Articles

Good clients are good business

Improve the performance of your practice by improving the quality of your client base, says John Haylock BankLink's Practice Performance Manager.

Running a great accountancy practice requires a lot of things to be done well. In particular you need great people, high-quality systems and excellent clients.

Most accountants are happy to invest in improving the capabilities of their team. Likewise there is plenty of ongoing investment in improving systems. While I believe some of that investment could be better focused, I have never doubted that accountants are prepared to invest in improving systems.

But it seems that relatively few accountants have active strategies to improve the quality of their client base. I know that many accountants can produce a list of criteria for assessing their clients and prospects, but most don’t appear to do anything with it.

The main criterion that is used by most accountants to determine if they should act for a client appears to be the presence of a pulse. Few accountants turn new prospects away and few stop working for any existing clients. The result is that the quality of clients stays exactly the same.

While this remains the situation a great opportunity to improve the performance of accountancy practices is being missed. The best place to start is by confirming your criteria for assessing the quality of your clients. Be equally clear about what sort of clients you want and don’t want.

While many accountants will have the size of fee at the top of the list, I suggest this should not be the overriding factor. Some other factors you may wish to take into account include:

• Ability to pay and/or history of paying on time
• Whether they are good to deal with
• The quality of their records
• Whether or not they promptly respond to your requests for information
• Their potential for growth
• Whether they require added value services
• Their ability to refer more good clients to you
• Their honesty and integrity

Once you have developed a list that you are comfortable with, you then need to decide if there are any 'must-have' factors.

An example for existing clients may be their history of paying on time. You may decide that if the client has a history of not paying on time you will no longer work for them - no matter how good they are against other factors. Obviously there will be slightly different criteria for existing clients than for new prospects.

Once you have your criteria, start with a review of your existing clients. Go through your list with your whole team and identify the bottom 10 percent of your clients. Determine whether the issues with these clients can be resolved. If the issues cannot be resolved (and in the bottom 10 percent most of them probably can’t) then I suggest you should contact these clients and let them know you can no longer work for them.

This bottom 10 percent of clients will likely produce only two to three percent of your fees but cause 50 to 60 percent of your headaches and frustrations. Freeing up this time and energy will give you more time to focus on your better clients and more time to attract new and better clients. It will also be great for office morale.

You should repeat the process next year with your bottom 10 percent of clients and every year thereafter.

Once you have carried out the process for the first time, then you can focus on improving your processes for taking on new clients of the type you want. My suggestion is that you should only take on new clients who are clearly better than your current average client. That way each new client improves the overall performance of the practice.

As you become more selective with the clients you both retain and take on you will discover that you will attract more prospects of the type you want. That’s because you will design your services in a way that attracts those types of people and those types of people will more likely associate with your existing clients and be referred by them. It becomes a virtuous spiral of improvement.

Better clients attract better prospects. Better staff will want to work in your practice. You will enjoy your work and make more money.

This article first appeared in The Journal. It is reproduced with the permission of the NZICA.