Solid Foundations

A new study from The PACE Partnership applies a scientific approach to winning new business and finds out that there is still more to be done

Small to mid-sized accountancy firms are responding well to current economic pressures.  They put in a good performance in a recent study by The PACE Partnership, which looked at their approach to winning new business. The fact that there were not dramatic peaks and troughs in the results, show that the firms’ approach is based on solid foundations.  There were, however, opportunities for further improvements.  These opportunities largely rest on adopting a more proactive and planned approach to generating a steady flow of new business opportunities. 

The study
The PACE Partnership’s study took place in February this year. It explored how small to mid-sized accountancy firms perform in eight core aspects of new client generation. Participants were also asked to indicate what kinds of marketing, lead generation, training and technology they use to support their new business efforts, and how useful these are.

Best performances
Small to mid-sized accountancy firms are good at building a deep and accurate understanding of a target client’s situation before attempting to ‘sell’ the firm or its services. Firms performing well in this respect understood the client to such a degree that they knew how to ‘package’ their services to add the most value to the client’s situation.  Participants in the study also demonstrated a good understanding of the ‘commercial’ aspects of new business opportunities.  This included knowing the decision-making process and timeframe, details of the budget involved, any alternatives being considered by the target client and the basis upon which they will make their choice.

Another strong performance came in the firms’ abilities to build relationships as trusted advisers with target clients.  This is historically a key feature of the accountancy profession, where fee-earners have to personally win clients and then deliver or co-ordinate the firm’s services to them.  With recent competitive pressures, there has been a risk that accountants become mere channels for selling a wide range of services.  This has happened in the Banking sector over the last 20 years and many bank managers have forfeited their status as trusted advisers.  This doesn’t, however, seem to be the case with small to mid-sized accountancy firms. 

Weakest performances
The lowest score in the study went to planning and managing a firm’s approach to winning new clients. Intellectually, most accountants understand the need for an effective framework to help them make the best use of their limited business development time.  Sometimes firms have not found the framework that will work for them.  Other firms have the framework but their highly independent and very busy fee-earners fight the processes and disciplines involved. Successful accountancy firms have built a new business process that fits around all the other commitments their fee-earners have to undertake.  This often works alongside other systems to avoid ‘reinventing the wheel’ and to motivate take-up amongst the professionals.

Small to mid-sized firms also did not perform well when it came to building a strong business pipeline.  They struggle to generate a steady flow of profitable new work and suffer periods of feast and famine.  They have too little control over the work coming into the business and do not manage their client portfolio in a strategic way.

Targeting and referral
Interestingly there were two categories, which featured in both the strongest and weakest performing areas.  These related to the use of targeting and referral networks.

Small and mid-sized accountancy firms performed well in having a clear and agreed vision of the types of new clients they are seeking to win in the future.  They performed less well when it came to deciding which potential clients they would like to avoid, with the result that they waste scarce business development time on unattractive targets.  Worst of all, very few firms owned up to having an agreed list of clearly defined target clients – ideally as part of a database, which others in the firm can see. 

This implies that, whilst the firms have a general idea about the type of clients they want, they struggle to define who exactly these clients are.  Without the creation of a specific target list, they will find it more difficult to focus the resources they have to approach these targets and win the business they want. Rather than actively going out to pursue new business opportunities, they are leaving new business more to chance.  In time, this approach could cause them to experience dramatic periods of feast and famine.  To avoid such a scenario, accountancy firms need to proactively manage the expansion of their client portfolio and business opportunities stemming from it.

The same issue occurs with the use of referral networks.  Participants demonstrated good strong personal networks of clients and contacts that generate significant numbers of high quality referrals to potential clients each year.  To some degree they regularly track which of these clients and contacts provide them with such high quality referrals.  However, when it came to taking a proactive approach at managing the referral network, they scored badly.  Without a reward system or reciprocal referral arrangement, what motivates clients and contacts to refer new business to their accountants year on year?  They may do so initially out of goodwill, but over a longer period of time many do eventually question ‘what’s in it for me?’ 

Those accountancy firms who manage their referral networks more strategically, tend to receive a greater flow of high quality leads over a long period of time, than those who don’t.  They recognise that referring is a two-way process and monitor their best referrers and reward them accordingly.

Comparison with big firms
In contrast to a similar survey carried out by The PACE Partnership three years’ ago with larger accountancy firms, respondents to this survey were less focused on directing their promotional efforts to specific potential clients.  They also had not formalised which clients they were targeting within their business systems.  In common with their larger counterparts, small to mid-sized accountancy firms had not established good systems for tracking business development activities on a regular basis.

Participants in the study were also asked to indicate which business development-related activities their firms chose to invest in and how useful they were.  The activities were broken down into four areas: marketing activities, lead generation, business development skills training and business development support systems.

Interestingly, the most often used activities didn’t perform very well in the ‘usefulness’ stakes and hovered around the 50% score.  These included activities such as the use of Yellow Pages or directory advertising, local advertising, sponsorship and the use of local business networks.   In contrast, those activities that were used more rarely were scored the most useful in winning business.  These included the use of rainmakers, personal mentors or business development coaches, client relationship management software and business pipeline forecasting tools.

Irrespective of their size, all accountancy firms want to keep their existing valuable clients and at the same time win high value new clients.  With time and resources for these business development activities strictly limited, it is essential that both are approached with the highest possible level of skills and confidence, the most effective management processes and the clearest and most focused strategies. From the results of this survey, it would appear that small to mid-sized firms are very good at understanding their target clients and building strong relationships with them, once they have the opportunity to do so.  There are, however, many benefits to be gained by them adopting a more proactive approach to generating enough of these opportunities with the best targets.


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