I have left my MYOB vs Xero blog post alone for 2 weeks. I wanted to see how many people viewed, shared, tweeted etc. So far around 500 shares, forwards and a thousands upon thousand of ‘views’. Cloud accounting is clearly a hot topic right now. I have got some other interviews coming…
Most firms have high retention rate per client. That means their clients stay clients of the firm for a long period of time. Somehow the Accounting profession has got most of their clients bluffed that it is hard to change Accountants. It’s actually not.
Partners will argue that clients remain with the firm because of the great relationship they have with their clients. I beg to differ. How can you have a great relationship with someone when you see them once or twice per year?
Imagine what your relationship would be like at home if you only saw your life partner once or twice per year? For some of you reading this it would be better!
I do not think retention rate is high because of great service, relationships, value for money or services offered.
I think retention rate is high because the Accountant knows about the clients financial affairs.
The reason Accountants have high retention rate is because of financial intimacy.
Most people do not speak openly about their financial affairs – it’s a very private matter. And if they only speak to a couple of people about a very private matter a lot of trust is built up. Not relationship – trust.
Your clients trust you to not tell others. So they don’t leave.
However, the real measure is how happy they are to be a client of your firm. I think that metric is based on the number of referrals you receive each year per client. If you divided the number of referrals (enquiries) you get annually into your total client base this will give you a startling reality of how happy your clients actually are.
Now the flip side to that is they want you all for themselves and they do not want to refer! Possibly.
Focussing on building relationships (retention rate strategies) is not about increasing the retention rate number (it’s already high), it’s about making memorable experiences with existing clients so they buy more from you and refer more to you.
You should be aiming for a retention rate of 95% and at least 1 referral per client per year.
I have written an extensive report on Accounting firm performance. You can download the full report here.
Enjoy video # 10.
In today’s Australian Financial Review, Accounting journalist Agnes King puts forth an argument that (first line) “Accounting firms have no business being on social media”.
She continues “Honestly, what do social media campaigns actually offer the clients of accounting firms? They might be a cheap way to distribute monthly newsletters but that’s hardly revolutionary.”
C’mon Agnes – get with the times!
That is like saying that in the 80’s Accountants should not have a fax machine, in the 90’s they should have not had a computer on every desk and in the naughties every person in an Accounting firm need not have a website or individual email address!
We’re in the social & community re-building age – every firm needs a social media strategy and every firm needs to embrace it.
The esteemed (and very one sided in this matter) journalist continues:
“Most accounting firms profess an increased investment in social media. When pressed, however, they’re just as likely to admit they don’t understand it. But they also know they can’t ignore it. Admitting this seems to be a horrifying sign of weakness. The sooner they get over this notion, the better for all concerned as they can start focusing on the value again. Don’t ignore social media but consider it a research and development exercise until it proves itself to be something more”.
Research and Development – is that it? It will be something more if firms want to make it something more.
I thought journalists were not supposed to have an opinion. Weren’t they supposed to give a balanced view of the subject at hand?
Her argument is fundamentally flawed because she does not understand how these new communication tools can enhance the relationship between Accountant and business client.
If the Accountants of this world are supposed to be the ‘trusted adviser’ and their clients look up to them for leading business advice then surely this medium is a way to distribute information and enhance the experience of dealing with the firm.
Surely a sign of ‘being modern’ and ‘keeping up with the times’ is that leading firms MUST have a social media presence & active and ever evolving presence.
The social presence must add value to clients otherwise it will be like the first ‘static’ websites of old where it was an online brochure with 10 year old pictures of the partners!
The beauty of a social presence is it is alive, interactive and very easy to use.
Here’s an example (and a cracking idea if I do say so myself):
Just imagine if a Proactive firm (one of my members perhaps!) started a ‘closed’ or ‘private’ group on LinkedIn or Facebook. They invited all of their clients to participate. Their employees participated as well and the Accounting firm lead discussions about topics. They started a ‘forum’ just for their firm where they brought their clients together. They stimulated clients thinking by offering case studies, testimonials, wins, content, discussion and tools. They updated everything through the closed group. The firm’s clients could do business with each other and interact with the people in the firm more. They could even offer ‘concierge’ service – connecting people to other people.
All this can be done for free right now.
It’s about building a community. Standard communities are deteriorating around the world due to media hyping up the next killing/abduction/robbery or car crash. The media has driven fear into the local community of old with their sensationalism, insinuation (it’s not safe to go outside kids) and negative driven news service. Just watch the news at 6pm tonight, or read tomorrows paper and count the negative to positive ratio of stories!
Social media used properly can re-build communities. They’re just different communities – a place where people feel like they belong.
On a final note. No one deals with a business, we all deal with people. It’s not business to business – it’s people to people. I do not deal with the Accounting firm because of their offices, pretty logo or brochure. I deal with the people in the Accounting firm – just as they deal with the people in my business.
Social media platforms are about bringing people together. To share, debate, exchange, inspire & communicate. Period.
Below is the June 2012 and financial year to date results of a very high performing Accounting firm. Through our network of 300+ firms we monitor their performance every single month through our cloud based monitoring system. I have circled the keys to this firms success. It is a 3 partner firm in the suburbs serving small businesses.
As you can see their ‘lock up’ needs some attention but other than than they are doing exceptionally well. Our strategies work for small firms and large firms. This firm is a shining example of implementing our strategies. Make an enquiry if you are looking to revolutionise your financial performance!
I have been asked by an editor of a publication to answer 2 questions on the accounting profession. In case my words are twisted, deleted or otherwise changed – here are the 2 questions and my direct answer.
What kind of a year was it for the CPA profession in 2011?
The accounting profession hardly moved in performance due to the fact that (in general) it did not start being proactive with marketing and servicing their existing clients with value added services. If the only strategy is to reduce costs then, yes, profits will increase, however new clients and much needed services to existing clients will not eventuate. The profession could be wiped out by internet based accounting systems. It needs to step up and take it’s rightful place as the trusted advisor
What kind of a year are we expecting in 2012, given that the year is half over already?
The proactive firms are doing well. They always will. The reactive firms will always turn in a mediocre result. This year will be a ‘same same’ year as last year. The profession makes too much money too easily and as such apathy creeps in. I think most partners of firms are lazy – especially when it comes to servicing clients properly by offering value added services. A tsunami of change is on the way with internet based accounting systems. Firms need to get ready for a reduction in annual tax work over the next few years. I am a big believer that this needs to happen. To remain relevant innovation and new services must be introduced – otherwise many firms will go the way of the dinosaur.
This morning I delivered a short speech (25 minutes) to 150+ Accountants. At the start of the speech I asked the question “On a scale of 1 to 10 how relevant is the Accounting profession today”. The resounding response was 7 out of 10.
When I finished my speech 25 minutes later I asked the same question in a different way. My question the 2nd time was “If the profession does not change in the next 7 years how relevant will it be”?
I started at 10 and my first taker was at 6 as I went down one each time. The overwhelming response was about a 1 in terms of relevance. I was blown away – a 1 out of 10 in terms of relevance if no change occurs in the way the profession operates.
So obviously in 25 minutes I caused a stir. What was I talking about? I made 3 key points:
1. The commoditisation of compliance. With the ‘cloud accounting’ revolution well upon the profession this will drive efficiencies, margin squeeze and the rise of “the internet accountant”. The photo below depicts what it may look like. Not a good look!
2. The way accountants explain compliance (the history) to their clients. Just sending out the year end accounts with the inane ‘sign here’ stickers and not explaining what it all means is just not good enough. Clients do not understand and therefore the value of the history paper is useless. It’s also out of date – by at least 12 months! But the history paper does have value – if it is properly explained. Using technology and a process (we call the process PANalytics) to demonstrate the history makes more sense. Our new internet product (Proactive Success System) explains in laymen’s terms where the money went and what it all means. An example screen shot is below.
3. Adding value. To remain relevant an Accountant must add value to the history document and then help their clients make history. The making of history bit involves real time numbers (available in the pocket or brief case at all times) and the offering constructive suggestions on improving the numbers. Our new “Client Alerts” product tells the Accountant real time what is happening in their client business every day. Being proactive takes on a whole new level with this product & process. When something that you pick up in your client business is not going so well then make the call and explain what you have picked up and what the client needs to do about it. What great client service and what a great tool to sell additional services. See below.
I think the sweat shop above will exist in the future. But that is not the answer. To remain relevant the profession must add more value – plain and simple. It’s time for change. My audience this morning knows it. They are up for it. Are you?
- You are the trusted advisor
- You are the natural business leader
- You can add serious value
- You should be the hub of business success
- You can make a massive difference to your community
- You need to be proactive rather than reactive
- You have a business to run – not a practice
- You need to stop focussing on writing up history and start making history
Go on! I know you can do it and live it.
At our annual conference we awarded stellar performance to 8 key firms in Australasia.
|Most Efficient Accounting Business – Clifton Accountants – www.cpaaccountants.com.au
Most Innovative Accounting Business – Hansens Accountants – www.hansens.com.au
Service Excellence in an Accounting Business – Selby Watson & Co – www.selbywatson.com.au
Best Client Result in an Accounting Business – Doyle Partners – www.doylepartners.com.au
Community Contributions by an Accounting Business – Jaques Stanmore Chartered Accountants – www.jaquesstanmore.com.au
Most Valuable Player in an Accounting Business – Ravi Sharma from PJT Accountants – www.pjtaccountants.com.au
Rising Star Accounting Business – Snelleksz & Co – www.snelleksz.com.au
Accounting Business of the Year – ZJL Partners – www.zjl.com.au
Congratulations to all. Much deserved. We’re very proud of you.
Lately there has been a lot of press and commentary (some would say hype) about cloud accounting systems.
So what is reality and what is hype?
First of all some facts:
- The cloud accounting (or the original term is SaaS – ‘software as a service’) has been around for a long time. The technology has been available for at least 10 years.
- Cloud accounting is where your (or your clients) data is stored on the internet (instead of a PC or server) so they can access it easily and efficiently.
- As of today there are approximately 3-4% of small / medium sized businesses who use an internet (cloud) based accounting system.
- The early adopters (the cool ones) have jumped on it and enjoy the simplicity and innovative approach to it.
- Many of the late majority users will be currently concerned about security issues. They are the same ones that were concerned about internet banking security concerns and now they probably use some form of internet banking.
- Every single accounting software maker (who started as a CD/Server/Hard drive system) are spending bongo bucks (technical term) to get ‘cloud ready’. In fact I know (from the horse’s mouth) that one prominent supplier is spending in the vicinity of $100M to get ready.
- Around the world there are gazillions of dollars being poured into any sort of internet based computing systems. The venture capitalists and financial markets are backing this space.
- Cloud accounting systems will not fix every issue you have with your clients ‘cleanliness of data’ – if they input incorrectly then you’ll get a mess like you do now. Muck in – muck out.
- It is reported by the software vendors that at the accountants end you will have an efficiency gain of anything from 10% – 40% when your clients are using an internet based accounting systems. That means 10% – 40% less time on the same job.
- When a client has their data on the internet it is easier to transport the data from one accounting firm or accounting software supplier to another. Click of a button.
- Every week we are hearing of clients who have switched accounting firms because the other firm did not offer an internet based accounting system.
And the final fact.
12. This is going to happen whether you like it or not!
This is a revolution going on in the accounting space. And you are in the box seat to capitalise on it – or possibly be wiped out. You need to be like a surfer and ride the wave. As one supplier told me 2 weeks ago – we’re only 5 minutes into the 90 minute game.
So here is what I see as the future of all of this.
This revolution is like internet banking was 10-12 years ago. The early adopters got onto it (internet banking), the banks made it easier to use, increased security and now it’s just the way we transact.
I see this wave coming where clients will demand you set them up on an internet system and they will switch firms because of it. You might say the strength of your relationship will stop that. I question the strength of that relationship when you only see your client 1 or 2 times per year. What would happen if you only saw someone you loved 1 or 2 times per year? Ok, some of you might say that would improve things!
I believe that compliance will become a commodity with internet accounting. The technology will simplify everything. The technology will link to government agencies, other portals of interest and it will feed content down to the end user. If compliance becomes commoditized then where is the accountants ‘mystique’?
There is no formal connection between accountants and client. There is a history/relationship/mystique connection – but you are not ‘connected’ formally. I see that internet accounting will diminish the loyalty accountants currently enjoy – unless you connect with them formally.
I truly believe that these new systems will make it easier and faster to process compliance. That means that run of the mill annual compliance will become a commodity. When products/services become a commodity then inevitably price pressure starts. If you are charging an agreed fee and you can take out 10% – 40% of the time, and the service is a commodity, then what is the ethical thing to do? My view is you need to reduce your price and price based on your value you provide.
There will be a new breed of ‘price cutting’ accountants start to appear. Internet based accountants. No relationship with the client. All delivered via the internet. Online support if needed. The work is done ‘wherever’. Who knows where? And for some who cares.
I think these new systems have the power to wipe out traditional/tired/stuck in their ways/yesterday based accounting firms. If your clients want it and you’re not delivering it then they will fill find someone who will. Are you going to pull down your shingle, sell out or get with it and ride the wave?
My view all this change equates to massive opportunity for savvy accounting firms who are truly interested in making a difference with their clients.
You see, when your clients are ‘internet accounting enabled’ the data is real time and more accessible. Your clients can see what is going on every day on any mobile or fixed device. It is a bit like what the late, great Steve Jobs said when he launched the Apple iPod® he said this device will allow you to have “1,000 songs in your pocket”.
I am going to say something similar – your business data in your pocket™. Your clients have their data in their pocket at any time – in real time.
Is cloud accounting your friend or your foe? Depends how you look at it. It’s your friend if you ride the wave and capitalise on it. It’s your foe if you do nothing.
Let’s say you want to make it your friend.
Imagine you have helped your clients get onto any one of the major internet based accounting systems. You guided them which one to choose and helped them get set up on it. You got on the front foot and promoted it to your clients before another accounting firm did.
Your clients accounting is now in the cloud. Once you get the hang of it you now have excess capacity and you now have some choices to make. You can either downsize your team, buy some fees or you could do what most have wanted to do for years – add value in a positive way to your clients with that new found excess capacity.
Imagine if you are now formally connected to your clients via the internet and you can see what is going on in their business in real time. With this data you can then become more relevant and more useful.
Imagine if you could see a consolidated view of your clients’ data, in real time, on your mobile device or PC. You don’t have to wait for next year to see this year’s balance sheet/P&L and financial situation. That is looking in the rear view mirror at history. It’s bordering on useless. We’re a real time society and you as the accountant need real time data. Real time on your phone, tablet or any PC.
And it didn’t matter what accounting system your client used. Your consolidated view would be with all clients and all accounting systems.
Imagine if the system would alert you if something untoward is happening – debtors up, payables up, cash down etc. The system sent you a text message or email when your clients go in the ‘red’ or it gave you a health check of all clients – no matter if they are in the ‘red’ or the ‘black’. If the system told you this you could then simply react to your clients’ situation and either alert them to the issue (good customer service) or you might have a meeting with them to help them solve the issue on the spot or have them buy a higher level service from you if need be.
Imagine if that same system fed up content to you and gave you help on what to say, how to say it and how to fix business issues. Imagine if that same system coached you and your team members on what to do, how to act and how to be better advisers to your clients.
Imagine if the system did real time benchmarking with the same industries that your client is in.
Imagine if the system enabled you to do a business performance review – on the spot. It enabled you to be more meaningful at your annual meeting with your client.
Imagine if it showed you how to plan the next 12 months with your client and with a click of a few buttons it prepared a budget & cashflow statement that was robust and ‘financier ready’. And then with the live data feed it helped you and your client monitor their daily, weekly, monthly, quarterly and annual results.
Imagine if you had ….
“Your clients’ business data in your pocket – anytime, anywhere…real time™”
That’s the future.
Available very soon for Proactive Accountants around the world.