What do you do when you get an email from a referral source with the name of a prospect who could use your help? Are you someone who instantly tries to figure out what you need to do to seal the deal, or do you step back and ask yourself if this is a client you really want?
Not every prospect is an ideal client. Firms that take any work that comes through the door often find themselves dissatisfied with realization, client responsiveness, last-minute requests or something else.
There are clients out there you can serve better than others – and they will be better clients, so stop chasing every lead you get and focus on ways to attract higher-quality clients.
1. Identify Your Ideal Client
Even if you haven’t thought about it, your firm can serve some clients better than others, but you can’t help everyone; there are many factors that go into what makes your “ideal” client. To understand the depth and breadth of what you do, begin with this market segmentation exercise:
- Create a table in Excel.
- Every row is a service you sell. Be as specific as possible. Instead of accounting, think QuickBooks®, payroll processing or financial statement preparation, for example.
- Every column is an industry that your clients operate in (example: manufacturing, construction and retail).
- Now, drop every dollar of your prior year’s revenue into the corresponding cell.
- Tally up the rows and columns and determine what percentage of your total revenue the cell represents.
The rows and columns that make up the highest percentage of your revenue represent the areas in which you have the most expertise. To drill down further, consider the size of each business, whether it’s public or private, and the structure of the internal accounting department. Also, think about how technology savvy you need your clients to be in order to match how you deliver your service.
At the end of this exercise, you should have a clear description that sounds something like this: “Private businesses with less than $3 million in revenue in the healthcare industry, where there is no internal CFO and who are willing to work in the cloud.”
2. Develop a Solid Channel of Distribution Strategy
Now that you know who your ideal client is, you need to know where to go and what to do to find them. A channel distribution strategy is the path your services take to reach your buyer. You sell business to business (B2B) rather than directly to the consumer. This requires that you clearly know what service you are selling, to whom and through what channel (service channel target).
You probably have clients who sell their products through a wholesaler or retailer. Who or what is your retailer? Channels could include a publication your targets read, an event they attend or a member association. It could be a relationship with centers of influence who target the exact same people you do. It could even be a piece of content you push out through a targeted digital platform. You want to hang out where your buyers hang out: that’s your channel of distribution. (For more information on how to create this buzz, read this article!)
If you are strategic about where you are going to sell your services, you will better position yourself for the referrals and prospects you actually want.
3. Know When to Say No
Let’s say someone outside one of your channels of distribution refers a prospect who doesn’t fit your ideal client profile. If this is truly outside your scope, you should say, “Thanks, but no thanks.” However, there are accountants who believe they can effectively work with non-ideal clients. If that sounds like you, be careful when deciding how many, and what types, of clients you want to work with who fall outside of your sweet spot.
The more clients you have that meet your ideal profile, the better job you do understanding their needs and servicing them. That generally translates into more revenue, greater profitability and happier staff. When you service clients who fall outside of your ideal, the engagement is more costly because you have a learning curve, inefficiency and lower realization.
Saying “no” to potential revenue is hard. Be honest with yourself and recognize that not all revenue is good revenue. Work you aren’t set up to perform often causes more stress, takes more time and makes your team irritable. Is that what you really want for your business?
Be strategic about the types of businesses you work with, and over time, the quality of your clients will increase and your firm will be stronger.