Why are some accountancy practices are so much better at winning new business than others?
To some accountants, schooled in a world where professional people don’t go touting for business, the question may seem impertinent. But for those that recognise the fact nobody owes a practice a living, it’s starting to take on a very meaningful resonance.
There has been something of a revolution during the past ten years in marketing and selling a whole range of professional services. Yet while more accountancy practices realise they need to market their services more proactively, they are not so sure what they should be doing.
Should they be advertising in the local and national press? Sending mailing shots to local businesses? Entertaining prospective big spenders at a day at the races?
Until recently, nobody was quite certain what worked. As a result, business development in many practices was something of a hit and miss in which various activities were tried and then dropped when results were disappointing.
Now a new piece of research by Policy Publications, in association with the University of Luton, has turned a spotlight onto the whole business of development process in accountancy practices. Researchers surveyed 60 small and medium-sized accountancy practices with annual revenues up to £25m.
In each practice, they looked at 128 different activities and issues which might have some impact on the process of winning new business.
They also asked each practice what proportion of bids for new business they win. Of the 60, 38 said they win more than half, 22 less than half.
Researchers led by Professor Colin Coulson-Thomas then crunched the data into a specially built database called Accountancy Benchmark. This enabled them to compare the performance of those practices that win more than half their bids (the ‘most successful’) with those than win less than half (the ‘least successful’). Accountancy Benchmark has been made available so other accountancy practices can measure their business development activities against it.
The initial research paints a fascinating picture of two completely different worlds of accountancy practices. Among the most successful are practices who understand the needs of their clients, are keen to explore better ways to offer new services and anxious to build long-term customer relationships. Among the least successful are practices that seem largely to be going through the motions, offering the same unimaginative services year after year, impervious to new trends and failing to recognise business opportunities.
But why should all this be important to a practice that has a solid client base and is happy to rub along from year to year? Two reasons.
First, competitive pressure means that increasingly these practices will not be rubbing along – but rubbed out. Even in the small and medium-size practice market-place, it’s clear there are more clients looking for a wider range of services. Those practices that know how to attract the clients who are looking for that bit more – and, of course, deliver it – will be those that not only survive but prosper.
Secondly, there are now more accountants, who, for the sake of their own career development, want to take on a wider variety of work if only to escape the drudgery of small company annual accounts and self-assessment tax returns. As they scan new horizons and offer a wider range of higher-margin services, accountants are increasingly coming into competition with management consultants.
So what does the benchmark study show? The key message is that the most successful practices score over the least successful in a range of activities, from attracting invitations to bid through to negotiating the final contract.
Take the main sources of new business enquiries. Figure 1 shows the top five sources for all practices in the survey. But, critically, 92% of the most successful attract ‘frequent’ or ‘regular’ referrals from their existing clients compared with just 68% for the least successful. This suggests the most successful provide a more satisfactory service for their clients and they are more skilled at building the kind of customer relationships which encourage referrals.
This point was reinforced when practices were asked which marketing activities were most important to them. Figure 2 shows the top five activities for all practices. Again, the headline figures hide some striking variances between the most and least successful. For example, 55% of the most successful think it’s very important to seek new projects from existing clients compared with a dismal 18% from the least successful.
But aside from marketing activity, what else attracts clients to invite accountancy practices to bid for their business in the first place? The most successful practices have striking leads over the least successful on the three key factors that attract most invitations to bid, as figure 3 shows.
It’s only to be expected that both groups should understand the need to develop their image and reputation. But it’s also notable that the most successful are much more likely to differentiate themselves through business-led expertise rather than relying solely on professional skills. This is reinforced by the fact that the most successful take more trouble to underscore their expertise through specific track record projects.
It’s also clear that the most successful take more trouble to identify with their potential client’s specific business problems (figure 4) although they still have some progress to make on this issue. The most successful are learning how to get ‘up close and personal’ when it comes not only to finding out what the client wants from the project but which key players will make the decisions.
That is also true when it comes to communicating with a prospective client during the bidding process (figure 5). The most successful get closer to the prospective client and are more effective at showing how they are different – thus providing reasons for the client to choose them over a rival. Critically, in a world in which accountancy is less about number crunching and more about finding innovative business solutions, the most successful are better at generating new ideas for their clients.
When it comes to chasing a succulent new piece of business, it’s no surprise that the most successful are more likely to have a senior partner leading the bid (figure 6). But what really is surprising is that the least successful often haven’t cottoned on to the importance of having people on the bid team with special subject knowledge and special client knowledge.
The most successful are geared up to make an all-round professional presentation (figure 7) when they stand up in front of prospective clients. They pay more attention to training team members in presentation techniques, preparing notes and scripts, rehearsing the pitch and providing more visual aids.
Significantly, they also provide more time for questions – which indicates they treat their presentations more interactively, wanting to hear the prospective client’s views as well as expounding their own.
In the endgame, the final negotiations, the most successful also score (figure 8). They focus on issues that clients care deeply about – on-time delivery and post-implementation support – and continue to build relationships. And, a significant pointer for the future, they also pay more attention to transferring knowledge to the client, seeing this not as a way of ‘doing themselves out of a job’ but, rather, of positioning themselves for future projects.
So what is an accountancy practice that is looking to develop its business proactively – rather than just accepting any old client who stumbles through the door – to make of all this? Plainly, the first point is the practice needs skills in business development. That doesn’t just mean somebody who spends the odd hour sending out a few letters.
Rather, it requires partners at senior level to provide strategic leadership to the whole business development process – and to put somebody in charge of it with both the skills and the time to do the job. The practice must also accept that the person in charge of business development will have less time for billable work – and not penalise them in profit sharing arrangements as a result.
Above all, the practice as a whole must develop a strategic view of the role business development can play in its future. The most effective business development activity targets new clients that can help a practice grow the way it wants to grow – perhaps focusing on new vertical industries or developing special niche skills. In that way, business development begins to add real value to the strategic development of both the practice and the skills of the staff within it.
– Peter Bartram is a freelance writer
A brochure describing how accountancy firms can benchmark themselves against the Accountancy Benchmark database is available by calling Policy Publications on 01234 328448 or by faxing 01234 357231. (E-mail: email@example.com).
Big Four firm Deloitte has announced its investment in blockchain start-up SETL as well as a partnership with VTC Group
Clients and business advisers can now connect to small businesses through a Facebook Messenger chatbot service, provided by Xero
It has been another glittering night in the accountancy calendar. A range of practices big and small, plus outstanding individuals, have been rewarded for their efforts in the British Accountancy Awards 2016
Making Tax Digital responses to the consultations expected in January 2017