Clients base

Engaging with needy or unhappy customers shouldn’t be viewed as a chore, as your team should look at them as an opportunity to grow your customer base. Instead, respond swiftly to customer complaints to increase the chances of these customers purchasing your products again.

→ Download Now: Customer Service Metrics Calculator [Free Tool]

Time has come for firms to cull clients

Ask a room full of accounting firm leaders if they are feeling overwhelmed this fall, and you will find a room full of heads nodding in agreement. One reason is that firms today see tremendous opportunity in the market but don’t have the time or capacity to capitalize on it.

Firm leaders can employ all sorts of capacity-building strategies including outsourcing, offshoring, hiring non-CPAs for service delivery roles, hiring outside your geography, implementing efficiency-building technologies, and more. These strategies work, but they take time and resources to plan and implement — and everyone today is short on both.

There is one strategy that firms can implement immediately to significantly improve capacity before the next busy season. This idea is one we’ve talked about for decades, but only the bravest and most committed have ever followed through.

  • Your people are tired of feeling overwhelmed. They are worried that the turnover you’re experiencing will make the next busy season worse than the last one. And we haven’t even hit the peak "quitting month" of November yet. If you’re like many firms, you don’t have the right headcount for your current client load, and you’ll risk burning out your best and brightest if you don’t make an immediate shift.
  • The 80/20 rule indicates you have cuttable clients. In most firms we analyze, 80% of a firm’s revenues are generated by 20% of their clients, and the other 80% of the clients make up 20% of the revenue. This big group of small clients are the "tail that wags the dog," and they require an immense infrastructure to manage. The cost to set them up in your systems, deliver services to them, and then bill and collect from them can outstrip the revenue they produce on an individual basis. As your firm grows, your ideal target client and engagement size grows, too. Serving clients that don’t fit any longer does not serve them or you.
  • Your people have clients they don’t want to work with. These clients may be mean, be disorganized, feel risky, have an unappealing environment to visit, fail to value your services, or pay slowly or not at all. They are the D-level clients you know you shouldn’t serve. These D clients are definitely working against you as you fight to keep your people in your firm and in this profession.
  • We have entered a seller’s market for services. Firms don’t have the capacity to take more work in certain areas. When demand is up and supply is down, fees go up. This is a perfect time to downsize your client base to let go of those unwilling to pay your fees, or who meet some of the other criteria outlined above.
  • You can achieve bigger growth with a smaller client roster. When you increase capacity, you’ll have time to implement other capacity expansion ideas. This will give you increased room to grow your business in areas that appeal to you and your team. You can expand services with existing clients, providing them more advisory services and making a bigger difference. Or you can go after more targeted "ideal" clients who fit your profile for an A client and who will bring more joy into your life and the lives of your team members.
  • You can bring real hope to your talent. When you cull clients and increase capacity, your people will see that you’re serious about changing your underlying business model to improve everyone’s quality of life.
  • Ask your partners to identify 10% of their clients under management for reduction. They can choose to reduce their client load based on engagement profitability, likability, fit for the firm’s overall product/service mix, payment habits, ease of working relationship, or any other criteria that they choose. Make it mandatory that each partner (or client owner) submit a list that tallies 10% of their client base to your management or executive committee by a certain date — quickly — for review.
  • Execute this strategy soon after Oct. 15 — or another fall finish line — and before the next cycle of service begins. Clients should be told of your plans to transition them to a new provider, so you can assist them in moving in advance of their next engagement period.
  • Use a uniform position statement to help make the communications smoother and more consistent. Some clients will need to be told "live" by phone or video based on their relationship with the firm, but most can be informed via letter or email. Consider using language like, "As you are likely aware, the accounting profession has been under immense pressure with continuous legislation and change, increasing client needs, and decreasing availability of talent. We have reached a point that requires us to examine our service commitments to ensure a quality work life for our team members. Through this analysis, we have determined that we cannot continue to deliver your [insert work type] services going forward. We are truly sorry to be at this juncture. We are happy to make a referral to another provider if you’d like, and we will work with you to make a smooth transition to whomever you choose to work with next." You may choose to leave the offer to refer the client to another provider out of any communication in the case of your most difficult clients.
  • Remember that a client who isn’t ideal for your firm due to size, niche, or service needs may be ideal for another. Identify firms that specialize in the type of clients you’ll be transitioning so you can actively refer those clients to quality providers that are seeking to grow their bases.
  • Remove financial disincentives. Most partner compensation and deferred compensation systems have some tie to the size of clients under management or book of business. If all partners reduce across the board, it makes any "haircut" that might be taken universal, so it keeps the playing field level. But if you aren’t able to get all partners to partake in this critical capacity-building strategy, make sure those who do let clients go are not negatively affected financially.
  • Don’t miss the chance to transition clients out of the firm when their primary provider is retiring. We see firms that transition "so-so" or even "bad" clients to new client servers in their firm. This is so disheartening to the future leader taking over these clients and not the right use of their talent. Instead, as you consider forthcoming retirements, identify at least 10% or more of your retiree’s client base to refer elsewhere. You can use some of the suggested language above, and include something like, "upon Partner X’s retirement, we are no longer able to serve you. Instead, we’d like to refer you to [outside provider Y]."

Customer Base vs. Installed Base

The installed base refers to the group of customers within your customer base who are actively using your products. Unlike the customer base, this group excludes people who have not recently made a purchase or are not engaging with your business’s offers. Identifying these customers will help your company provide timely service to improve retention.

However, HubSpot’s installed base would only consist of the customers currently using HubSpot products in their day-to-day workflow. By highlighting this subsection of our customer base, we can personalize our marketing, sales, and customer service offers to fit the specific needs of our active users.

While lead acquisition is essential for building a customer base, it’s not enough to build your installed base. If you want your business to be successful, define the most effective way to balance lead acquisition and customer retention, and both your customer base and installed base will grow.


Leave a Reply

Your email address will not be published. Required fields are marked *