Accounting Firms, Competition and Differentiation

In the course of a conversation with one of our members he said “in these tough times you really have to keep your eye on the competition.”  I asked him who he saw as his competition and predictably, I suppose, he said “other accounting firms of course!”

Sure, other accounting firms may be interested in winning your clients but that’s only one source of competition and, quite frankly, the least important in my view.  I say it’s the least important simply because there is such a low level of client movement between accounting firms that either your “competitors” must be very poor at the competitive game or, probably more to the point, they do not offer any good reason for people to incur the cost of switching which is significant in both time and money.

The main reason clients switch is not due to the “pull” of the strategic marketing genius of other firms, nor is it because they are phenomenal salespeople; it’s because of the “push” of service failure from their current firm.

If you want to grow your practice you need to master four things: (1) improve the service experience you give to your clients, (2) develop an intimate relationship with clients who meet your stringent selection criteria i.e. clients in respect of whom you are able to add significant value, (3) empower all of your people to embrace a client-centric service philosophy and, (4) implement a marketing process centered on a structured referral system.  Oh, and by the way, when you take special care of the first three things the fourth one takes care of itself.   A great reference to follow up on this is Jeanne Bliss’ 2009 book I love You More than My Dog.

The traditional work output of accounting firms is well known –I’m talking about compliance-based services of the A&A type and tax planning and return preparation mixed in with a smattering of business advice usually financial in nature.  These work outputs are very difficult to differentiate because the buyer is not expert enough to make a judgment of quality.

But the buyer is very good at making a judgment of the service experience.  If you can’t differentiate what you do you must differentiate how you create and deliver those work outputs.  Differentiation in accounting firms is essentially about the experience you offer to your clients. I’m not just talking about the WOW factor –how ever that may be created—I’m talking about getting the job done, I’m taking about being fast and on budget; I’m talking about rapid response to inquiries, and I’m talking about proactive initiatives that are in the interest of the client rather than being blatantly driven by the interest of the firm e.g. constant marketing emails about your financial planning or other services!

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