Yesterday I presented day one of my Capitalising on the Cloud seminar in Newcastle. I am touring 14 cities in Australia and New Zealand. Probably coming to a city near you! Gold Coast tomorrow and Brisbane on Friday. Already 1,155 Accountants are registered which is awesome.
The feedback was amazing. The Accountants loved it and more importantly when I read the implementation forms they are going (at least they said so) to implement the ideas.
It’s a full day covering
- Cloud Accounting
- Cloud practice management
- Value Added Services
And loads of new tools, techniques, tips and hints. It’s all about the “How To”. I have 2 successful Accountants speaking at each event as well. You can still register. Check out the cities I am still to go to. Hope to see you there. More information and registration details here. Check out the highlights reel from yesterday.
With cloud accounting implemented with your clients you now have access to more ‘real time’ financial data than ever before. With the data being so up to date there is an amazing opportunity for you to add value with new services.
You can even take it up a notch and get daily and automatic ‘KPI feeds’ direct to your device (laptop, smartphone or tablet) that will tell you the story as to what is going on – good and bad.
Now that you have all this data what are you going to do with it? I think you have a duty of care and obligation to advise the clients how to improve the data. If you are living by the mantra of “all clients are buying all services that help them achieve their goals” then it’s not selling new services. It’s servicing your clients properly.
Here is a list of 15 new services that you could offer:
- Cash flow analysis – where does the money go
- Profit improvement program
- Monitoring & accountability program
- Debt re-structuring
- Capital raising
- Interest reduction service
- Waste audit
- Revenue improvement strategies
- Creditor analysis & negotiation
- Product profitability analysis
- Debtor management service
- Tax planning & minimisation
- Business Planning
- Inventory management system
All are valuable services that will make a significant impact to your client’s financial future. By ‘staying close to the numbers’ you have a better chance of the client buying the service. With good systemisation of the services you can have Accountants of all levels deliver the service – not just the partners.
You will need to learn some sales skills on how to have your clients buy them. You may also need some new tools so you can systemise the services.
To show you how to sell the services and which tools to use I am running a full day seminar called ‘Capitalising on the Cloud’. I am presenting it in 13 cities starting tomorrow (March 19). For more information and registration details visit www.cloudseminar.com.au for more details.
The problem with pricing by the hour is that the assumption is that the price per hour is correct (often calculated by a salary multiple) and the time to do the task was correct. The assumption is that time multiplied by the rate equals the correct price. In my view, nothing could be further from the truth.
When selling intellectual property it truly is a bizarre pricing model. You are valuing what you know and the outcome the client gets based on a salary multiple (to get to the charge rate) and the time taken to do the task. Very strange! I understand it’s an easy way to calculate a price. The issue is this model does not value how smart you are and the impact you make.
There has to be a better way. And there is. It’s all about value pricing. Value pricing is where you price the job upfront based on the value you create for your client. You cannot value price after the fact. That means you have to ‘scope’ the project out first (by talking with the client and doing some research), find the value you are adding and then present an implementation plan to the client based on how you are going to help them.
Now for historical work you have a challenge with pricing. And that’s price parity. You may think it is worth more but if the client has been paying $X for the past few years then they may pay $X + a bit -but not the price you think it is worth. For a new project that the client has not bought before then that’s a different story.
To work out the value you are adding you need to think the following. Without me, they can achieve ‘X’ result. With me that can achieve ‘Z’ result. The difference (‘Y’) is your value that you can add. The impact might be financial, emotional or both.
1. Cash-flow improvement. If the client is constantly juggling cash, never with any money and always stretching creditors and arranging payment plans then that is the current situation. If you can educate them, put systems in place, show them how to improve profit and then monitor their behaviour and let’s say the outcome over the year is that they are $200,000 better off. Your cash ‘value add’ is $200,000. They are also sleeping better at night; less stressed, have more working capital to expand and are generally happier. Your emotional value add is massive. How much would you charge? Well a 10:1 return is a pretty good deal. So maybe $20k – $30k.
2. Tax minimisation. If your client has a tax exposure of say $550,000 because of their current structure and trading environment then that is the current reality. You come along and re-structure their affairs and negotiate with the tax department and you get their exposure down to $150,000. Then your cash value add is $400,000. What can they do with $400,000? Maybe expand the business, pay the house off sooner, retire early and get some of their life back. Your emotional value add is huge. What’s that worth to the client? Pick a number – maybe $30k – $60k.
If you know the numbers in advance (cloud accounting helps with that enormously) then you can scope out projects that make a difference with your clients. If you can articulate your value in advance and present in such a way that makes sense financially and emotionally then you’ll win the business.
At the end of the day the only right price is what the market is prepared to pay for it. That means the right price is just before NO. In other words if they keep saying YES without hesitation then the price is too low.
Starting on Monday, March 17 I am presenting a full day workshop (visiting 14 cities) called ‘Capitalising on the cloud’. It’s all about helping your clients based on you knowing the numbers. Pricing is part of the program. Bring your team along and learn how to use cloud accounting as a service offering which adds value to your clients. Check out www.cloudseminar.com.au for more details.
Once you have clients on cloud accounting you have an amazing opportunity to add value to the numbers. On the old system (hard drive based systems) you might not get the clients financial data until 6, 12 or 18 months after the fact. It’s very hard to offer real value when the data is so old.
With cloud accounting that all changes. You can have access to the data whenever you want. That means if you have the data then you can offer (real time) management accounting, budgeting, cash flow management and profit improvement help. The services are not going to sell themselves however. You need to approach the client, highlight the opportunity and show the client how you can help.
I have a belief system that every client in an Accounting firm should be buying every service they need that helps them achieve their goals. Anything less is doing your clients a gross dis-service.
To find out what their goals are you need to meet with them. For the meeting to be a success you should not ‘wing it’ but follow a structured approach. If you follow my proven 12 step meeting approach (for any value added service for any client) you will make a lot of new value added sales:
Step 1. Make sure all of the decision makers are at the meeting. Absolutely crucial that this happens. If you are making recommendations then all the decision makers need to be in attendance.
Step 2. Set the scene why you are having the meeting. Your client is wondering why they are there. You need to tell the client that there is nothing to worry about and you are here to help.
Step 3. Frame the meeting purpose and time frame of the meeting. The purpose of the meeting is to dig deeper into the current situation and offer some solutions on how you can help improve profit, cashflow, revenue & tax minimization. You need to tell the client how long the meeting will last and make sure they are good for that timeframe.
Step 4. Understand the ‘now’ by asking a series of background related questions. Have their data on the screen (bigger screen the better) in our PANalytics product (which consolidates data from cloud products) showing the business performance review. Dig deep with probing questions to understand the current reality.
Step 5. Understand what the clients’ goals and objectives are. You need to transition from the past to the future by asking what they want to achieve in the next 3-5 years. Emphasize with them and reassure them that you can help them achieve the objectives. Write down all the objectives.
Step 6. Ask how they would know if they have achieved their objectives. Again another transition from the future back to how they would know if you have helped them. You’re looking for tangible measures of progress.
Step 7. Ask what it would mean to them if we helped them achieve their objectives. You’re looking for feelings so the project plan becomes emotional above logical.
Step 8. Ask what their current plans are to achieve their objectives. Some clients may have a great plan that may just work. You need to find out if they do. Most will not have a plan of any sort. You need to reiterate that you can help them (you may need to build the plane as you fly it in some cases) and you’re excited by the potential in their business.
Step 9. Ask what the consequences are of not doing something different. If they don’t have a plan you need to ask them the consequences of not doing something different. Let them talk.
Step 10. Ask timing related questions. You’ll need to ask them if this is a sooner rather than later project and what else they have going on that may prevent them from getting started right away. Let them know that you’re going to look at a suitable start date in your workflow system.
Step 11. Tell the client the next steps. It is crazy to offer a price and proposed implementation plan on the spot. Tell the client you’re going to write an implementation plan and send it to them. In it will be some options the client can take. Each option will have a fixed fee and each option will help them achieve their objectives.
Step 12. Book the next steps. Tell the client you will send the implementation plan on X date and you’ll need to meet again to answer questions and work out which option is best for the client to take. Set the follow up meeting date.
The follow up meeting is all about re-aligning your client with their objectives and asking which option do they think is the best one now to help them achieve their objectives.
The 12 step meeting process is a small but important part of my new full day seminar ‘Capitalising on the Cloud’. I am visiting 14 locations throughout Australasia starting next week on March 14 in Newcastle and then around Australia and New Zealand ending on April 16. For details and booking information go to www.cloudseminar.com.au