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1. ADP LUNCH & LEARN CPE PROGRAM“Understanding Client Behavior: What You Need to Know ”Based on a program by: John Burnett, Prof. of Marketing, Univ. of DenverAdapted for CPE accreditation by SmartPros Ltd. (www.smartpros.com) Powered by: V.1109a The ADP Logo is a registered trademark of ADP of North America, Inc.

2. Following today’s presentation: • Review of Program Reference Material • Completion of Course on www.accountant.adp.com • Print CPE Certificate Overview • Segment Overview: Today we are going to discuss how and why potential clients would use your services. • The discussion is broken down into four areas: • Client Behavior and Exchange • Relational Marketing • Client Behavior as Problem Solving • Six Steps in the Decision Process

3. Objectives • Course Objectives: Upon successful completion of this segment, participants should be able to: • Describe how clients and service providers assess relative trade-offs in the marketplace. • Understand what factors influence clients in the decision process.

4. I. Client Behavior and Exchange • Professional Services • Do you think you can create a "need“ for your services? • How do you identify who needs/wants your services? - concentrate on a specific population - understand your target market - get to know “them” • Determine who makes purchasing decision • Is the individual acting on behalf of: • Self • Organization Customer = Consumer = Client

5. I. Client Behavior and Exchange, Continued • Market Exchange • Relationship between service provider and potential client Allows both parties to: - Assess relative trade-offs they must make to satisfy needs and wants • Service providers often have formal • Policies • Objectives (Example: Accountant may only engage in exchanges when profit margin is 10% or higher) • Clients may have personal policies and objectives • May not be formalized • May not understand what prompts them to behave in a particular manner

6. I. Client Behavior and Exchange, Continued • The Marketplace • Clients control the marketplace because they have: • a. Free choice • b. Competitive offerings to choose from • Marketplace consists of potential clients with • a. Needs • b. Wants • c. Purchasing power to satisfy needs and wants • Key Questions • How do potential clients make purchase decisions? • What factors influence clients in the decision process? Understanding how clients arrive at these decisions allows you to build an attractive offering.

7. II. Relational Marketing • The Nature of How You View Potential Clients Must Change • Modern technology is transforming choice • Choice is transforming the marketplace This new technological push is programmability. Programmability Allows Accountants to Offer • More variety • More choices Accountants and clients can design and implement the “program” that will yield the prescribed product, service or variety that best suits their needs. • Implications of Programmability • Clients have many choices • Choice is often made on the basis of loyalty • Loyalty is created from strong relationships Technology has created the promise of “anything, anyway, anytime.”

8. II. Relational Marketing, Continued • Accountants Must Build Relationships With • 1. Clients • 2. Referral sources • 3. Software providers and other suppliers • 4. People with influence • 5. Members of financial community • Accountants Must Learn Their Customers' • 1. Beliefs • 2. Interests • 3. Attitudes • 4. Self-images • Misreading these characteristics may cause • mistaken assumptions that will result in the loss of the sale.

9. III. Client Behavior as Problem Solving • Client behavior can be the combination of efforts and results related to the client's need to solve problems. • Client Problem Solving • Triggered by identification of an unmet "need" • Physical • Psychological • Solved by understanding the criteria of how you "want" to fulfill that need • Successful Marketing Is Based on: • Creating wants • Satisfying needs • * Although the difference is a subtle one, there is some • benefit in distinguishing between a client's needs and wants.

10. III. Client Behavior as Problem Solving, Continued • Client Decision Making Can Be: • Complex or Simple • Complex • First-time purchase of product • High-priced, long-lasting or infrequently purchased services Example: Life Insurance • Simple • Repeat purchases • Routine products and services Example: Personal tax return with few changes each year • Simple Decision Making Becomes Complex with Change in: • 1. Price • 2. Product or service • 3. Quality

11. IV. Six Steps in the Decision Process • Need Identification • Information Search and Processing • Identification and Evaluation of Alternatives • Product/Service/Outlet Selection • Purchase • Post-Purchase Behavior

12. IV. Step 1: Need Identification • The process starts when an unsatisfied need or motive creates tension. Identification of Unsatisfied Need • 1.Internal: Anxiety, perhaps from experiencing a problem • 2. External: Seeing an advertisement • Unsatisfied Need Recognition • 1. Creates recognition of the need • 2. Requires the need to be defined • Need is Resolved Depending on: • 1. Magnitude of discrepancy between “Have” & “Need” • Ex: I “have to have” a new Cadillac. I “need” a new car. • 2. Importance of the problem • * Need recognition process is often a function of the type of information • we receive and how we perceive it. This is where a need becomes a want. • The above helps to determine: • Is it important enough to proceed to next step? • If not, will decision process be abandoned?

13. IV. Step 2: Information Search and Processing • The potential client may seek information to help identify and • evaluate alternative products, services, and outlets that will • meet the need. • Clients Receive Information from • 1. Family • 2. Friends • 3. Personal observation • 4. Competitors • 5. Better Business Bureau • 6. Advertising • 7. Mass media • Clients Rely on Information from • 1. Past favorable purchases • 2. Past unfavorable purchases • Past Favorable Purchases Lead to • 1. Brand loyalty • 2. Store loyalty • Example: Client will return to their accountant on an annual basis for tax preparation.

14. IV. Step 2: Information Search and Processing, Continued • Information Search Can Identify New Needs • Involves: • a. Physical • b. Mental activity • Requires: • a. Time • b. Energy • c. Money • Once the search is complete, how do they process the information? • Five Points to Consider for Information Processing • 1. Exposure to stimulation (receiving direct mail) • 2. Pay attention to stimulus (opening the direct mail) • 3. Perception of incoming signals (understanding the offering) • 4. Retention and storage of information (direct mail is appealing) • 5. Retrieval and application of information (responding to the call ofaction)

15. IV. Step 3: Identification and Evaluation of Alternatives • Identification of Alternatives Are Influenced by: • Time and money costs • Existing information • Downside risk • Predisposition to particular choice How do clients choose among competing services? • Evaluation of Alternatives Are Based on Attitudes • - What we know • - What we feel • - How we act • Change in Attitudes Can Lead to Change in Behavior • a. Situation/Service-specific

16. IV. Step 3: Identification and Evaluation of Alternatives, Continued • Service Providers Have Two Choices to Create a Potential Shift in Attitudes: • 1. Change client’s attitude to be consistent with your service • 2. Change service offering to match client’s attitude • Modifying a client’s attitude may be needed when introducing a new service. • Change in Attitudes • Can lead to change in behavior • - Situation/Service-specific • * Changing a client’s attitude can be difficult, • especially when there is a strong loyalty to • another brand or provider.

17. IV. The Final Steps in the Decision Process • Step 4: Product Service Selection and Outlet Selection Evaluation and Selection Phases are closely related. They choose you, they choose your services or They choose your services, they choose you • Step 5: The Purchase Decision • Determining Factors: • Amount of effort client is willing to put forth to evaluate your services • Which factors actually influence the purchase? (Did you satisfy their needs?) • What conditions would prohibit/delay the transition to your service? • Factors to influence purchase decision • - Advertising • - Personal Selling • - Referral Discounts

18. IV. The Final Steps in the Decision Process, Continued • Step 6: Post-Purchase Behavior • Feelings and Evaluations After the Purchase Are Significant • Sets the stage for continual business • Provides referral opportunities • Suggestions to Reduce Post-Purchase Anxiety • Personalized reinforcement • Strong customer service • Proactive communication • Note: While the decision process appears to be standardized, • no two people make a decision in exactly the same way. • Be sure to: • Uncover the needs of potential clients • Present solutions to meet those needs • Ensure their satisfaction with your service

19. Review of Today’s Segment • Summary: • Today's program covered • Client behavior and exchange • Relational marketing • Client behavior as problem solving • Six steps in the decision process • Key questions on buyer behavior: • How do potential buyers make purchase decision? • What factors influence buyers in decision process?

20. Discussion Questions • Why has it become important to understand client behavior? To what extent do you understand your clients' behavior? • Today's marketplace has become extremely competitive as a result of new technology and increased programmability. Many observers believe that clients now control the marketplace.

21. Discussion Questions • 2. The program differentiates between individuals who act on their own behalf versus individuals who act on behalf of an organization. To what extent does your practice appeal to one or the other? How does this affect your marketing? • Participant response based on your practice, your clients, and their orientation, as well as your own background, perspective and experience.

22. Discussion Questions • The program differentiates between simple decision making for routine or repeat purchases versus complex decision making for high-priced or infrequently purchased products and services. To what extent do your practice fall into one group or the other? How does this affect your marketing? • Participant response based on your practice, your clients, and their orientation, as well as your own background, perspective and experience.

23. Discussion Questions • 4. The program recommends actions that can reduce so-called "post-purchase anxiety." Why is this important? To what extent does your own practice engage in these actions? • The significance of post-purchase behavior is that it can affect "repeat" business as well as influence what clients tell others about your services.

24. Discussion Questions • To what extent has this program been helpful in terms of managing your own practice? Should we provide additional coverage on this topic in the future? • Participant response based on your practice your clients, and their orientation, as well as your own background, perspective and experience.

25. What Now? • Reference Handout Material for Additional Content Information • Review CPE Card • Complete Course by Taking Online Components Thank you