Person pruning a plant representing marketing's role in culling clients

Marketing’s Role in Culling Clients

Like many businesses these days, accounting and advisory firms are facing staffing challenges, shrinking capacity, and struggling morale. Becca Johns, director of practice growth at Rea & Associates, Inc. in Dublin, Ohio, said in the December 2021 AAM Business Development Roundtable, that reducing — rather than increasing — the number of clients often is the key to freeing up time to pursue and serve higher-value clients. Marketing’s role in culling clients is important for accounting firms to complete the process effectively.

“Our workload and need to focus on future growth required that we examine the highest and best use of our resources,” Johns said. “When viewed from that perspective, deciding whether we should spend time on 1040 preparation or consulting engagements made the answer much clearer.”

The process of culling clients begins with acknowledging the goal is to reduce the number of clients, not just improve profitability. If profitability is the sole determinant, price increase letters can be sent to push clients toward an equitable solution that allows the firm to continue serving them, but Johns advises doing so with caution.

When Rea sent letters offering clients the choice of a price increase or terminating the relationship, Johns said 90% accepted the price increases. While it affirmed the firm’s value to their clients, Johns said if a firm intends to move away from a specific type of business, then changing its prices — even significantly — may not provide the desired results.

What to Cull

A firm’s mission, values, strengths, and strategic goals should inform the criteria used when evaluating its client base to determine what clients to cull. It’s not always about dollars and cents.

Accounting and advisory firm marketers are adept at describing their organization’s ideal clients. In addition to a keen understanding of their firms’ industry sectors, revenue and business needs, they consider ideal client personas when developing marketing events, materials and content. Therefore, marketing’s role is pivotal in the process of culling clients. Marketing sets the tone and creates talking points for communications to the clients set to be culled. Then, they will tie those decisions and discussions to future client acquisition efforts.

In looking at continuation criteria, the definition of profit must be expanded beyond conventional billable rates and annual revenue measures. Relationships are also key contributors to partner profitability, and considerable weight should be assigned to them.

Some common considerations:

  • Profitability: Lifetime client value should never exclusively be the criterion to determine which client relationships should end, but it should always be a top consideration for any organization that needs to pay its team a competitive wage and earn a respectable profit.
  • Value and vision alignment: The mission and values should be integrated into client evaluation criteria. If diversity, equity, and inclusion (DEI) is a critical initiative for a firm, then give it prominent consideration when determining the fit and future of each client.
  • Capacity and expertise: Team member skills and experience shift continually over time. Evaluate whether the services each client needs match your team’s current skill set. If there is a mismatch of expertise with client requirements, it’s a good indicator the client may benefit by working with another firm.

Protecting Talent

Today’s talent shortages give marketers an even greater awareness of the need to attract and retain top professionals. Marketing’s dual role in attracting clients and talent to the firm provides a unique perspective that is valued during the culling process of a firm’s clients.

Katie Tolin, president of CPA Growth Guides in Canton, Ohio, advises her clients to ask their staff who they don’t want to work with.

“Accounting firms aren’t finding new talent, and the cost of retaining current talent has continued to rise,” Tolin said. “Firms can’t expect to attract and retain people if they still expect 80-hour workweeks. Reducing client volume and giving employees a voice in determining which clients remain is a powerful message that can position firms favorably in both recruiting and retention.”

Tolin also counsels clients to gain consensus on firm direction to ensure current clients and future prospects support the firm’s mission. Nailing down the motivation to prune clients is key. Year-round work can alleviate a bottleneck but ultimately, some clients will not be an ideal fit for a firm.

“If managing the congestion of busy season is the primary issue, giving clients the option of either being released or going on extension can address the problem,” Tolin said.

Messaging Matters

Accountants and business advisors are no strangers to navigating sensitive topics. Care and planning go into each conversation. Whether imparting unexpected audit results or coaxing a young startup to formalize its accounting procedures. Despite the finesse it takes to manage these situations, firm principals often need guidance of their own when breaking up with a client.

Tolin is an advocate for the inclusion of marketing’s role in the process of culling clients. Communicating the severance of the relationship to the client must be conveyed in a clear, confident manner with no room for misinterpretation. Marketers can develop speaking points for partners to ensure consistent messaging during these sometimes difficult conversations, regardless of a partner’s personal style.

Johns shared an example of when carefully crafted messaging helped save a relationship. One of Rea’s former partners was snared — along with his mother — into the group of 1040 clients who needed to be pruned. The messaging Rea used to convey its decision helped to smooth that transition.

After expressing how the firm appreciated the client’s business over the years, they briefly described how Rea needed to put their staff above all else and made the difficult decision to preserve its team by reducing its client volume.

Care After Culling

After culling existing clients, firms should intentionally curate a client base that aligns with its strategic goals and firm culture. Firms can use the evaluation criteria they created to determine which clients to prune to identify preferred client profiles. Then the criteria can be used to assess referrals and pursue clients who align with those criteria.

Marketing’s role after culling can help ensure clients who are removed aren’t replaced with others with a similar profile. This is also a great time for firms to examine how they manage client relationships to ensure they are set up to succeed from the beginning.

Marketers play a key role in helping firms align personas, profiles, and practices toward attracting more desirable clients and providing them with exceptional service. Better clients, not necessarily more clients, will reward firms with stronger growth and a happier workforce in the long run.

Access the full Spring 2022 issue of Growth Strategies which focuses on talent and technologies here: https://accountingmarketing.org/publications/growth-strategies-archive

About Tammy Farrell

Tammy Farrell, CPA, CFE, is a freelance writer for Savvy White Papers who specializes in the financial and service industry.

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