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Building a more Rewarding Practice Means Overcoming the Three Barriers to Specialization

For years, decades even, accountants have talked about specialization. Building a niche practice has been the subject of articles, conference agendas, podcasts, and discussion among practitioners since what seems like forever. But the discussion is coming to a head as firms continue to struggle with capacity and staying on top of all the changes affecting the profession. A combined strategy of focusing on specific types of clients along with transitioning clients that don’t fit (we call it right-sizing your client base) is the key to solving some of the profession’s greatest current challenges ensuring its future health.

There are three common barriers practitioners and firms must overcome to embrace the opportunities specialization affords. In this post we identify and offer strategies to overcome them.

Barrier 1: perception of boredom

There’s a paradigm accountants must unlearn which is when you specialize it means you only do the same thing over and over. One of the most frequent objections I hear from practitioners at every stage their careers is “I like the variety of (or the idea of) working with lots of different types of clients.” Or put another way “I would get bored only working with one type of client.” The implication is that when you choose to serve only a certain types of clients that every engagement will be the same.

The first step in overcoming this barrier is to acknowledge a fallacy that two businesses, even competitors or those in the same industry, can be the same. The fact is every client is different because you serve people. And people have different views, experiences, personalities, stories, priorities, communication styles and thousands of other attributes that make us unique. The challenges and opportunities they face may be similar, but your approach to solving the issues and your relationships will be different.

The second step to overcoming this barrier is shifting your mindset. What if instead of doing the same thing for every client, becoming a deeply experienced professional means more creative flex? When you start to see a client’s operating environment from different angles because you spend a LOT of time in that space your experience lends itself to more inventive and innovative solutions. Focusing on fewer clients also creates time for deep thinking vs being so bogged down with work that you focus primarily on tasks and keeping you head above water. What if all this enables you to solve more issues and offer more proactive ideas to your clients?

Saying no to the clients and projects that don’t fit frees you to say yes to more challenging, interesting and inspiring work. It creates opportunities to provide solutions to challenges your clients may never have thought you could solve.

In summary: focus is the key to a more diverse practice.

Barrier 2: anticipated negative effect on revenue

It feels counterintuitive that fewer clients leads to more revenue, and that carving off and transitioning a chunk of our practice will ultimately increase top-line revenue and bottom line profits. First, as we already discussed, freeing time and space to do more for our existing clients enables us to bill our clients more. Second, specializing creates an opportunity to market yourself and your firms in a way that makes you more relevant to those prospects that need you than other firms. As you increase your relevance you decrease (or possibly eliminate) your competitors—which means winning a higher percentage of engagements.

Not only that, when prospects recognize the lack of alternatives to your firm the balance of power in the proposal process shifts to you. Pricing is non-negotiable, without scope modifications. You don’t feel pressured to give away pieces of your service or knowledge in order to win the business. You can become more steadfast in your terms of service and timing. You can stop wasting time responding to RFPs that don’t make sense. The entire process becomes more straightforward, with less gamesmanship.

Think about how refreshing that would be. Not only do you win a higher percentage of engagements, you will win with higher fees, fewer write-offs and greater realization.

Simply put: specialization increases revenue and profitability.

Barrier 3: failing to define the specialty

There are two options when it comes to specializing: reactive specializing in which you see what others are doing and seize whatever segment is left or proactive specializing to make your own space. Often firms think about specialization in terms of industry, which has lots of advantages, but there are lots of ways to define it. Region or location can be a specialization if you’re very well connected and articulate the value your local roots and connections bring to clients. You can specialize in a service model, like remote/tech enabled. You could be the firm that only meets at the client’s site or that works with family-owned businesses.

Most people start to define their niche on the basis of where they are today. They look to where they have concentrations of clients or their existing skills. This can be a good approach if you have passion for serving those kinds of clients, but you should be be wary of being held captive to the opportunities you have already had. You may find greater joy and satisfaction from diving in to something completely new, as long as you have the patience to recognize that diversification like this is a longer-term strategy than expanding an existing area. There’s no right or wrong way to start—as long as you start. A lot of folks “dabble” in one area or another. Dabbling is the enemy of specialization and gets you nowhere.

Regardless of where you start, follow these steps:

  1. Choose a focus
  2. Articulate the expertise frequently, consistently among your target clients (both current and prospective)
  3. Continue to work to add the missing skills, capabilities and processes to support your positioning

Often accountants make the mistake of switching steps 2 and 3—feeling that they can’t start talking about their specialization until they know everything. Let’s unlearn the definition that “specialize” means you have to know all the answers. Instead re-frame the definition to mean being dedicated to and connected enough to help find all the answers. It’s the epitome of what it means to be an advisor to clients.

The takeaway: if you don’t decide, you won’t specialize.

If your professional goal is to do more for fewer clients, explore some level of specialization. Like most things, specialization is a continuous learning journey. Be ready to not have all the answers. However if you’re committed to finding them, limitless possibilities await.

The Value of Client Feedback: Spoiler—It’s Not Only about Clients

Recently, we’ve added the following polling question to our CPE webinars: “Does your firm have a formalized survey process for gathering client feedback?” More than 80% of respondents say they don’t.

Client feedback goes beyond electronic satisfaction surveys and net promoter scores. Meaningful intel on how your clients feel about their relationship with your firm is a key driver of client loyalty. But beyond that, there is another strategic purpose to gathering client feedback: staff retention.

A New Outcome of Client Feedback: Reduced Turnover

Firms that take time to formalize a process of gathering client feedback, evaluating consistencies and making purposeful choices about what to incorporate are better able to empower their team members to provide a meaningful experience. In contrast, firms that have no formalized way to evaluate what is important and what isn’t generally suffer (or more accurately, your people suffer) from the pressure of making every complaint, exception or suggestion appear equal. Your people may kill themselves trying to address every item individually causing redundancies, inefficiencies, employee burnout and, yes, turnover.

Client feedback is actually a path to better staff retention and even contributes to your ability to recruit and hire new people. A formalized process can be a real differentiator for your firm. We’ve helped firms large and small design, build and refine their client feedback processes. What’s common among them is a need to address the gap between learning and application. To glean value from the feedback leaders need to commit to applying what they learn by making systemic changes and engaging in training on the outcomes to be delivered. That’s where the magic happens.

Not only are there staff retention improvements, increasing the lifetime value of your client base by enhancing client retention levels significantly impacts your firm’s ability to grow its top-line because you aren’t constantly replacing revenue from clients that are leaving the firm. And loyal clients will refer business to you and serve as a reference if you ask…making it easier to attract new relationships as well.

Finally, working with loyal clients who recognize the value of the relationship with your firm, seek your counsel, are fun to serve and take your advice create for a very fulfilling practice. They create interesting professional opportunities and an enjoyable atmosphere. Who wouldn’t want to practice public accounting in an environment like that?

Understanding Satisfaction vs Loyalty

Satisfaction and loyalty are related, but not the same. Satisfaction is often tied to a project or engagement. Loyalty is tied to the relationship. Both are important – you can’t have loyalty without satisfaction first. But loyalty helps to insulate the relationship from brief periods of dissatisfaction. If I’m a loyal client, I’ll allow you the opportunity to fix a satisfaction issue. I may even become more loyal if the issue is resolved quickly and to my liking. However, if I’m merely satisfied, and then become dissatisfied I’m more likely to look for an alternative service provider because there is nothing else tethering me to the firm.

So ask yourself, “what are the proactive measures we are taking as a firm to measure and improve client loyalty?” If the answer is “not much” or “I’m not sure” you any want to consider starting at the beginning by understanding what your clients value in a relationship, and how you’re doing delivering in those key areas.

How do You Know What Clients Value? Ask!

Coordinated efforts to improve client service can yield some of the greatest returns on investment of any growth activity. To be most effective, any effort related to improving client service should germinate from feedback from your best clients. Often when firms measure satisfaction, they focus on engagement satisfaction. How satisfied were they with the outcome? How did they enjoy the experience of working with your team? What could you do differently? How would they rate the deliverables? While important, these surveys don’t adequately measure the satisfaction with the relationship—which is what drives loyalty.

Consider a formalized program to regularly learn the following from your clients:

  • What attributes of service do they associate with your firm?
  • What attributes of service are most important to them in hiring a CPA?
  • How satisfied are they with your firm’s delivery of the attributes that are most important?

Don’t leave the task of evaluating feedback to your people in an ad hoc way. Put your team first by making strategic choices about what feedback is material, and what isn’t and then create systems, processes, training and tools that will enable them to deliver. Also, make sure that when you receive positive feedback about one of your team members you share it with the rest of the firm. (Create a culture of kudos!) Positive feedback goes a long way in creating goodwill with individuals and within the firm as a whole. In doing these things, clients will begin to see and feel the difference between your firm and others in the market.

Contact us today to get started on a program for your firm.