Accountants and Marketing: Why A Strength Of Accounting Firms Creates A Weakness In Marketing

Michael Carter - Wednesday, June 15, 2011 - Comments (1) | Trackbacks (0) | Permalink

The strength of the accounting firm's business model is what creates its weakness.

Imagine a business where even if you do a mediocre job looking after customers or clients, they keep coming back. Year after year.  Restaurant owners don't have that luxury. Nor do hairdressers, dentists, motor mechanics, bakeries, physiotherapists ... the list goes on.

The recurring nature of compliance work in accounting, combined with 'sticky clients' has lead to many firms becoming lazy (and dare I say it, lacking in competency) in certain areas. Areas like client service, innovation and marketing. Firms haven't *had to* invest in these areas. So most firms haven't.

By 'sticky clients', I'm referring to what in 'MBAspeak' is called 'perceived buyer switching costs'. In other words, clients believe the cost of switching accountants is equal to or greater than the benefits of switching accountants, so they conclude, "Why bother?"

We do a lot of surveying (formal and ad hoc) of peoples' perceptions of their accountants. "Better the devil you know," sums up a common attitude. Whilst everyone knows they of course *could* switch accountants, they figure the next one will be no different and no better to their existing one.

What a wonderful opportunity for the innovative marketers within the accounting industry!

But there aren't many of those. And, most likely, nor will there ever be. (Again, what a *wonderful* opportunity for what we call The Innovative 5% of firms.) This means you don't have to innovate all that much in relative terms to what other industries need to, in order to stand out from the crowd within the accounting industry.

So why don't most firms innovate? Why don't most firms market?

There are a number of reasons, but the main one is that they haven't *had* to. Most people only do what they perceive they have to do. They deal with the Urgent and the Important. And usually both in combination.

In Time (or Priority) Management lingo, authors and trainers speak of Four Quadrants, based on two axes of Importance and Urgency. Most people live their lives in Quadrant 1, where matters are both Urgent and Important. Most accounting firms live solely in Quadrant 1. Deadlines, deadlines, deadlines. Lodgement deadlines, payment deadlines, penalties. Quadrant 2, on the other hand, is where matters are Not Urgent but they are Important.

In Stephen Covey's excellent books 'The 7 Habits of Highly Effective People' and 'First Things First' he talks about the fact that the most important things in life, those things that lead to a happy, healthy and prosperous life reside in Quadrant 2. They never seem Urgent, until one day crisis point is reached and the matter moves into Quadrant 1.

Looking after our health. Our mind and spirit. Nurturing our relationships. Spending time with our loved ones. Taking some 'me time'. Planning for the future! No-one can argue these are not important, but many neglect them because they are not shouting, "Urgent, urgent!" at us, with the accompanying pop-up reminders, chimes and figurative taps on the shoulder.

Quadrant 1 is like a vortex, sucking us in, time and time again. (By the way, in case you're wondering, Quadrant 3 is Urgent but Not Important, and Quadrant 4 activities are Not Urgent and Not Important.)

So, what has this to do with marketing and innovation?

Clearly, these are Quadrant 2 activities. They never appear urgent, do they? A client will not call up, complaining the firm hasn't promoted a service to them, or hasn't let them know when the next workshop or webinar is on, or hasn't implemented the latest cloud-based software or paperless office technologies.

Nothing is easier to postpone and procrastinate on than marketing.

I find that one of the fascinating paradoxes in business, because the two most important functions in a business are Marketing and Innovation.

The renowned grandfather of management education, one of the first people to look on the management of a business or organisation as a discipline and profession, Peter F. Drucker wrote this: "Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

I love that quote, not only because I know it to be true through my experience in founding and growing a number of businesses over the past 20-plus years, but because I know it 'rattles the cage', so to speak, of the typical accountant.

Marketing is, without a doubt, the highest Return On Investment (ROI) activity for any business.

Why? Because it multiplies revenues. Often without increasing costs.

Why else? The best product (or service) doesn't win automatically.

"Build it and they will come," is rubbish. Ask any failed entrepreneur. The B-class product with the A-class marketing will beat the A-class product with the B-class marketing, every time. You can argue with that, be upset with it ... or accept it.

In my previous business venture, software company Business Fitness (of which I am still a shareholder), I was reminded of the power and leverage of marketing, first hand. For the first 5 years of the venture, my role was General Manager of Innovation. In other words, making sure we had an A-class product. Then, 5 years in, when one of my co-founders exited the venture to start a coaching business, I moved over to head up Marketing, which he had been managing.

Just by applying the exact same principles we now teach accounting and advisory firms, we tripled revenues in the next 12 months and with far less expense.

We used modern marketing approaches combined with the latest technologies. (It was fun, too!)

Keeping expenses lean is important, but that approach does not offer the leverage that marketing does. Effective marketing will literally multiply your firm's top line revenue.

Just like a member of The Clientshare™ Academy (our structured training and implementation program), Newcastle firm Growthwise who in the past 11 months (as at June 2011) has grown revenues by 220.93% compared to last year. And this growth has been at improved margins.

Founder of the firm, Steph Hinds, attributes half of that growth to what Practice Paradox taught her about marketing strategy and focus.

To quote Steph, "This has been phenomenal for us." (And, by the way, that's just one part of 'Module 1 - Your Radar' within the 10 modules of the Academy program.)

And guess what Steph proudly tells people when she's asked what her marketing budget is?

Zero. That's $0.00.

Now that's leverage!

But ... it's easy to procrastinate, isn't it? Is it time you took action? Time you stopped ignoring the highest ROI activity available to your business?

Next article we'll discuss ways to make your marketing happen by creating and imposing some urgency ...