before work is begun to execute the four disciplines.
- we drilled down on each of the four disciplines.
more: 14 marketing activities needed now more than ever | how not to develop your practice | 6 keys to developing new client prospects | now is the time to activate your referral network | does your firm recognize all its skills? | protect and grow existing clients | the 4 marketing disciplines
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now it’s time to address the final piece of the overall framework: the enabling systems that will optimize a cpa firm’s success in achieving its growth objectives.
train staff in business development (selling). most cpas will tell you they didn’t select accounting as a career because they wanted to become sales reps. their education and work experience most likely included no sales training. the term “selling” was not in their dictionary and if truth be told, the mere mention of the word often produces debilitating anxiety.
yet one of the main activities for increasing revenue and indeed, for operating a cpa firm successfully and profitably, is generating new business.
firms must address this apparent disconnect: cpas’ reluctance or failure to sell versus the fact that the lifeblood of a successful firm is revenue growth. the best way to bridge this gap is for firms to adopt programs to train their people in business development. when we say “programs,” understand that there are no magic pills or shortcuts and no substitutes for doing your homework and studying.
cpas learned their accounting skills in four or five years of undergraduate study, perhaps postgraduate work and countless cpe courses taken over many years. learning business development skills is no different. i’m not suggesting that cpas must get years of classroom education in business development, but they must continuously provide their personnel with sales training. attending one half-day seminar or reading a book on selling will not cut the mustard.
we recommend that firms begin their business development training programs with partners and managers before involving staff below managers. staff can be impressionable and will mimic what they see the partners and managers doing. you want to perfect your training program with high-level personnel before exposing staff to it.
create individual marketing plans. this is basically step 1a to training in business development. most people wouldn’t get an accounting degree if they weren’t going to work in the accounting arena. the same holds true for sales training. it makes little sense to invest in sales training without getting “students” to put into practice what they learn in the classroom.
says lisa tierney, a nationally known marketing consultant to cpa firms: “individual marketing plans identify a clear path for attracting target clients by outlining specifics such as how and where they will spend their time, money and energy. these plans should be customized to the individual’s natural ability and strengths and to tap into the person’s sense of their personal brand.”
everyone should have a written, individual marketing plan that serves as a game plan for bringing in business. most likely, if a firm has 30 people who are active in business development, there will be 30 different game plans.
most of the individual marketing plan components will borrow from one or more of the four disciplines:
- protect and grow revenue from existing clients.
- identify and nurture referral sources.
- focus on a well-defined group of prospects to get new clients.
- support activities that complement the first three components.
remember, people create growth, not “other” things.
mentor and coach in business development. can you think of an older, more tried-and-true form of learning than mentoring, coaching and on-the-job training? it’s enormously helpful for young cpas who have never sold a thing in their lives to watch a pro do it. in this case, the pros are usually the partners. and they should do this not just once, but over and over (taking a tip from malcom gladwell’s research). all cpas need to develop their own style of selling, and there is no better way to develop it than to watch others who are good at it.
one firm we worked with had an opportunity to pitch the work of a large museum. the partner took a senior with him on the pitch. as they were leaving the museum, the senior was upset with herself because she didn’t think she had gotten her points across in the best possible way. she wished she had spoken more eloquently. a few weeks later, the director of the museum called the partner to say his firm had been awarded the project. the partner asked what made the museum choose his firm over the competition. the director responded: “you were the only one who let your senior talk.”
many cpa firms have an unofficial rule (only unofficial because there is little accountability for enforcing it) that partners should take a staff person with them on sales pitches. one managing partner of a large firm told me, “at our firm, if partners go on a pitch alone, they get shot.”
whenever staff attend any kind of sales training, internal or external, their mentor should make it a point to sit down with the staffer, review what was learned and coach the person on how to put to use in a live setting what was learned in the classroom.
offer financial incentives and rewards for marketing. there are two strongly interrelated points to be made:
- financial incentives work! always have. always will. bringing in business is extremely difficult for most cpas because it forces them to go outside their comfort zone to do something that is critical to the firm’s success. so it makes perfect sense to establish financial incentives for those who make the effort and succeed in bringing in business. for partners, this almost always means that business development will be heavily weighted in allocating income.
for staff, the incentives usually take one of two forms.
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- a sales commission. this may not motivate most staffers, but it’s worth adopting because it will work with some staff.
- promotion to a higher position.
- why would anyone make this business development effort if their compensation is the same as that of co-workers who do little or no marketing? they won’t. bringing in business should be handsomely rewarded.
setting a marketing budget. talk to any firm active in marketing and they will tell you that one of the greatest challenges is to control the irresistible urge to spend, spend, spend. that’s why firms have marketing budgets.
the following metrics are from a recent rosenberg map survey. they show the percentage of revenues spent on marketing:
- firms over $20 million in revenue spent 2.1 percent on marketing.
- firms $10-20 million spent 2.1 percent.
- firms $2-10 million spent 1.5 percent.
note that this figure excludes the compensation of dedicated marketing personnel, whether full-time or part-time. if marketing personnel are included, this metric averages 3-4 percent.
it’s interesting to note the gap in revenue growth depending on firms’ size: growth rates for firms over $20 million are 45 percent to 100 percent higher than for firms in the $2-10 million group – every year! (growth rates for the larger firm group are affected by a higher level of merger activity than for smaller firms, but the growth gap is still huge after mergers are factored out.) although it’s difficult to correlate marketing spending to revenue growth for any business, it’s clear that the larger firms are bigger believers in the marketing function than smaller firms.
every firm needs to put together a marketing budget, broken down by major categories. this helps the firm focus on those activities that are likely to have the greatest rate of return. the most common marketing expenditures are these:
- marketing staff salaries
- firm events such as seminars, networking and trade shows
- individual business development activities
- marketing materials, including content creation
- outside consultants, including those who serve as outsourced marketing directors for their cpa firm clients
- blogs and newsletters
- branding
- direct mail
- political and charitable giving
- training in business development
- advertising and sponsorships
- website and seo (search engine optimization).
- email marketing, including list purchasing
in 2017, hinge research institute and the association for accounting marketing conducted a marketing budget benchmark study. here are the top spending categories, expressed as a percentage of marketing expenses excluding the salaries of marketing personnel:
- individual partner business development activities 18.5%
- sponsorships 10.9%
- charitable giving 10.0%
- advertising 8.6%
- marketing materials 6.6%
- consultants 5.4%
interestingly, higher-growth firms spend most of their money on
- marketing materials, including content creation
- firm events, networking and trade shows
- website including seo
- educational firm events
- professional association expenses
and the larger firms spend less money on advertising, sponsorships and individual partner business development activities.
what does this tell us?
- high-growth firms spend their business development money quite differently from low-growth firms.
- it proves a time-tested principle of life: just because someone else does something, it doesn’t mean you should do it. smaller firms tend to throw dollars at marketing, hoping it will absolve their partners of the need to engage in business development. but larger firms spend their money more intelligently, focusing on those activities that will provide the greatest support to individual business development activities.
most effective marketing activities. the most effective marketing activities are, of course, different from the most commonly used ones. hinge’s survey cited these as the most effective marketing programs:
- specialization and niche marketing 24.4%
- blogging 14.6%
- website 12.2%
- social media 12.2%
- networking events 12.2%
- telephone marketing 9.8%
- firm rebranding 9.8%
- employee sales training 9.8%
accountability. the way the story is told, a firm experienced flat growth for a year. the managing partner convened a partner meeting solely dedicated to getting everyone’s commitment to step up their individual marketing efforts. the partners seemed pumped up and pledged their full cooperation. various ideas were shared. everyone left the meeting convinced that the firm’s revenue woes would soon be over.
what happened? nothing. why? because there was no accountability for any of the partners to actually do anything. the partners knew that nothing would happen to them, financially or otherwise, if they did nothing to bring in new business.
here’s my favorite definition of accountability (because it’s mine!):
if there are no consequences to failing to achieve a goal or an expectation, it is less likely that the goal will be accomplished.
if your firm is serious about executing the four disciplines, you must establish accountability for people to achieve their marketing and business development goals.
one of the best ways to get this accountability is by clarifying, in writing, what actions for business development are expected of each partner.
hiring an external marketing consultant. a classic line from one of clint eastwood’s “dirty harry“ movies is “a man’s got to know his limitations.”
quite often, after years of trying to organize and execute a marketing strategy and achieve revenue growth, firms fail at achieving their growth objective. many reach the point, painfully, where they see their limitations and acknowledge that they don’t have the skills to do practice development on their own. that’s when they engage an experienced, well-known cpa industry marketing consulting firm. the consultant essentially becomes the cpa firm’s outsourced marketing director. firms under $10 million in annual revenue will likely see better results if they use the services of a marketing consultant instead of hiring their own marketing director.
the importance of making time for business development. being successful at just about anything important in life depends on devoting a enough time to the endeavor at hand. business development is no exception.
cpas, especially partners, have a natural tendency to focus on their clients and the work performed for them above all else. no one would argue that taking great care of clients is critically important. but the partners have to do all the work. the clients, the firm and the staff are much better served when partners leverage themselves by building great teams beneath them.
it’s important for partners to leverage themselves to free up time to bring in new clients to the firm, cross-sell existing clients and nurture referral sources. time spent on these activities is far more valuable to the firm than doing staff-level work. having the discipline to carve out time for business development drives revenue growth.
firm management. the #1 factor in the success of a cpa firm is effective management. why? because it makes everything else happen: marketing, training, developing great staff, technology, profitability, strategic planning, quality control, succession planning and mergers.
crm stands for customer relationship management. a crm system is a database tool for managing a company’s interaction with clients and business development prospects. it leverages technology to help organize, automate and sync business activities, such as marketing, sales and client technical support. the ultimate reason for having a crm system is to increase revenue and positively impact profits.
says becky livingston, president of penheel marketing, “you know you need a crm when your list of contacts has outgrown your rolodex. you remember what a rolodex is, right? another indication is when you begin to forget important information about your clients, notice your communication with them has dwindled or find it difficult to keep track of followups in your pipeline.”
able. the growth partnership has developed a crm system specifically for cpa firms. it’s called able, and it taps into tgp’s two decades of experience working with cpas. able serves as a firm’s crm, pipeline, content library and accountability dashboard.
users of able are able to
- measure the loyalty of important clients and calculate their net promoter score™
- cross-sell services to key relationships
- generate active referral relationships
- view their current pipeline of pending new business
- position the firm in front of defined, coveted prospects
- develop a personal brand by providing thought leadership materials to clients and prospects
- manage important relationships with a proprietary able dashboard
- use a toolbox of proven best practices
the point of enabling systems
a firm can create the smartest marketing plan that ever existed, but if there are no enabling systems, “the best-laid plans of mice and men will go awry” (adapted from the poet robert burns).
- without sales training, few people will know how to sell.
- without sales mentoring, the training may be wasted.
- without individual marketing plans, no one will know what to do and be accountable for doing it.
- without a marketing budget, spending will lack focus and roi.
- without accountability for marketing, results will be disappointing.
- without financial incentives, few will be motivated to sell.
- without the time, marketing activities will go undone.
- when firms lack the ability to grow their revenues, they should hire outside consultants to assist them in plan development and implementation.
- firms need a crm system to organize their marketing and business development activities.
- without overall management, none of the above will happen.
if firms are truly serious about revenue growth, then these enabling systems must be in place. without them, disappointment and frustration will almost certainly follow.