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By Robert Shapiro

Public accounting firms normally focus on billable hours, realization rates, staffing, and traditional overhead factors when striving to enhance profitability. An often overlooked factor, is a firm's conversion rate from prospect to client. Many firms tend to accept the status quo, even though some do a much better job at conversion than others. Even minor improvements in this "batting average" can have a dramatic impact on the bottom line. There is a process to be followed, and deviations or shortcuts will reduce the number of hits. With some effort, the number of new business hits may be dramatically increased.

Information Gathering
(Internal & External)

One of the most critical elements, the information gathering phase, takes place prior to the initial prospect meeting. This preliminary work sets the tone for the prospect meetings and serves to focus discussions on relevant issues. The objective here is to develop a prospect data sheet that organizes internal capabilities and industry data. An appropriate information base will position the firm as prepared and knowledgeable. The data sheet may also be utilized as a guide to the initial prospect meeting.

While some firms are more deliberate than others in preparing for new business opportunity meetings, many approach these sessions with a false sense of confidence. Preparations often translate to a brief discussion centered on who is going to lead the meeting on the way to the session. Given that client relationships are generally long term (7-10 years) and generate regular revenue streams, it is surprising that this latter practice exists.

In terms of the firm's internal data, it is necessary to be conversant with the firm's capabilities in the prospect's industry sector or business. How many clients does it have? Are there any clients that are market leaders? What success stories has the firm developed within this particular industry? What are current industry specific issues and trends that the prospect is likely to be facing? Has the firm published in this area or have related specialized knowledge?

During this information gathering stage, a firm's contact data base becomes critical. Having an existing relationship within the prospect organization or a mutual relationship, beyond the referrer, can jump-start the sales process. Those firms without network databases may wish to circulate a memo or make a voice-mail announcement in certain new business scenarios.

Although some CPA firms obtain D&B reports on a prospect company, this data is limited in scope and may be only marginally helpful to the sales process. Information that may provide greater insight includes current and recent news about the company's principals, operations, market, industry, strategic plans, product line, and expansion plans. An Internet search, or an alternative electronic periodical search, is the way to go.

Internal and external data should be thoroughly reviewed by the sales-team and a draft of at least 10 open-ended questions should be prepared. This list will serve as a guide for the initial prospect meeting and will encourage a prospect to give the sales team pointed information about their organization that will be critical in the sales process.

Initial Prospect Meeting

CPAs should understand that their mission for the initial meeting with a prospect is not to communicate the firm's biographical data, but to gain an understanding of the prospect's needs and expectations. This requires an ability to listen and to ask relevant and thought provoking questions. Armed with an agreed to wish list, the firm can demonstrate in a follow-up meeting its approach and competence in resolving these issues and the potential benefits to be derived.

The opportunity at this meeting is for the prospective client to relate to the firm on both a professional and human level. This meeting should be more of a working session than an interview. The prospect should be involved in the discussion and proposed solutions. Have prospects work with you to develop problem solving approaches. A wish list of key goals should be developed jointly. What better way to show a prospect how you work together, how you think, and your knowledge? Roll up your sleeves and draw out examples on a legal pad strategically placed between you and the prospect. Some of the more common guidelines to be followed during the initial meeting include the following:

1. Try not to talk when listening is in order.

2. Hear and prioritize prospect's needs.

3. Respond to direct questions.

4. Sell only those services needed by the prospect.

5. Focus on benefits.

6. Recognize immediate project

7. Avoid bad-mouthing competitors/the profession.

8. Try not to solve prospect's problems on the spot.

9. Establish personal rapport.

10. Ask for the engagement.

Relationship Building

The decision to engage a CPA firm is based in part on elements that reach beyond price and technical proficiency. Perhaps key among these are trust, rapport, reliability, and confidence. These and other relationship factors need to be at the forefront of the sales effort and not behind the scenes. The CPA should contact the prospect after the initial meeting in order to recognize the prospects' participation in the process, interact on a human scale, and further identify and qualify needs and expectations. It is also a way to set the stage for the second meeting.

From the beginning of the process, the prospect should be treated as if he or she were an important client of the firm. The prospect should be invited into the "family" and included in appropriate firm events, e.g., seminars, workshops, or social events. He or she should be placed on the firm's mailing list. Recent publications or notices about the firm or its professionals may also be sent with a simple handwritten note, as well as newspaper and magazine articles.

The Proposal

It is not surprising that client proposals often replicate the mistakes commonly made in the initial prospect meeting. They are often boilerplate, firm-centered documents as opposed to client-centered--specifically tailored to each prospect. They start off by selling the prospect on the firm, its history, and services. Some even go on to describe their offices, including square footage. What counts in the proposal is its ability to communicate to the prospect that the CPA has absorbed its immediate needs and the firm will help to resolve these needs according to a logical approach. Therefore benefits and solutions need to be stressed as opposed to procedure, details, and firm directed methodologies.

Executive Summary. The proposal should start with an executive summary section providing an overview, including key issues and opportunities. This section should contain relevant facts and figures learned during the information gathering phase and in the initial meeting. It should state the firm's unique qualifications to satisfy the client's needs.

Situation. The proposal should detail key issues facing the prospect company, as well as secondary concerns. Where possible, it should quantify the impact of each issue on the organization. The proposal should demonstrate the firm's capabilities to resolve each point, and draw upon past client achievements whenever possible.

Deliverables. Include a deliverables section, listing exactly what the prospect will be getting. This often serves to reinforce the need for the engagement and provides a succinct list that serves to guide the project along. This section also diffuses any misunderstandings about what was promised.

Budgets. The fee must be clearly stated as well as the firm's policy on related charges, expenses, and billing practices. A time line should be drawn showing deliverables against projected dates.

Firm Capabilities. The firm's uniqueness to handle the prospect's needs should be shown. The firm's expertise, people, and experience should be packaged and offered. This section may touch on case histories and expertise of the project team. It should provide prospects with more general information about the firm and its

Second Meeting

The focus of this working session is to reinforce relationships. The proposal should be reviewed with comments considered. If possible, review your proposal in person as part of the process. This is another opportunity to exhibit to the prospect how you work and represents a certain commitment on the prospect's part. It allows you to tweak your proposal and confirm or moderate your thinking. It is at this point that you should have a well defined idea of the prospect's intent. Hopefully this may mean some additional communications and another meeting, or the preparation of an engagement
letter. *

Robert Shapiro, CPA is president of Robert Shapiro & Associates, a marketing company for professional service firms.

Michael Goldstein, CPA
The CPA Journal

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