transcript \n<\/strong>(produced by automation. not edited for spelling or grammar.)<\/p>\njean: hello, thank you for joining gear up for growth, powered by 卡塔尔世界杯常规比赛时间. i’m jean caragher, president of capstone marketing and your host. this episode is focused on marketing and business development.<\/p>\n
our guest today is august aquila of aquila global advisors, where he specializes in consulting with firms on mergers and acquisitions, succession planning, compensation, and partnership issues. august is the author of several books, including “compensation as a strategic asset,” “the new paradigm,” “how to engage partners in the firm’s future,” “leadership at its strongest,” and his latest work, “marketing to maximize productivity, profitability, and client retention.” august has been named many times as one of the 100 most influential people in accounting by “accounting today.” august, welcome to gear up for growth.<\/p>\n
august: well, thank you, jean. it’s a pleasure to be here.<\/p>\n
jean: yes, i should say for our listeners, before we actually turn the record button on, august and i were going down memory lane a little bit. so i’m really excited to have this chance, august, to talk to you today about marketing and business development and some about your new book, too, which i’m very excited to hear about. so as i mentioned that, you know, the first section of your new book is titled “marketing is more than just bringing in clients.” tell us a bit about that.<\/p>\n
august: okay, well, you know, if you go back in history a little bit, when we first started marketing firms, it was all about bringing in the client, getting a client, getting a client and not worrying about anything else. over the last 30-some years now, i think we’ve grown up and marketing today should be so integrated into a firm that it can help the firm increase its enterprise value by making the firm more valuable if you decide to sell the firm. it’s great in recruiting and retaining staff. and it also, i think one of the key things to me, it makes a firm more innovative in that it starts thinking outside. i’m not going to say outside the box, but it makes the firms start thinking more about the business of accounting rather than the profession or the practice of accounting, which are two, you know, which are two different things. so innovation is really critical. and then all of these points obviously can be expanded. but if you’re just looking for bullet points, then i would say that pricing is really a marketing function. so when you look at firms today and how they price their services and the different ways they can price their services, marketing plays a significant role in doing all of that.<\/p>\n
jean: let me just add for a minute there because that’s a great point and pricing is a hot topic these days. and i know you wrote a book related to pricing and our friend michelle river has her advanced pricing methods. and there’s talk about subscription models and all that. not only does that force an accounting firm to operate more as a business. i think it’s a tremendous opportunity for marketers or managers in a firm to take on being the leader in changing a firm’s pricing model. that’s really a way that internally someone could make a mark on their firm and their careers. would you agree with that?<\/p>\n
august: i would. where the difficulty is in implementing that is that many firms even today focus on billable hours rather than the revenue or the cash brought in. as soon as you say the revenue, forget it. you know, there’s always a little bit of a write down or write off or whatever you’re talking about. but as firms, i always give the example is that my billing rate is, say, $300 an hour and i do tax work and i spend 2 hours with somebody and i charge them $600. okay, but what if i’m doing some sort of consulting job on an hourly basis and i spend 2 hours and the client benefits tremendously from that 2 hours? do i still charge them the $600 because maybe the client saved hundreds of thousands of dollars and if i…<\/p>\n
jean: no, you charge them more, right?<\/p>\n
august: yeah, i mean, you could charge a lot more. getting firms first of all to look at revenue is not important in the firm. what is important is the profitability of that revenue and then, secondly, to get people to not focus on billable hours or track. i mean, it’s okay to track billable hours, but have other performance indices that you want to look at to see how effective you are just in running the business and also in your marketing activities.<\/p>\n
jean: right. right. august, as you’re meeting with firms or talking to folks, what is your take on firm leadership initiating a change in how they price? i know we’re still very much in the infancy of that, but what’s your take on that?<\/p>\n
august: well, i think the leadership is critical because it would be very hard for a manager just to go out and do it because it would be contrary to the, sort of the current culture of the firm. but, you know, firms are successful because it’s a top-down driven culture, i believe. so whoever’s at the top needs to do maybe couple things for leadership. one, i think the most important thing for a leader is to set the direction of the firm, whether you call that the strategic vision of the firm or strategic planning, but where do you want to take the firm? and, you know, you get input from everybody, but you need to set that first, and then second, you need to be committed to doing that. that has to be your passion as a leader, to actually implement, execute that vision. so now you come to execution of actually doing it and not the last but not least is that it’s gotta be your personal mode of operations, so to speak, right? i have to do what i say. i can’t say not do it because then it becomes meaningless to everybody in the firm and that’s hard. and you know people, people aren’t necessarily trained to be leaders. i believe that you can become a better leader if you know what to do and if that’s what you want to do. so if the leader doesn’t embrace something, i don’t think anything gets done in the firm.<\/p>\n
jean: well, i would agree with you, you know, having spent many years on the inside of firms related to marketing and business development. it needs to come from the managing partner. otherwise, i think accountants like other professions can become very comfortable. i think many cpas have made more money than they ever thought they would, and they’ve got a great life. and why should they do anything differently? because things are great just as they are. so there really has to be a compelling vision or case about why something in a firm needs to be implemented differently or why they have to make any change regardless of what it’s about.<\/p>\n
august: yes, you know, and one of the things is that i know i’ve struggled with in my consulting over the years to actually get things implemented in the firms that you consult with, but accountants, lawyers, doctors, any profession, they want to practice that profession, right? so accountants or tax people want to do accounting or tax, doctors practice medicine. so why not bring in people in which firms have been doing who can do the marketing, who can do the initial sales, but at the same time, i think we can instill in professions or professionals that it is critically important for them to make that client experience as important, as critical as possible. and to me, that’s marketing, right? every time i’m eye-to-eye with a client, i can do some marketing and it doesn’t take me anymore. just, you know, listening, understanding what they’re trying to do, maybe be sympathetic, maybe being… and. i’m not even sure what to say, but being sympathetic in listening before you give them the solution, you know, in partnering with those clients to say, “here’s what we can do together. what do you think? how should we proceed?” and things like that. so to me, the quality and the value of each client interaction might be one of the most important marketing activities that professionals can do.<\/p>\n
jean: right. absolutely. yeah. and, you know, i have several colleagues who have made that jump from marketing to client experience officer or director, or whatever the title is, and how important the data is. and also, i had a terrific podcast episode with mitch reno at rehmann and he has data that beats anybody. it’s every interaction. it’s always coming to a meeting with an idea. it’s being more proactive in a way that a firm could really differentiate themselves. so, well, the two of us, you know, have talked a lot over the years about, you know, niche marketing and specialization as a way to have a firm differentiate themselves. mitch’s case was a firm can do that through client experience.<\/p>\n
august: yeah. and, you know, and what’s unique is that there’s only one of you. there’s only one of me. so, you know, we’re unique. and the more value i feel we can bring to a client, share with a client, that adds to the value of that to the contact, the inner interaction with the client. that’s critical. people have said, “well, i don’t want to give away everything i know.” i said, “well, you must know very little if you think you’re going to give it all away because i remember a long time ago that somebody told me, he said, the more you can give to a prospect in the beginning, they’re going to sit there and say, “wow, if you’re giving me this now and i’m not even your client, what will you do for me when i become your client?” you know, nobody’s going to do their own will or a complex tax return or their audit or integration or anything else. i mean, so i’ve never been afraid to share with clients or anyone, you know, the knowledge.<\/p>\n
jean: right, absolutely. yeah, as an example of what their experience is going to be like. now, i know there’s more related to the book, but let me…i’ve got a few questions here for you as well. and i’m sure that we’re going to incorporate some other items that are in the book. so the research that i’ve done with our colleague rick telberg at 卡塔尔世界杯常规比赛时间, we called it the seven keys to successful cpa firm management. our research showed us that the leading firms are 15 times more likely to follow a written marketing plan. they’re 15 times more likely to check progress against that plan, and they’re 10 times more likely to have specific and measurable business goals. so what are your thoughts about why leadership and some firms are willing to hold themselves to higher standards but most aren’t?<\/p>\n
august: well, i think it goes back to the leadership that we talked about a little bit earlier, goes back to firm culture. and i like to use, for example, mckinsey. you know, mckinsey is a very i mean, it’s outstanding consulting firms throughout the world, but it’s very difficult to get hired by mckinsey. okay, it’s like applying to the cia, 40 million applications and they take 4 people. the same with mckinsey. but not only is it difficult to be hired by them, it’s difficult to stay there. so their bar, their expectations, you might say, of what you’re going to do, how you’re going to do it, how you treat clients, your growth, your development is very high. so they actually, they review people every six months or so or have historically, they may have changed recently, but they have historically. and if you’re not meeting that bar, then you got six months to get there. okay, now most accounting firms are struggling to get people. but if you had high expectations, who would apply to your firm? people who want to perform, who have personally have high expectations. and if you have lower expectations, what are you going to get?<\/p>\n
jean: i mean, you get higher expectations, you get the stars, right? because those are the ones that really want to prove themselves, right?<\/p>\n
august: yeah. and, you know, that’s the problem historically with a lot of firms is that you get somebody who wants to exceed, who wants to do something. and then they’re sort of depressed because of the culture of the firm that doesn’t let them shine, let them grow. there’s no potential there for future expansion.<\/p>\n
jean: so, you know, that’s like special leadership, right? so, you know, i wasn’t planning on asking you this question, but i will, because the two of us can both remember back to the 1980s and the number of cpas that left their larger firms to form their own firms. there was a lot of entrepreneurial spirit that stemmed from that decade in the ’80s. do you sense that that could happen again today? do you get any feeling about that?<\/p>\n
august: well, what’s interesting is that back in the ’80s, we used to say there are about 45,000 firms out there and about maybe 1,000 or so were really the bigger firms and most of the other 40-some thousand were smaller. those numbers haven’t changed. so what does that tell us? you know, that there’s still, as large as firms are getting today, i think there are always people that want to work in a smaller organization. and i’m not saying that in any negative sense, because the smaller organizations, if they’re structured properly and they know their niche, they’re serving a niche of the client base that a larger organization cannot afford to serve. and so it’s… i just think it’s the evolution of a business. i mean, you see that in everything where somebody leaves microsoft and starts a startup. and that startup becomes nvidia or something like that. you know, so it’s…<\/p>\n
jean: you know, as you look at the big picture, those firms that started in the ’80s, it would be very interesting to see how many of them were actually around with the same names, because whatever reasons, they’ve been acquired by other firms, you know, or merged with other firms. so those leaders were good at forming the firm. and then maybe, i don’t want to be negative, but just that they or maybe the leadership, they just love leading the firm that they really didn’t look at that succession. i know that’s one of your areas of specialty, succession planning, that they didn’t perhaps think hard enough about who is going to take over for them when they retired.<\/p>\n
august: yeah, those leaders are great entrepreneurs. i worked for one at friedman. i remember irwin friedman, great entrepreneur, great thought leader. but the entrepreneurs that i’ve known over my life, not only in the accounting profession, but just in small business, i don’t know what it is, but the entrepreneur feels that he or she has to control everything. and if you can’t really delegate, then you’re not creating an organization that is going to survive, because once the entrepreneur gets older or dies, he or she is the person holding that organization together. and i think that’s one of the reasons why you’ve seen so many mergers. and when i was with american express, we started this whole thing of roll-ups in the ’90s. you know, most of the firms today that sell, i should i would say most of them, i’ll go out on the limb, they’re selling because they have a problem, whether it’s a leadership problem, whether it’s a financial problem. other people problems, they can’t, you know, pay for their unfunded retirement plans. very difficult to find firms that don’t have problems that want to sell.<\/p>\n
jean: everyone has problems. august, you mentioned american express. how would you compare your time there to what you see in the private equity market now? what are the similarity…<\/p>\n
august: yeah, we were like the model t ford and the private equity today is obviously the tesla or the lamborghini of the… you know, it’s just interesting. there’s so much money out there. and there’s so many firms that are out there looking in the market at different models for accounting firms. it’s in its infancy and it needs to see what’s going to happen in the next three to five years. p.e.’s, private equities, usually want to turn their money in a short period of time. and when they do that, then what’s going to happen? what’s the fallout from people? will they start new firms again? you know, if you’re 40 and this is what you do, you’ll probably go out and start a new firm.<\/p>\n
jean: yeah, it is going to be interesting just because my understanding about the culture of a p.e.-backed firm, you know, when you were talking about expectations earlier about how those expectations might be different, you know, related to growth and profitability and folks may not like that change in culture.<\/p>\n
august: right.<\/p>\n
jean: yeah, we’ll have to visit in three to five years and see what happened with all those firms.<\/p>\n
august: yeah, it’s an interesting time. it’s exciting that there’s these opportunities out there for accounting firms to explore rather than before, there there really weren’t opportunities up until maybe american express started and c-biz and then all the roll-ups of accounting firms running other accounting firms and now nonaccounting firms from the p.e.s to banks to wealth management firms are out there buying family offices. everybody’s out there buying something.<\/p>\n
jean: it’s very interesting. and of course, along with that, you know, there’s a lot of dialogue also about how p.e. is not for every firm. and, you know, how can firms remain independent? you know, what did they need to do if remaining independent is their goal?<\/p>\n
august: you know, if you have a good vision, if you have a good marketing plan to implement that vision, and if you’re a good firm, i think there’s no reason why you couldn’t stay independent.<\/p>\n
jean: i believe that too. so let’s take another step back related to marketing. and i believe a lot of our listeners and viewers are in firms with less, let’s say less than 100 people. in your experience, what is the most effective marketing strategy for cpas?<\/p>\n
august: well, let me start off by saying i don’t think there’s one. okay, i think you need an integrated marketing plan so it works together. just doing one thing isn’t going to be totally successful, maybe successful, but you could be more successful doing an integrated thing. so if i were very small firm…<\/p>\n
jean: well, i’m sorry for interrupting, but so would you agree that a marketing effort should have more than one strategy but if a firm is just starting out, they’re willing to get commitment on this one strategy, you would encourage that, right?<\/p>\n
august: well, if you’re just starting off, yeah, you have to start off… and today, with technology and ai, it’s a lot easier to market a firm than it was in the ’80s or the ’90s prior to, you know, the personal computer and everything like that because it was much more expensive. but i would say, so say for example i am at the low end or the smallest end of your small firms from 1 person to 100 people, what is the most important thing for me to do? the most important thing for me to do is to develop some sort of expertise, you might say, some sort of image in the community that i serve that i’m a tax expert, i work with maybe homeowners associations. but whatever it is, you got to create, you got to be out, you got to be known in the marketplace. if you’re not known, you’re never going to get any new business or new clients. so i would say that’s number one. i think i would say i would use social media because if i’m small, it’s free. it’s not hard to do. and even if i say, say i want to write an article under my blog and i go to chatgpt and i say, “could i have an article on issues facing the construction industry today? 500 words.” and it pops out and i modify it a little bit. but, you know, now i’ve got content that i can put on my social media. and how long has that taken me? half an hour. you know, so i think that’s good, getting known in the marketplace. and these are these are things that small firms and even the larger firms still do. they get involved in their communities, right? they get involved in associations. they get involved in their church and their synagogue. so people know what they do. they network. i don’t know.<\/p>\n
jean: so these tried and true marketing tactics, you know, that have been around, right, for decades and decades in our profession, still hold a place for practitioners today in implementing a marketing plan.<\/p>\n
august: absolutely, especially the smaller firms. as you get larger, then you can move more into the, you know, what do you call it? the search engine optimization, right? so your name gets pushed up to the top of the list. and there’s so much you could do in the obviously hiring marketing people and bringing in experts in there. but in going back to, you know, the smaller you are, you’re going to get most of your referrals from clients or just having a good website, which isn’t as expensive as it used to be. you know, it’s pennies compared to you get one client in, it’s going to pay for itself. so it to me, using technology to develop a presence out there because the younger and younger generations are all using technology, you know, and if you get a referral source from somebody, it’s a good chance that somebody saw you on the internet. they read an article or something like that.<\/p>\n
jean: right. absolutely.<\/p>\n
august: you know, what is marketing’s purpose? to create awareness, right, as a firm to somehow give you an opportunity in the marketplace that somebody will call you to not to close a deal. that sales. you know, but marketing from a pure sense is really, as we used to say, getting you up to bat. and then it would be up to you to get the hit.<\/p>\n
jean: right. so a big difference these days, though, you know, back in the day, august, you know, partners would take their print brochures and put them in their briefcases and hop in their car and drive to a prospect. and, you know, they would drive that whole story of the firm and what they’re capable of doing. and nowadays, those prospects are going online and they’re checking out firm websites and they’re checking linkedin and they’re googling firms. they’re googling partner names and they’re doing their research before they even contact you. so it’s important for firms to not only be doing those things you’re mentioning in real life, but how they are promoting themselves digitally is equally as important.<\/p>\n
august: yep. and today, clients, you know, before technology, meaning the personal computer and the internet and everything, is that we held the black box. clients didn’t know anything or very little. and they came to us as they would come to a doctor to find out the solution to something. well, now, if you want to find an answer to a tax question, you can go online, you can look at it, then you can go talk to the accountant and see how much he or she really knows. you know, and the client now is highly educated or can be highly educated about a lot of these issues. whether or not the information they get online is 100% correct, that’s another issue.<\/p>\n
jean: yeah, for sure. so, i’ve got a couple more questions, so i know that again, your book again, that is called “marketing to maximize productivity, profitability and client retention.” and you’re talking about, you know, marketing is being more than bringing in clients. i know that we both agree that firms need to both be more selective in the new clients they bring on as well as being willing to let go of clients. so there’s a workshop that i’ve done a few times about firing clients and the challenges of firing clients and the top two responses i get when i ask them about the greatest challenge, the responses are, “i don’t want to hurt a client’s feelings,” and “obtaining new clients to replace the lost revenue.” so what do you think about these responses and how can cpas get past that?<\/p>\n
august: yeah, i think both the responses are sort of nonstarters. i don’t think it makes…you’re not going to hurt a client’s feeling, first of all, you know. and it depends. now, you’re not going to disengage a profitable client, but we all know that there are a lot of clients that really, you know, you’ve been doing for especially small firms, you’ve been doing them for years. you raise maybe their fee $5 a year. i mean, you know, it’s not worth it. and so what i’ve done in my book is i’ve got two sample letters of how disengagement letters that you can send to a client. and then i’ve got a short chapter, a page or two on how to do, you know, what you need to do. and the key thing i think in disengaging a client is to be transparent with that client, to be honest, and to maybe offer them some options. so the options could be, you know, i know somebody else who’s more suited to serve you. or if you’d really like to continue working with me, you know, the fee has to go from $10 to $1,000 to, you know.<\/p>\n
so i mean, there’s nothing wrong because, a, i don’t think you feel good about a client that you don’t want to serve. and so you would feel happier and the client would probably feel happier talking to somebody else. and it’s just something that one of the things that i always encourage firms to do is look at their clients by different tiers, different levels. and usually what comes out is that top tier are the most profitable. there’s a smallest group but you’re getting a lot of dollars from that group. those are the clients that you want to be able to spend your time. even if you’re a tax shop and you’re just cranking out all these semi-profitable, non-profitable clients, if you got rid of them, you could spend your time on those clients at the top two, three tiers. and you wouldn’t become less profitable, you’d become more profitable, or at least you’d have more time to enjoy your life.<\/p>\n
jean: right. right. and i think a lot of people are thinking about that these days, aren’t they? that’s right. am i happy with what i’m doing? is there something else that’s out there that i need to look into? yeah, i’m one of those people, you know, you really want to be purposeful about, you know, how you’re spending your time. so i lied. i still have two more questions. so what is the most important lesson that you’ve learned in your decades of consulting with cpa firm leadership?<\/p>\n
august: well, the most important lesson. i would, i would say that the most important lesson in marketing of professional services of what we do is that just because something doesn’t work once, it doesn’t mean that it’s not a good idea and that you shouldn’t, you know, shouldn’t do it. so, and then i think added on to that, i would say, is that looking at all the different ways that strategies you might say you could use to market the different tools, because there’s so many tools for marketing from trade shows to what you’re doing today. and, you know, seminars and webinars, podcasts, and, you know, and what do you feel comfortable doing and go with your gut feeling of what you like to do, because you’re going to be more successful in that and your people will be more successful. yeah.<\/p>\n
jean: those are two great points. okay. so my last question is your bonus question. what has been your favorite country to visit?<\/p>\n
august: my favorite country to visit has been spain. and i’m going to the canary islands, which is part of spain.<\/p>\n
jean: oh, okay.<\/p>\n
august: in january for a month.<\/p>\n
jean: wow. now, i’ve not been to spain and i haven’t been to the canary islands either, but it’s on my list. right? i’ve not heard a bad thing about it. i’ve got friends and also who have traveled there, they all come back and say it’s just fantastic. what’s your favorite part about spain?<\/p>\n
august: well, the thing that i like most, and it’s not a geographical region, i’ve been through all of spain. in september, i was up in the basque country in bilbao and san sebastian where hemingway wrote a lot of his books and “farewell to arms.” but i love the food. i love the food and i love the people. they’re just such great warm people. enjoy life. greatest place on earth, i think.<\/p>\n
jean: oh, boy. well, that is a great spot for us to end. i’ve been speaking with august aquila of aquila global advisors. thank you, august, for your time today. this was really fun.<\/p>\n
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