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Prospecting for clients.

Prospecting for Clients

Many articles have appeared recently in accounting literature dealing with direct solicitation by members of the profession. Some articles have given the pros and cons of marketing professional services while others have focused on specific strategies. However, the basis for these strategies generally has been methods currently used to market tangible products rather than professional services. Therefore, these recommendations are untried or unproven in the area of accounting services.

Can a professional firm's client base be increased by prospecting as other non-service firms have done in the past, and can this be accomplished relatively inexpensively? This article will attempt to answer these questions and dispel some common myths regarding marketing for professionals.

Prospecting

The practitioner who wishes to increase client revenue has essentially two choices: expanding the range of services being offered to existing clients or search for additional clients. The process of seeking new clients is called prospecting.

Prospecting pertains to the different methods and/or techniques used to find prospective clients. It is the starting point, preceding any actual solicitation. As indicated above, many sources and techniques for finding prospective clients have been published in accounting literature, including: current clients, previous clients, friends and relatives, bankers and lawyers, civic and social clubs and business associates. These are all viable sources for new leads.

Another method of prospecting consists of checking with the secretary of state's office or other appropriate state agency for newly-incorporated businesses and/or those businesses recently acquiring city or county privilege licenses. This is one inexpensive means of obtaining a prospect list. Not all such businesses will become clients; however, even those that already have accountants may be interested in hearing about what your firm can do for them.

Planning

A marketing plan is essential if a practitioner expects his or her practice to grow. Planning for growth is a systematic process which should include the following steps:

1. Define the nature of your

practice; 2. Make a thorough internal

analysis of your current

marketing practices to date; and 3. Set objectives.

There is one other important part to the planning process -- establishing a marketing mix -- however this is beyond the scope of this article.

Practice Definition

What type of practice do you have? What type of practice do you want to have? What kinds of accounting services do you want to provide and to whom? Ultimately, your practice must offer those accounting services that are needed by clients in your area.

Think of a practice definition as a blueprint. Like a blueprint, a clear practice definition will indicate the direction in which you are trying to move your practice and how you can best acheive this objective. For instance, you want to grow by offering the type of accounting services needed by the type of clients you are targeting. It is not necessary or desirable to try to be everything to everybody.

Internal Analysis

This consists of a serious look at what the firm is presently doing to attract new clients, if anything, and how successful this approach is. Who is involved in client contact? Are they trained in dealing with people and do they recognize the importance of a service-oriented approach to doing business?

All contact with potential clients by anyone in the firm is important. Everyone associated with the firm should be ever mindful of the possibility of promoting the firm and its services with each and every contact made, regardless of the circumstances. This applies to clerical workers as well as others not directly involved in the delivery of the accounting services.

Compile a list of all techniques and methods presently being used to obtain potential clients. Accompanying this list should be a space to evaluate how well each technique or method has worked. Make a note as to who made the contact. Each person associated with the firm should be expected to have input into this process. This will help everyone feel more committed to the firm's success.

This analysis should point out what is working and what is not. Have you increased your client base through your current practices? Have your methods or techniques of obtaining new clients been successful? If you accomplished your goal then by all means continue doing what you have been doing. On the other hand, if you didn't do as well as you would have liked, changes need to be implemented.

Set Objectives

Acquiring prospects is a continuing process for a growth-oriented firm. Today the business environment is in a state of flux. Old businesses are fading away and new businesses are being started. This will cause a turnover of clients. Unless a firm has a method for obtaining new clients, it, too, may fade away. Regardless of the method chosen to obtain new clients, objectives need to be established. Objectives establish the specifics to be carried out after a goal has been decided upon. This relates back to your practice definition. These objectives will be specific as to the type of clients being sought, what is to be accomplished, how much of an increase is expected (quantitative) and when it will be accomplished (time period).

As can be noted, objectives provide a means through which actual performance can be evaluated. Objectives are necessary in order to exercise proper control in a firm. Therefore, they should be both realistic and attainable.

Survey

The authors sought to dispel common arguments in the accounting profession:

1. Businessmen do not want to

be contacted by accountants,

and 2. Businesses who already

employ accountants are satisfied

with the services being

received. If, in fact, this is

true, you cannot prospect in

the traditional manner.

A mail survey was conducted among 100 businesses which had been incorporated within the previous 60 days or which had acquired city privilege licenses within that time period. Names were randomly selected from data published in a daily newspaper which featured business data of this type. This data can also be obtained free of cost directly from the state or local government office where such records are kept.

A letter with a tear section at the bottom with four questions was mailed to each of the 100 businesses. Respondents were encouraged to complete the questions and return the tear section in an enclosed stamped envelope. The results are shown Table 1.

As previously noted, all of the businesses surveyed had either incorporated or acquired a privilege license within the previous 60 days. This might signify those indicating their businesses to be over four months old were mature, established businesses.

The survey instrument was mailed to respondents without regard to type of business or kinds of accounting services needed. A practitioner who has planned as indicated above would send letters only to those businesses with whom services could be satisfactorily rendered. This is the importance of defining the business you are in -- you identify the type of prospects to be sought.

Question 2 indicates that even though direct solicitation is possible, accountants still refrain from directly contacting potential clients.

Question 3 responses are very interesting and important to a practitioner considering prospecting for new clients. Eleven respondents are agreeable to a meeting and four more indicate that they may be. This is a rather high percentage considering 41 employed an accounting firm. Nine of the "yes" respondents currently employed an outside accounting firm.

Respondents were almost equally divided between being in business less than four months or more than four months (Question 4). This is of particular interest since only five of the 11 "yes" respondents in Question 3 had been in business less than four months. It strongly indicates that both businesses that already employ outside accountants and both new and older businesses are receptive to being contacted by other practitioners.

Costs

Cost for this type of prospecting is minimal considering the alternatives. While costs may vary somewhat by geographic area, this survey was conducted for an average per unit cost of $0.36 for stationery, envelopes and postage:

Mail 20 letters per month @ $0.36 x 12 $ 86.40

Return postage (average

2 per month @ .65 ea) 15.60

Annual return mail
permit cost 60.00
TOTAL ANNUAL COST $161.00


Based upon our survey, if 240 letters are mailed each year, 24 favorable responses will be received. This is a cost of approximately $6.71 for each favorable response. Most importantly, you have a prospect who has, at least indirectly, invited and expects a personal meeting to discuss his accounting needs.

Additional costs could be incurred for a brochure to be enclosed with the letter explaining accounting services the practitioner can deliver. The brochure should enhance interest in the practitioner's services and, consequently, increase the return percentage to an even higher level.

If one-half of the favorable respondents become clients, you could add a minimum of approximately $12,000 to billings each year. This would be generated at a cost of between $161 and $391 per year depending upon whether promotional material is used. Clearly this would be a cost effective method of prospecting and expanding an accounting practice.

Conclusion

Traditional methods of prospecting are available to practitioners. The problem appears to be that practitioners do not want to avail themselves of these methods. Various lists of prospective clients are available. One such list is that of newly-incorporated and newly-licensed businesses. This list will include firms that presently employ outside practitioners and those that do not currently have an accountant.

The general idea in the profession that businessmen do not want to be contacted by practitioners was not born out in this study. In fact, quite the contrary was true. Not only are businessmen willing, but many would apparently welcome this contact.

Use of the method described in this article or a similar method of prospecting can be a cost effective means of expanding an accounting practice. The bottom line is that you can prospect for as little as $6.71 per client. [Table One Omitted]

Roy D. Smith, JD, CPA, is an assistant professor of business law at the University of Arkansas at Little Rock. He received his JD from the University of Arkansas Law School and has published in the National Public Accountant and elsewhere. He was previously self-employed as a public accountant. Bill C. Tadlock, DBA, is an associate professor of marketing at the University of Arkansas at Little Rock. His DBA was received from Mississippi State University. His interests are in marketing services, particularly professional services. His articles have been published in the National Public Accountant, Small Business Institute Review, Business Insights and other publications.
COPYRIGHT 1990 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:accounting firms
Author:Smith, Roy D.; Tadlock, Bill C.
Publication:The National Public Accountant
Date:Oct 1, 1990
Words:1760
Previous Article:Quality control for the small firm.
Next Article:Accounting Information Systems, Concepts and Practice for Effective Decision Making, 4th ed.
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