Learning from the competition.

Because of today's increasingly competitive marketplace and the emergence of more non-CPA businesses providing accounting services, CPA firms face the challenge of providing higher quality products, faster service and more competitive prices. CPA firm leaders who are more knowledgeable about the quality of their competitors' products and services are better equipped to develop plans to improve their own service quality and to incorporate new product or service development strategies. They also are better able to differentiate their firms from the competitors and finetune marketing and client service plans to focus on their own perceived strengths.

In addition, researching the competition can help CPA firms identify potential acquisition or merger targets, find new ways to increase profitability and maintain or gain a leadership position in a market or a specific service or niche. Gaining a better idea of one's marketplace and new insights into one's own operations is both practical and professional.

Although a large-scale competitive research project may be better suited to large firms, small firms also can adapt many of the strategies this article discusses.

COMPETITIVE RESEARCH

Ideally, everyone in a CPA firm can help research the competition. A large firm might organize a competitive intelligence committee, made up of four to six partners and professionals who are familiar with the competition and are interested in finding out more. It's a good idea to involve firm members who are knowledgeable about other companies and firms and who can communicate well with others in a variety of situations. In a small firm with fewer resources, this work can be assigned to one partner or professional. Even in a much smaller undertaking than the one described here, any volume of information received is of value.

The project's objectives include

* Setting research project goals.

* Identifying the information needed.

* Developing key questions to be asked.

* Creating a master list of competitors.

* Collecting internal and external information.

* Organizing the data.

* Communicating the data to firm members and using it effectively.

* Updating the data regularly.

These steps can be taken separately or form the outline of an informal project at a small firm, or they can become assignments for research committee members in a large firm.

Determining objectives. Stating needs and objectives gives the researchers direction and helps them focus on finding specific information. The objectives can be service-oriented (quality of service, responsiveness, value, communication, etc.), product-oriented (specific products or services offered by the CPA firm), niche-oriented (manufacturing, medical, not-for-profits, etc.) or general in nature (fees, office location, etc.). Sample objectives include researching

* Non-CPA firms that provide pension plan adminstration services.

* Firms that provide litigation support services to matrimonial lawyers.

These objectives can be pursued by an individual in a small firm or by a team in a large firm.

Identifying questions. After deciding what information the firm wants, the next step is to develop a list of questions for different sources of information. The questions should be short and open-ended. For best results, they should be asked in person, but if that's not possible, a telephone interview is another option.

The exhibit on page 45 offers a long series of questions to be asked when comparing one's own firm with competitors, based on information gathered from clients by firm members. At a minimum, a firm should answer these four basic interview questions:

* Is the competition better? If so, how and why?

* Why are they better?

* What can we learn from them?

* How can we apply what we have learned to our business?

Many firms already use similar questions to determine why they were passed over in a competitive bidding process. Asking such questions in advance enables firms to prepare better for future bids and presentations.

Creating a master list. To focus the firm's efforts, firm leaders should compile a list of competitors to be researched.

Collecting internal information. Typically, 70% to 80% of the competitive information needed can be found internally.

The partners and staff may have friends employed at other firms or may be former members of the firms. They may have had contact with professionals from the competition through involvement in community, civic or state society organizations. Those doing the research should tell partners, professionals and administrative staff which other firms they're targeting and find out what knowledge is available in-house.

Other data can be uncovered in

* Existing client files (competitors' old proposals, reports, letters, brochures, invoices).

* Publications and documents in the firm's library.

* Client satisfaction survey results.

External information. The best ways to gain valuable competitive information are to

* Interview clients, referral sources and vendors.

* Review public information, such as requests for proposals for public work (state, county, city and town), seminars sponsored by competitors, local newspapers (classified ads, business briefs, editorials, etc.), trade publications, directories and journals (ads and articles), city directories, yellow pages and state CPA society and other association publications, directories and meetings.

* Ask to be put on competitors' mailing lists. * Review other external information and databases, which can be found in public and university libraries:

1. LeadSource.

2. Business Periodical Index.

3. Dun & Bradstreet.

4. Public Accounting Report (PAR) Auditor Trak.

5. PAR Top 100.

Organizing the data. These data can be organized according to the specific competitor (John Doe & Co.), the question (What do clients or referral sources like about working with...?) or the general area of interest (human resources). If the organization method is chosen in advance, the information can be input daily or weekly, as needed.

Communicating the data and developing strategies. In a large firm, the firm members assigned to this project might develop a report including a summary of the overall findings and an overview of all the data collected. In a smaller firm, communication might be as simple as inviting partners to a working lunch to describe what each has learned and discuss how to proceed. For any firm, the next step is to evaluate the research and discuss different marketing, client service, product- or niche-focused strategies.

This information and updates should be communicated to the remainder of the staff through reports from the managing partner or research committee members in meetings or via bulletin boards, internal newsletters, etc.

Updating the data. Everyone at the firm should be encouraged to participate in an ongoing competitor information update program. They should be encouraged to tell partners or research committee members interesting competitor information. Those in charge of research should review and modify the data quarterly, with a more extensive analysis completed yearly to help improve the firm's marketing and client services efforts. BEING COMPETITIVELY INTELLIGENT CPA firms leaders who know and understand their competitors will thrive in the future. They will be better able to meet and exceed client expectations and better armed to compete with other firms. They will be on the cutting edge of new products and services.

It's time we start being more competitively intelligent. Even partners in small firms can create a better awareness of what the competition is doing right and what it means for them.

EXECUTIVE SUMMARY

* CPA FIRM LEADERS WHO ARE knowledgeable about the quality of products and services provided by their competitors (including non-CPA firms) are better equipped to develop plans to improve their own service quality and to incorporate new product or service development strategies.

* EVERYONE IN A FIRM should be able to offer some insights into its competitors. Even in a small firm, any volume of information received will be of value.

* PROJECT OBJECTIVES include

1. Setting research goals.

2. Identifying the information needed.

3. Developing key questions to be asked.

4. Creating a master list of competitors.

5. Collecting internal and external information.

6. Organizing the data.

7. Communicating the data to firm members and using it effectively.

8. Updating the data regularly.

BIBLIOGRAPHY AND RECOMMENDED RESOURCES

* Business Intelligence by Kirk M. Tyson, Leading Edge Publications, 1986.

* Monitoring the Competition by Leonard M. Fuld, John Wiley & Sons, Inc., 1988.

* Competitor Intelligence by Leonard M. Fuld, John Wiley & Sons, Inc., 1985.

* Beat the Competition! by Ian Gordon, Basil Blackwell Inc., 1989.

* Marketing Research Text and Cases by Harper Boyd, Jr., and Ralph Westfall, Irwin, 1972.

* Exercises in Marketing Research by James E. Nelson, Ken Publishing, 1982.

* "Is Competitor Intelligence Important to Your Sales and Marketing Efforts?", Sales and Marketing Management, September 1991.

* "Europe '92 Provides New Impetus for Competitive Intelligence,'' The Journal of Business Strategy, November/December 1991.

* "The Intelligence Process: A Management Checklist," Canadian Business Review, summer 1991.

* "An Empirical Comparison of Direct Questioning, Scenario, and Randomized Response Methods for Obtaining Sensitive Business Information," Decision Sciences, November/December 1991.

* "Making Competitive Intelligence Relevant to the User," Planning Review, May/June 1991.

* "Japanese Competitive Intelligence for R&D," Research Technology Management, January/February 1992.

* "Share and Share Alike," Industry Week, July 15, 1991.

* "Still a Distant Second," Across the Board, November 1991.

TAMMY A. LINN is president of Tammy Linn & Co., Scottsdale, Arizona, a marketing consulting firm. She is a founder and past board member of the Association of Accounting Marketing and a frequent speaker on marketing topics.