Expanding your service

An American and a Japanese are walking deep in the African bush.

In the distance they notice a lion starting to stalk them. To his companion’s astonishment, the Japanese takes off his backpack and starts putting on a pair of running shoes. The American laughs: ‘You surely can’t be expecting to outrun a lion’. ‘No’, says the Japanese. ‘I only have to outrun you.’

This story is about competition: you don’t have to have a massive advantage to win. After all, championship times for the 100 metre sprint are distinguished by hundredths of a second. Few accountants have business as of right; they have to compete for it.

Audit and basic accountancy services have gradually been commodified, so how can the strength of an existing client relationship be used to sell new services? The obvious area is in management services and consultancy.

Offering these is a natural development: the client who needs a new financial controller might seek your help in finding or selecting one; they might want your advice on the selection and installation of new accounting software, and so on.

Changing the accountant

A study of the reasons why clients changed their accountant showed two-thirds felt they were not getting an adequate standard of service. Here’s a very simple test: tomorrow morning, one of your key clients calls up and says, in the course of your conversation, that he’s received an approach from one of your competitors. As you look back over the service relationship between you and that client, are you confident that you have continued to deliver the same standard of service that was promised and delivered early in the relationship?

We all know it takes more effort to win a new client than to retain an existing one, but the risk is that we take existing clients for granted.

How depressing when the first you hear that a client is unhappy is when they are considering moving their business elsewhere. So it’s worthwhile asking clients from time to time what they like and what they would like to change about your service, and then taking action on the feedback.

But you do have to recognise you are unlikely to be first to market with these new consultancy services. Your competitors and other specialist providers will also be seeking to sell them to your clients and you have to adopt the same professionalism as they do.

Consultancy is not the same as accountancy; not only does it address different issues but the process of engagement is different too. A basic difference is that the process of selling a consultancy project involves product design as well – specifying what the work is going to be. The two major challenges therefore for an accountant moving into consultancy are setting clear expectations about what the client is going to get and meeting those expectations when conducting the consultancy project.

It requires skills rather different from those relating to mainstream practice – for example, in project management, problem solving, managing change and so on – which are the stock in trade of a qualified management consultant. So if you are going to offer consultancy, you need to make sure your people are properly trained in selling and delivering it. The risk of not doing this well is that, far from binding your clients more closely to you, you alienate them by the poor delivery of new services.

Preparing the ground

If you want to develop your competitive performance, you have firstly to foster an environment in your practice where people are encouraged to look for new ways of doing their work. There is a gardening analogy: if you’re putting in a new plant, you prepare the ground carefully. You wouldn’t expect it to survive, let alone thrive, if simply left on the surface of the soil. Similarly, with a performance development programme, you have to prepare the people and business for it carefully.

You should identify specific, measurable business targets and then design a programme that will help people achieve them. Many managers at this stage are guilty of ‘cat and piano syndrome’. This is based on the theory that if you need a piano hauled up to your sixth floor apartment, harness a cat to it and, given appropriate direction and motivation, the cat will pull it upstairs.

Although ludicrous, managers often believe that if people are told what to do, and the rewards and punishments associated with success or failure are made clear, they will accomplish their targets. They forget that people also require resources, support, time and training to extend their performance.

And people need to be confident that putting in effort will result in success otherwise they won’t make the effort in the first place. Getting the context right is an essential preliminary to planning how to develop competitive performance.

Everybody in the practice should be part of this effort – support staff as well as professionals. But the example has to be set from the top.

This is not a new idea. But what I find as I observe accountancy firms is that although the theory is well known it is rarely carried through in practice. So here’s an immediate opportunity for you to acquire a competitive advantage in client retention – just seek and respond to the views of your clients that little bit better than your competitors. Product development describes the process of identifying and delivering new services to your existing clients.

Consultancy is thriving; the slimming down of so many companies means they frequently need to use consultants to staff one-off projects for which they have insufficient internal resources. But this work has to be approached with professionalism and care.

Even if you’re at the top of the profession with the largest market share, your rivals’ greatest ally is your complacency. Management gurus Professors Hamel and Pralahad put it well in the Harvard Business Review: ‘Abundant resources won’t keep an industry giant on top when its hungrier rival practises the strategic discipline of stretch … What distinguishes Beta from Alpha is not Beta’s smaller resource base, but the greater gap that exists between Beta’s resources and its aspirations.’

Calvert Markham is managing director of Consultancy Skills Training.

The third edition of his book, Practical Management Consultancy, is published by Accountancy Books this month.