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How to lose clients without really trying: it's easy to lose clients - the trick is knowing why and what to do about it.

For many years, CPA firms didn't worry much about retaining existing clients. It seemed there were always enough new clients coming into the firm and competition for new or existing clients was minimal. Today, however, the environment has changed drastically. The number of competitors has multiplied, clients are more sophisticated and, most important, they consistently demand higher levels of quality service each year.


Studies show business-services clients can be up to five times more likely to switch professionals for perceived service quality problems than for price concerns or product quality issues. CPAs should be aware of the snowballing effect of client dissatisfaction. While 26 of every 27 dissatisfied customers will fail to report a service problem because they don't expect anything to be done about it, the average dissatisfied client will tell 10 people, and some will tell as many as 20. However, 90% of dissatisfied clients will give a company a second chance if their complaints are resolved promptly and thoughtfully.

Client expectations are progressive. In Marketing Imagination, Theodore Leavitt says client expectations rise to what has been shown to be possible. Leavitt notes that 10 years ago, only the best hotels provided shampoo, mouthwash and other amenities. Now people expect them and hotels are pressured to provide them. Clearly, service demands on CPA firms also rise. Firms that continue to raise their standards for providing client service will thrive.

And those that truly learn how to cultivate clients will discover the four major benefits of keeping existing clients satisfied:

* Repeat engagements.

* Referrals.

* Endorsements.

* Lower servicing costs than those for new clients.

All of these benefits translate into an improved bottom line.

Each time someone in a firm-whether a receptionist or the managing partner-comes in contact with a client it is a moment of truth. That contact can be a pleasant, neutral or negative experience for the client that will deeply affect his or her subsequent opinion of the firm.


There are several ways to lose clients, and most of them involve service quality-not poor technical quality. In many preventable cases, the practitioner's attitude is the culprit. Many CPAs unknowingly treat clients as the enemy. This is demonstrated when someone in the firm believes or even tells a client a problem was really the client's fault. In other situations, firm members act as if they are more important than their clients and make clients feel small and insignificant. And, too often, clients find themselves being ignored.

Over the past several years, we have spoken to hundreds of CPA firm clients throughout the country. The number one complaint we hear is "My accountant just doesn't treat me right." There are many examples of mismanaging clients. Sometimes firm members fail to return a client's call to avoid a confrontation. In some cases, staff people running late tell clients, "We would have finished the engagement on time if your people had completed the schedules on time."

How does the client feel when told the late engagement was his or her fault? Or when he or she calls with a concern and the call is not returned for a day or two?

And these aren't the only ways we lose clients. Sometimes it's easier to put up barriers between firm and client than it is to communicate. We've seen several ways CPAs erect barriers. The six most common and harmful ways will be described below, along with suggestions for safeguarding against client defections.


The best way for CPA firms to lose clients is by ignoring them or failing to treat them as valued and important. One simple way to start solving this problem is by reminding firm staff and administrative people to acknowledge the client and use his or her name. In addition, when staff members are on assignment at a client's office, they should remember to be friendly to everyone, including the receptionist, secretaries and other personnel.

Every firm member must be responsible for client satisfaction. For example, our receptionist is a terrific public relations person. Once she has talked to a client on the phone, she usually remembers that person's voice and says, for example, "Hi, Ms. Jones. It's nice to talk to you again." She also remembers the names and faces of clients who come to our offices. Staff members should be reminded that kind of treatment makes clients feel special.

Here's a way for partners to experience a new client's introduction to the firm: Call the office and pretend to be a potential client. Ask to speak to the partner in charge of a specialty area or industry. Is the receptionist helpful? Informative? Or does he or she merely put you on hold?

Partners who are disappointed with their receptionists' responses should make them aware of the problem. The receptionist should be informed of whom should receive various types of calls. It's a good idea to give him or her an industry and service specialty sheet that lists partners and their areas of expertise. The list should designate one partner to receive general inquiries or calls that don't fit any other category.


Firms can lose clients if members see them as people who, instead of voicing legitimate concerns, are simply trying to interfere with a perfectly well-run system. In Carl Sewell's book, Customers for Life, the Dallas car dealership owner recommends treating clients like friends. That means aiming to resolve client problems when they're raised and avoid personality conflicts.

Conflict resolution can be key to keeping clients happy. It requires, however, that CPAs take responsibility for the situation and communicate with the client as soon as a problem arises. The client should be involved in the solution. One good way is to ask clients how they would resolve the problem themselves.


Here's another common scenario that can help lose clients: A partner goes on the initial sales call and then passes the client on to lower-level staff.

In a firm we worked with, a partner brought in a small business client. Since it wasn't a complicated engagement, he decided to let lower-level staff handle the work. Unfortunately, not only did the partner lose contact with the client, but the staff person also did not treat the client with sufficient care.

When the client got the bill, he went through the roof because it seemed too high. There were no technical problems. But the staff person had handled everything-requests for documentation, phone instead of going to the client's office. The client didn't believe he should pay for premium service when firm representatives never even visited his company.

True, the engagement was conducted efficiently, but the client wanted to see and communicate with a real person. The cost of the writeoff far exceeded the cost of the time it would have taken the partner or staff person to visit the client.

Firm managers can easily spot those who offer the best client service-the same partners who get the most referrals from clients, do the best job at collecting accounts receivable and file their reports on time. There is a strong correlation between providing quality service to clients and profit generation.


Clients often leave firms because of unpleasant surprises that could easily be avoided. It's amazing how much little things count. Clients consistently rank communication as a top factor in satisfaction surveys. This is the ability not only to express oneself clearly but also to explain how a service operates, how much it will cost and how problems will be handled to clients' satisfaction. Any circumstance that changes an engagement's scope, increases fees or involves a problem requires immediate communication with the client.

For example, a partner in our firm's systems consulting group was asked to interview 8 people for a client project. The firm sent an estimate outlining the project, which the client approved. The first day of the project, the client decided he wanted us to interview 18 people instead, so the partner immediately put together another letter describing the changes and the increased fees. (Don't count on the client to remember an oral agreement.)

In another case, a client had an emergency and there wasn't time to compose an engagement letter in advance. However, before the bill arrived, the partner documented all the engagement activities and went over them with the client. The client paid the bill within five days.


Practitioners can make incorrect assumptions about what clients value in their services. CPAs tend to judge performance based on technical accuracy, but most clients can't judge that aspect of engagements. They judge CPAs on how promptly they return phone calls and whether they meet deadlines and can be relied on to offer creative business ideas.

An awareness of the client's specific needs will lead to innovations for the client-and additional engagements for the firm. In his book, Swim with the Sharks, Harvey McKay, a very successful envelope vendor, attributes his success to the "McKay 66," a questionnaire his company completes on every customer's family details, hobbies, goals, education and more.

If a firm develops close relationships with its best clients, they will more likely stay with the firm even through difficulties.


Firms make a mistake when they allow new staff members to cut their teeth on engagements for existing clients. Clients want to work with the same staff over time-they don't want to feel they're constantly retraining accountants on their procedures. This is a major problem in larger firms. Everyone needs to learn on the job, but putting new staff on an engagement may require some extra communication with clients to reassure them about new staff's experience and commitment.

Remember, if clients don't believe they're getting good value for their money, they won't enjoy doing business with the firm-no matter what else it does for them.


If we keep in mind that a $10,000 accounting client is really a $100,000 client over the next 10 years, we probably will spend a lot more time and effort trying to meet his or her expectations.

The key to keeping clients is to follow through until they're totally satisfied. Many firms respond to the client's problem and then go on with business as usual. Firms with a true quality-service orientation do one more thing-they identify why the problem arose and use this information to improve future firm performance.

When thinking about mishaps in a firm's customer service system, consider these potential trouble spots:

1. Organizational problems: Does the firm have difficulties in delivering products or services or make misleading promises to clients?

2. Employee problems: Do employees fail to follow firm policy or to understand clearly policies and procedures?

3. Client problems: Do clients cause problems by misusing products or services, either out of ignorance or due to lack of communication?

Remember, losing clients is easy. Keeping them is hard work. CPAs' challenge is to identify the service dimensions most important to clients, determine if they're being delivered and develop a quality service system that becomes an integral part of the firm.

The return will be a sharper competitive edge because clients will be the firm's best salespeople and employees will have higher morale. Firms also will benefit from the lower costs of keeping existing clients versus gaining new ones.


* CPA FIRMS MAY BE LOSING clients because they don't understand what clients value in dealings with professionals.

* THE NUMBER ONE WAY firms lose clients is by ignoring them or failing to treat them as valued and important. Every firm member must be responsible for client satisfaction.

* CONFLICT RESOLUTION can be key to keeping clients happy. CPAs must communicate with clients as soon as a problem arises and make an effort to involve them in the solution.

* CLIENTS OFTEN ARE UNHAPPY when a partner goes on the initial sales call and then hands over the client to lower-level staff. They may balk over the fees or even change firms.

* CIRCUMSTANCES that change an engagement's scope, increase fees or involve a problem require immediate communication with the client. Clients may leave if there are too many surprises.

* MOST CLIENTS JUDGE CPAs not on technical accuracy but on how promptly they return phone calls and whether they meet deadlines and offer creative business ideas.

* ENGAGEMENTS SHOULDN'T be used as a training ground for new employees. Clients should be reassured about new staff members' experience and commitment to their interests.


The most important things to remember about quality service are

1. The client defines it. Service quality is not measured by conformity to specifications but, rather, by meeting clients' expectations.

2. It is a journey, not a destination. CPA firms are project oriented-they look for a beginning, middle and end. These don't exist with service quality.

3. It is everyone's responsibility. There is no way to delegate it.

4. It is a design issue. Identify client contact points within the firm and be sure to design quality into every service activity.

5. It requires keeping promises. Meeting and exceeding customer expectations is the only way to retain clients.

6. Staff must be empowered to provide it. Give staff the authority to make decisions affecting quality service.


Firms that ask these questions after engagements will receive valuable insights into client satisfaction.

1. Were the fees less than, the same as or more than you expected? If clients don't think they're getting value for the fees they're paying, they won't stay with the firm.

2. Did we deliver the product or service on or before the promised date?

3. Would you use us again for this service? If, for some reason, there was a problem on the engagement, the client can voice complaints. The firm has a chance to rectify the situation in future engagements.
COPYRIGHT 1992 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Koltin, Allan D.
Publication:Journal of Accountancy
Date:May 1, 1992
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