Keeping the client satisfied.

It's not always a good idea to heed the conventional wisdom about client surveys and quality improvement programs.

Improving client service by meeting or exceeding client expectations is a battle cry of the accounting profession in the 1990s. As firms seek the panacea of quality improvement programs to differentiate themselves from their competitors, some form of client assessment program or client satisfaction survey often is considered as a starting point. Our research and consulting work with accounting firms points to several challenges for firms conducting such programs, especially when they send written surveys to a cross-section of client executives.

KEEP THE FOCUS ON THE CLIENT

As firms focus on improving service there is a tendency to accept all of the total quality management (TQM) research and thinking without applying it intelligently to one's firm. As a result, firms attempt to do too much. For example, a typical mandate is that everyone in the CPA firm (including even the internal accounting and billing department and the copy machine operator) immediately switch his or her focus to serving clients. On the contrary, we believe this mandate primarily should apply to CPAs in the field doing the work. Although there is nothing wrong with instilling a client-first philosophy, it is not always clear how it should be implemented by support staff. As a result, the real risk is becoming enamored with the theories of TQM and not thinking clearly about how to serve clients' needs and wants.

We also have seen too many programs offer "smile and be nice" training to front-line service people as the customer quality service program. If the accounting and support staffs need this kind of training in basic human decency, the firm has a recruiting problem, not a quality service problem. Client assessment programs must be focused on how to discover what clients want, need and expect of their CPA firms and then on how to improve on what clients actually receive.

GATHER THE RIGHT DATA

There is an adage that applies to this challenge: "If you can't measure it, you can't manage it." Too frequently we see firms gathering information from clients that isn't very useful. Internally generated surveys designed to measure what a firm wants to believe is meaningful may have nothing in common with what a client perceives to be important. Before a survey is conducted, in-depth interviews with clients can help flush out what clients really value. Our research suggests that if CPAs want to find out how they are doing, they must ask for feedback on the following:

* The client's perception of the accountant's technical ability and judgment.

* The client's trust and confidence in the accounting firm.

* The interest and attention shown in the CPAs' dealings with the client.

* The responsiveness of the firm's personnel to client needs.

* The value of the service rendered for the fee charged.

Collectively, these factors measure an abstraction we call client service. In addition, for dissatisfied clients, this five-factor approach (and the specific survey statements used to assess each one) can pinpoint certain areas in which improvement is needed. The kinds of survey statements firms might use include:

* Accountants at the firm understand the unique aspects of their clients' businesses.

* The firm's fee structure accurately reflects the firm's performance and the value of the services rendered.

* Clients receive prompt service from the firm.

* Accountants at the firm provide the best available technical advice for their clients.

CAPTURE CLIENT COMPLAINTS

Given the realities of the CPA profession, service sometimes means having to say you're sorry. Unfortunately, there is no such thing as zero defects in the profession. "Zero defects" is a meaningless concept for two reasons. First, delivering accounting services requires significant human interaction between the client and the accountant, which means there always will be variations in what is provided. Certainly service problems can be reduced, but they never will go away. Second, all CPA firms have capacity constraints; as much as 60% of a firm's annual work must be done in the first four months of the year. The decrease in responsiveness during busy season inevitably will produce disgruntled clients. Since a firm can't reduce defects to zero, when service failures do occur there should be a strong recovery effort, which begins with capturing client complaints. Once a survey has identified these complaints, firms can begin to make improvements. For example, if a firm finds that clients perceive the partners to be technically competent but unresponsive and insensitive to the vagaries of their businesses, the firm can institute changes to correct or enhance problem areas.

In our client assessment work, we find that about 10% of the clients who respond to client service surveys write in to complain about the service they received. These complaints should be analyzed to determine if they represent failure points in the firm's service delivery system that must be improved or if they are isolated and essentially random incidents. The firm must encourage and empower employees to resolve client problems promptly. Our experience suggests that too many firms have a "first time right or else" mentality. In order to avoid admitting to a mistake, employees tend to bury client service problems in the hope they will just go away.

When firms first decide to initiate a client assessment program, they tend to embrace the idea of anonymous reporting in the belief it will encourage more candid feedback. In our experience, anonymity does not produce much difference in the quality or quantity of the comments received on client surveys. Anonymous feedback does have one critical drawback, however. Once clients report their dissatisfaction, they generally expect action, even though the survey was anonymous. The firm receives pointed feedback about problems with various client engagements but has no way to respond to specific issues unless the client can be identified.

GET STATISTICAL VALIDATION

This challenge relates to the design and type of survey instruments used. Developing a survey is a separate process from its administration. Personal interviews may be necessary during the development phase, but they are a cumbersome, time-consuming and expensive way of gathering information about the client population during the administration phase. Also, personal interviews are expensive: One rule of thumb is that each in-depth personal interview will cost $300. It's a better idea to use personal interviews to handle problems with disgruntled clients that are uncovered in an extensive survey.

Telephone interviews also are of limited value for client assessment surveys for three major reasons. (1) A well-designed, comprehensive survey is too long to administer efficiently over the phone. In fact, most client assessment surveys take between 30 and 60 minutes on the phone. (2) Too many people perceive telephone requests as telemarketing ploys, which can cause a client to view the firm in an unfavorable light. (3) Telephone surveys typically cost $20 or more per response and are expensive when compared with written surveys yielding approximately the same information.

Traditionally, mail surveys have been criticized for their low response rates. In fact, mailing list vendors often use an expected response rate of 3% when making sample size calculations for market research activities. However, using the firm's letterhead to introduce the survey and having the senior partner sign the introductory letter can boost response rates to as much as 40% to 60%. If a client believes that responding to a survey will improve service quality, there is a much greater probability that the survey will be completed and returned.

One of the problems that usually surfaces when a CPA firm creates its own survey is that the questions are designed to assess the firm's perception of client needs. More often than not, the clients have different ideas about customer satisfaction issues. Firms should conduct in-depth personal interviews before they design their surveys to understand the specific, client-oriented concerns that should be measured. Practitioners then can develop survey statements relating to these areas.

A number of consulting firms offer a client-service assessment survey specifically for CPA firms. These surveys use factor analysis, a method of statistical validation that helps ensure survey questions produce the results for which they were intended. Although such off-the-shelf surveys must be modified to fit individual firms' particular circumstances, they still can be both efficient and effective tools for firms wishing to begin a client assessment program as soon as possible and without high development costs.

CLARIFY CLIENT EXPECTATIONS

It's often difficult for firms to determine how to meet and exceed client expectations because clients have a whole range of expectations.

At the low end is an expected minimum level of service. If accountants are not providing at least this much, a firm is at high risk of losing clients that certainly will not use the firm for more than the required audit service. If the service level consistently exceeds this minimum, clients tend to give referrals and often ask for services in addition to audits. While these firms have a competitive advantage over those providing service at lower levels, they may not maintain it for very long. At the upper end of the range is the wished-for level of service. If a client could paint a picture of perfect service, this would be it. But it is too costly for a CPA firm to provide this level of service because the expectations usually are unrealistic.

When clients are asked about their expectations of their CPAs, they usually describe the upper end, not their true expectations for an acceptable level of service. Our research suggests that a better way to determine client expectations is to ask a cross-section of companies--both clients and non-clients--about their CPA firms' performance levels. Past experience shapes expectations, so it is important to sample beyond existing clients to construct a set of norms or benchmarks. The service experiences of a cross-section of accounting service users are an excellent indication of the current average expectations of a client in a given market. With this information, a firm has an excellent way to compare individual client survey responses with overall client expectations to see how it is meeting or exceeding them.

LOOK BEFORE JUMPING

The standard approaches to determining and raising client satisfaction may not always work for every firm. Addressing the five challenges discussed in this article will give a CPA firm a better chance of beginning a satisfactory client assessment program without making the many mistakes made by firms that jump into client assessment or customer satisfaction programs without giving it the careful thought and attention it deserves.

EXECUTIVE SUMMARY

* THERE ARE AT LEAST five challenges CPA firms must face when they want to develop successful client assessment programs:

1. Keeping the program focused firmly on the client.

2. Gathering data in quantifiable, measurable ways.

3. Capturing and monitoring any kinds of client complaints.

4. Using a statistically valid survey methodology.

5. Successfully determining true client expectations.

* FIRMS MUST RECONSIDER standard advice about client satisfaction surveys and take a more practical, logical approach to these programs if they are to be effective. SETH R. ELLIS., PhD, a partner of Mayer, Ellis Clark, is an assistant professor o marketing at the University of San Diego. He is a member of the American Marketing Association. MARTIN, A. MAYER, CPA, is a partner in the professional services marketing firm of Mayer, Ellis & Clark, San Diego. A member of the American Institute of CPAs, he is a former partner in charge of the Minneapolis and San Diego tax practices o a large national CPA firm.