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Tell your clients why you are more expensive

The other day I was invited to an event launching the corporate offering of a well known online retailer. It was a great event – wonderful venue with harbour views, tasty food & beverages and an eclectic crowd. It was a most enjoyable evening.

However, there was one highlight that especially stuck out to me – the key note speaker was a chap named Martin Grunstein. I had vaguely heard of his name before so I didn’t know quite what to expect. Martin describes himself as “The Customer Service Expert” He was a most engaging speaker and had a unique style of delivery.

Although Martin’s experience is predominantly retail, a lot of the material he presented at the event is easily transferable to professional services such as accounting.

One of his points that stuck with me was the importance of telling your clients and prospective clients what you actually do for the fee that you charge. It is vitally important that you give clear reasons as to why the fee is at the level it is.

For example, lets say that a prospective client of yours questions why your fee for a specific project is $15,000 rather than $10,000 from a competitor – or in other words why are you 50% more expensive? According to Martin, the onus is upon you as the service provider to tell the client why you are more expensive and why your service is superior.

In the above example, reasons may include:

  • You as the client are assigned one contact person whom you can contact at anytime regarding anything to do with the project.
  • Access to other clients of the firm who have done the same project in their businesses so you as the new client can learn from their combined experiences
  • Complimentary phone support for 12 months following the project completion.
Each of the above reasons represent significant benefit to the client, lowers risk and increases the likelihood of the project being successful. It is then a simple case of saying to the client, “This is why we are 50% more expensive. Go and ask the other firm if they can do the same. If they can do it for the lower price go for it. If they have to charge more then ask them why they didn’t include these aspects in their original proposal?
Either way – you set yourself apart as the more professional and more informer provider.
Thank you Martin – great advice!
See you next post,
James

The subtle art of negotiation (2 of 2)

Last post I referred to Brad’s use of a “wonderful device” in his negotiations with clients. So what is this device? Put simply it is distance. By distance I mean another person which Brad needs to refer back to and check with before committing himself and his firm to anything.

By helping other partners provide services to a large client, Brad has created at least one other person within that account whom he can use as someone he needs to check with and consult before making any decisions when it comes to project scope or fees. Professional accountants (at the partner level in particular) often fall into the trap of saying yes on the spot or being caught by over-committing when a client puts pressure on them in a meeting. What Brad has done is to create distance by having another partner doing work in the same organisation to whom he can “defer” decisions. This is is how it works.

Let’s say, Brad has been asked by his client to make the fee in his proposal sharper and include some extra items at the lower price. Brad can then say something along the lines, “Mr/Mrs Client, thank you for asking the question. However, I need to discuss your request with my other colleague who is the lead partner for this account. I’ll come back to you with an informed response”

By having this other person to defer to, Brad has created sufficient distance and given himself more time to develop a informed, creative & innovative approach and not respond in the heat of the moment and give away too much.

I you’re a partner keep the above in mind when engaged in your next negotiation. It might just save you some time & money!

Until next time,

James E

 

The elephant in the room

It is human nature to avoid awkward situations. Accountants (since they’re human!) are no different. Don’t let matters go too far down the track if there is a problem with a client – especially the sometimes sensitive topic of fees.

Recently I heard a horror story of a partner of a Top 20 accounting firm doing some work for a “friend” of his who operated a sizeable business. Given the relationship with his mate, the partner took some short cuts in the usual method in how a new client is brought into the firm. Well … to cut a long story short … a few months later the work-in-progress of almost a million dollars was written off. Needless to say, the partner’s friend refused to pay the huge bill since he had not been given any regular updates or communication with the partner and/ or the firm. The partner had paid the price of not talking about the elephant in the room!

Show me the money … NOT

I was in a meeting just the other day with a couple of senior partners with a big accounting firm (think top 10).

We were discussing with a marketing consultant I introduced to the firm what do people operating their own businesses really need and want from their advisers – in this case accountants.

The conversation went the usual way regarding client compliance needs, opportunity to value add, be proactive and the like. I’ve been in lots of discussions like this over the years and I’m sure you have too. Too often these conversations revert to motherhood statements, platitudes and the bleeding obvious.

However, towards the end of the meeting, something interesting happened. One of the senior partners, leaned forward and said the following (paraphrased):

We have to be upfront and completely honest with people that we meet who may or may not become a client. If we can help them improve their business and grow then we need to show them how we can do that. If we can’t help them then we need to tell them and step away.

I really like that statement. So often accounting professionals have so much pressure on them to meet their budgets, keep their write offs to a minimum and use everything in their power to make sure productivity is kept at a high level. Rightly or wrongly their is a (over)focus on fees.

The sad fact is that if you, as an accounting professional, are preoccupied with fees and the paraphernalia that comes with that, then clients will feel, see and smell it. No amount of soothing words, gifts, seminars/workshops, and invitations to the corporate box at the Rugby or Cricket will or can change a clients view that you and your firm is only interested in the money.

Wouldn’t clients prefer and want advisers (be they accountants, lawyers, management consultants etc…) to focus on them and their business, personal wealth and wellbeing and view their fees as a byproduct of a committed and strong relationship?

This is the sole reason I have stayed with my own accountant for more than 10 years now. He takes care of me and he knows the fees will take care of themselves.

What do you think.

All my best,

James E.

Relationship or fee?

A few weeks ago I was thrust into an interesting situation.

A long-term commercial client of mine had asked me if I could recommend a specialist tax consultant for some advice that he needed regarding a pending transaction.

To cut a long story short, I recommended a senior tax specialist to my client and the two of them started to meet to plan & discuss  the project at hand. The first meeting went well and then things fell apart.

Without going into the gory details, the advice delivered didn’t help my client and the final bill that came was about double what the client thought the service was worth.

A tax friend on one side and a long term client on the other. I was the chap who brought them together and neither was happy. Not a good situation to say the least!

I suggested to both parties that we meet and hash things out.

We got together and each party presented their views in a full and frank way. After about 30 minutes, my tax consultant friend made a really interesting statement that changed the whole tone and atmosphere of the meeting.

With names changed and a little license on my part, … this is what the tax chap said:

Wayne … I’m sorry you’re not happy. I think we have had a communication breakdown and that has created an outcome which is not what you want or what I want. I’m not worried about my fee. The most important thing here is my relationship with you. I’d like to think that you & I will be able to work together in the future. I’m happy to wipe my fee and start again.

There was a pause and my client (I could see) was impressed with the tax chaps attitude and willingness to admit fault and start over. My client said that he was happy to pay 50% of the fee owing and would be open to work with the tax chap again.

I hope this has reinforced to you which of “fee and relationship” is the more important!

Thanks for reading and bye for now.

James E