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Nov 1992

How to have happy clients. (The CPA Manager)

by Cottle, David

    Abstract- Management of client relationships can be broken down into three essential components: management of the clients, management of tangibles and management of the CPA firm's own people. In managing clients, key considerations include making realistic promises, anticipating clients' anticipation, educating clients and their advisors, and maintaining communications. In managing tangibles, accounting firms attempt to influence the client's opinions through the tangible representative of their service, including business cards, financial statements and tax returns. In managing people, CPA firms should focus on fostering a client-centered culture. Efforts should be made to establish quality standards, train personnel in providing quality service, track quality of performance, collect feedback from clients and reward excellence.

There are three key aspects to managing your client relationships: 1) manage the clients; 2) manage the tangibles; and 3) manage your people.

Manage the Clients

An important factor in increasing your chances for a client-relations win is to help the client form realistic expectations of the nature of the service you will perform, the events they will experience, and the outcome you will achieve. The following are a few ways to exercise a little more control over new clients' expectations, as well as those of old clients.

Don't Over Promise or Oversell.

Theodore Levitt in The Marketing Imagination stated, "If you promise the moon, it is reasonable for customers to expect it." Making idealistic promises may get you more business initially, but they raise unrealistic expectations and unbalance the service/quality equation. Do you remember Holiday Inn's "no surprises" advertising campaign of 1986? It promised, "The best surprise is no surprise." They dropped it because it raised unrealistic expectations that the company could not deliver. CPAs who over-promise and underdeliver create client disappointment resulting in a loss of current business and future referrals.

For a CPA, it is better to exceed client expectations than to let clients down. Be careful what you say to clients when explaining what you hope to accomplish. Don't promise the client more than you and your organization can deliver.

The Secret Of His Success. One successful practitioner shared the simple secret of his success: "Get the clients' reports to them at least one day before they expect them." If he can deliver the report to the client by the 17th of the month, he promises it for the 19th. Then, even if he runs into trouble, he delivers it on the 18th and still exceeds the client's expectations.

Beware Of The Extremist Client.

There are two kinds of extremist clients: those who think you can do no wrong, and those who are prone to blame you for everything wrong. Either way, you're likely to lose when you deal with them. The hallmark of extremist clients is abdication of their responsibility to cooperate with you to ensure the successful outcome of your professional efforts.

The first kind of extremist clients has an almost messianic faith in you. They have unrealistic expectations of what you can accomplish. They know that you are not going to let them down even when your prognosis is not good. The client flatters your ego. You think: "They really have confidence in me." You are being set up for a fall, because the client's expectations are usually unrealistically high. The following are a few warning signs:

* They are unsophisticated regarding the profession and the expectation gap is obvious;

* They think you are a genius; and

* They think computers or some other technology will provide a quick fix to their problems.

The other kind of extremist clients will not be satisfied no matter what you do. Named after Oscar the Grouch of Sesame Street, they complain about everything. The following are a few identifying marks:

* They had unrealistic expectations of their former accountants;

* They change accountants frequently;

* They bad-mouth their former accountant unnecessarily;

* They are unreasonably demanding;

* They are chronic complainers; and

* They tend to procrastinate, provide fragmented information, or incomplete data, and still expect you to achieve a good result.

You may be able to educate Pollyannas and bring them down to earth, but there is not much you can do with Oscars except refer them to your worst enemy.

Play Offense, Not Defense. A key to having a happy client is to anticipate a client's expectations. As soon as you know about, or anticipate a difficulty, take the initiative and call your client. Don't wait for the client to call you. For example, when a job will be delayed, when the cost is more than you originally estimated, or when you or your staff made a mistake that may annoy the client, don't wait for the client to call you. If you wait, you'll have an uphill battle. When things do go wrong, apologize and take responsibility. It's better to take the pressure than to keep clients in the dark, give them an unpleasant surprise, and perhaps lose them. Make it clear how you will respond and what the client can expect.

Educate The Client And The Client's Advisors. Knowledgeable clients make better decisions, provide better input, and ultimately gain greater satisfaction. Educate clients how to use your services most effectively and what to expect; explain the underlying reason for policies or procedures that could frustrate them. Play offense, not defense.

Stay In Touch. Nothing is worse to a client than waiting and wondering. Often, a CPA may accept an assignment from a client and go charging off to slay the dragon. Considerable time may elapse until the CPA is able to come back with the dragon's head. In the meantime, the client sits around worrying about what is happening. Stay in touch.

Whenever you reach a critical decision point on an assignment, call the client, lay out the alternatives, make a recommendation, then ask for the client's opinion and instructions. Ninety-nine percent of the time, he or she will tell you to do what you were going to do anyway. When you maintain communications, clients are not surprised by what you did and they are informed as to what you will be doing for them. If you don't need a critical decision from them, call them periodically just to let them know the status of your present assignment. Every conversation should end with two comments: Ask if there's anything else he or she wants you to do, and tell your client when you will call next. Some clients may not want to hear from you so often. Find out your clients' preferences and respond accordingly.

Following are some other ways to stay in touch with your clients:

* Follow up client meetings with a brief letter or memo summarizing the discussion and any decisions;

* Find out your client's real deadlines and meet them or beat them; and

* Send your client copies of all correspondence with third parties.

When Bad News Is Not So Bad. The way that clients react to bad news depends to a large degree on how you tell them. Don't turn clients off by being negative or by dumping the bad news on them without some form of preamble. For example, if your fee is going to be more than expected, begin by explaining the facts upon which you and the client based the original estimate. Show how those assumptions aren't going to work out (hopefully through no fault of yours) and the effect on the estimate. Be sure to get his or her consent before proceeding.

By communicating with clients, educating them, and managing their expectations, you will serve them in a way that will get you increased client loyalty.

Manage The Tangibles

Managing the tangibles is closely related to managing client expectations. While managing expectations increases chances that a client will have realistic expectations before you render a service, managing the tangibles is concerned with shaping client opinions during and after rendering services.

Tangibles include--

* Your Souvenirs. Because clients cannot hold your services in their hands like a manufactured product, they tend to pay attention to the tangible representations of your service as clues to your service quality. Your souvenirs include any reports, tax returns, and financial statements. To clients, the quality of the souvenir may indicate the quality of the service. It may represent to the client that for which he or she has spent his or her hard-earned dollars.

* Your Ambassadors. You have numerous ambassadors representing you. These are the other people in your firm, your client newsletters, brochures, announcements, business cards, facilities, equipment, etc.

Clients ask themselves, "Do these people look like quality, do they have a quality office, do they use the latest technology, and do they produce a product with a high-quality look?" Your clients may not be able to tell how well you audit or do tax research. Their evaluation of the appearance of your report and the performance of your personnel serve as surrogates for your technical performance.

Think of other firms that have really impressed you. How do your ambassadors and souvenirs compare with theirs? Could you learn anything from them?

Manage the People

Superior service quality on a sustained basis requires that quality becomes embedded in a firm's culture. And building a client-centered culture for quality service requires leadership at the top--from the partners.

Develop A Quality Culture. To develop a company culture devoted to client-centered, quality service, you must:

* Establish quality standards;

* Hire personnel with the capacity to meet those standards;

* Train personnel to meet the established quality standards;

* Monitor the quality of performance so that partner and employee compensation are related to achieving the quality standards; and

* Reward outstanding performance.

Establish Quality Standards. Commitment to quality must pervade the firm. It starts at the top but cannot end there. In reviewing published case histories of companies known for high quality service, there is one constant--the pervasiveness of quality consciousness in these companies.

Hire Personnel With The Capacity To Meet Those Standards. Clients interact with personnel other than just partners. Client-contact personnel include telephone operators, receptionists, secretaries, and even file clerks. Frequently, these are among the poorest trained employees of the firm.

If a line worker in a manufacturing plant has difficulty communicating or is poorly dressed, the company's customers won't know about it. However, with professional services, many types of employees come into some sort of contact with the client. Therefore, employees' language skills and dress are part of the client's impression of the quality of the firm.

Train Personnel To Meet Quality Standards. Development of knowledge and skills is a process, not an event. Regular training throughout your organization should be ongoing. Machine-produced products have a high degree of uniformity. But professional services have a high personal labor content and can have a high variability each time they are performed. To create a higher, more-uniform level of quality performance, you should provide meaningful performance standards so your people will know what you mean by quality. For example, standard turnaround times should be established for:

* Returning telephone calls; * Processing correspondence; * Reviewing reports; and * Delivering tax returns.

What quality standards presently exist in your firm? What changes, if any, should you make to those quality standards? What new quality standards should you adopt? Do you check for small signs of courtesy? How many rings does it take to answer the telephone? How often are your telephone lines busy? How long are clients placed on hold? Is your receptionist courteous? What is the "thank you" score among all personnel in your office?

Track a routine client transaction, e.g., a tax return, from start to finish. List every time the client comes in contact with your personnel and who the personnel are. Cover all the functions: telephone operator, receptionist, delivery, etc. Are you actively managing all these contacts? What additional management do you need? How are you training your technical and support personnel to meet your existing quality standards? How should you train your technical and support personnel to meet any changed or new quality standards?

Monitor The Quality Of Performance. When managing the people, this is the most difficult task of all. It involves measuring client satisfaction, much of which is subjective. Develop the means for measuring performance and keep score on each person--including partners.

How do you currently monitor the quality of performance? Have you contemplated any kind of a feedback program? Consider a perception survey of clients and referral sources? Monitor employee attitudes. Ask for comments on their understanding as to the biggest problems you face in trying to deliver quality service. Also, if they were managing partner and could make only one change to improve quality, what would it be?

Track client perceptions. An annual survey of both clients and referral sources can help you evaluate how well you are doing.

Reward Outstanding Performance. To reward outstanding performance, you must have measurable standards. Your reward system should be timely, meaningful, accurate, simple, and fair. It should anticipate meeting established standards and rewarding exceptional people. Rewards can be financial recognition, and/or career advancement. There should be no limit on the number of persons who can be rewarded. Anyone who meets the reward standards should get the prize.

Ask For Help

If you don't know how to measure the performance of clerical or support personnel, for example receptionists or telephone operators, why not ask them to help you in setting the standards? Don't omit them from your performance standards just because their work appears difficult to measure. Remember they have contact with your clients and your organization is being evaluated in part by their performance.

If you want to have happy clients--MANAGE.

David W. Cottle, CPA, is a consultant to professional firms in marketing and client service improvement, profitability, partner compensation, and management.

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