W HAT S HOULD Y OU B E D OING WITH Y OUR B AND C C LIENTS

1. WHAT SHOULD YOU BE DOINGWITH YOUR B AND C CLIENTS PRESENTED BY SAM M. ALLRED, DIRECTORAT UPSTREAM ACADEMY

2. Too many firm leaders struggle to understand and implement an effective strategy to upgrade their client base every single year. The primary focus of this management presentation is how to strategically deal with the lion’s share of your clients – B and C level clients. 2

3. PRESENTATION ROADMAP • Understanding the concept of client upgrading • Strategies for B and C clients • Questions and answers Email questions tosama@upstreamacademy.com

4.  UNDERSTANDINGTHE CONCEPTOF CLIENT UPGRADING

5. While there are many excellent strategies for building a profitable accounting practice, few things will help more than choosing and retaining the right clients. When all is said and done, the foundation of a highly profitable practice is selecting great clients and giving them exceptional service.

6. “Along with your human capital, your client selection and retention criteria are the most important aspect of crafting your firm’s success.” Ron Baker

7. Your firm can be no better than its clients allow it to be. “It’s axiomatic: You’re as good – or as bad – as the character of your Client List. In a very real sense, you are your Client List.” Tom Peters

8. In too many firms, the primary client management strategy appears to be: Get and keep as many clients as we can. Firm members respond to nearly every RFP, pursue every lead, and court every prospect. Too often firms act as if there is only one decision maker – the prospective client.

9. You need to ask the question: Where will this strategy lead? If you have too many of the wrong clients your best clients remain underserved and retaining them becomes more difficult than it needs to be. Also, what are the benefits of bringing more D-level clients into the firm?

10. How important is due diligence in the client acceptance process? Two stories to consider.

11. PERFORMANCE FACTORS • One way to rate clients (and potential clients) is to use the following performance categories: • Reputation • 2. Quality of Professional Staff • 3. Nature of Relationship • 4. Quality of Services • 5. Treatment of Firm Staff • 6. Fees and Payment

12. PERFORMANCE FACTORS By assigning points from each of the performance areas from 1-10, you can then determine a level. 42 or above: A-level client 34 – 41: B-level client 25 – 33: C-level client Below 25: D-level client

13. Firms that take the time to rate their clients will find the resulting list of clients in each group produces an almost perfect bell curve with the majority of clients falling into the B and C categories.

14. D-level clients C-level clients B-level clients A-level clients

15. The goal of client upgrading is simple – finish every year with a better mix of clients than you had at the beginning of the year. If your firm takes this client management strategy seriously, each year you’ll consistently skew the client bell curve farther to the right and you’ll have more A and B clients and fewer D clients.

16. D-level clients C-level clients B-level clients A-level clients

17. One result of rating your clients and entering that rating in your practice management system is accurate reports every year to help you refine your client upgrade strategy. You can accurately measure the number of clients, number of charge hours, and production in each rating group every year.

18. GOALSWITH A-LEVEL CLIENTS • Provide outstanding service • Be a proactive, trusted advisor • Schedule your best people to service these clients • Execute a WOW plan that turns these clients into raving fans • Build strong loyalty • Obtain quality referrals 18

19. GOALSWITH D-LEVEL CLIENTS • Minimize your risk in serving these clients • Find others who can serve as a safe landing for these clients • Develop a plan to remove these clients from the firm over a three year period • Schedule a face-to-face meeting to implement the removal plan • Be accountable for following the process

20. Please consider this thought: Those firms/individuals who have taken the time and effort both to rate their clients and to ultimately remove D clients have improved their ability to effectively screen prospective clients as a direct result.

21.  STRATEGIESFOR B AND C CLIENTS

22. Let’s focus now on the lion’s share of your clients – those that are either C or B level clients. We will first focus on your C clients and discuss what your best strategy should be for these clients. This strategy is pretty straight forward.

23. CHARACTERISTICSOF C-LEVEL CLIENTS • Have limited growth potential • Are relatively low risk • Can’t afford premium rates/services • Are unwilling (perhaps unable) to pay for a trusted advisor relationship • Require repetitive services year after year

24. BEST STRATEGYFOR C LEVEL CLIENTS The goal with C level clients is simple – transfer the majority of these client relationships to those below the partner level over the next two years. Set a specific goal and be disciplined and accountable as you progress towards that goal.

25. BENEFITSOF TRANSFERRING C CLIENTS • Realization improves without partner rates • The firm can provide more face time with clients • Those managing the client relationships get more experience and growth opportunities • Partners are able to spend more time with A and B clients

26. The strategy with your B level clients is a little more involved than what we have just discussed with your C level clients. We will first discuss the general characteristics of your B level clients and then discuss your strategy in dealing with them.

27. CHARACTERISTICSOF B-LEVEL CLIENTS • Have between 60% and 80% of A level client characteristics • Have the most potential to convert to A level clients • Are good places to work and have the ability to attract quality people

28. BEST STRATEGYFOR B LEVEL CLIENTS The strategy with B level clients is two fold: 1) retain them through quality service and 2) turn as many as possible into A level clients. The term “mining your client base” applies in great measure primarily to your A and B level clients.

29. CONVERSION STEPSFOR B LEVEL CLIENTS Identify leaders to assist with the conversion Evaluate B clients and identify those with the greatest potential to become A clients Go on a fact-finding mission and develop an individualized plan for each client Schedule face-to-face meeting with clients Monitor your progress

30. 1. IDENTIFY LEADERSTO ASSIST Not every partner or manager is passionate about and skilled in converting B clients to A clients. Find those who have the passion and ability to initiate open and honest dialogues with clients about the benefits of change. Those chosen should have the ability to be (or become) trusted advisors.

31. 2. EVALUATE LIKELY CLIENT CANDIDATES Identify any characteristics, attitudes, habits, etc. that contribute to the client being classified as B level (rather than A level). These might include: • lack of planning, focus, or leadership • too much time spent in Quadrant I • complaints about invoices • challenging interactions with firm staff • size

32. Evaluate whether your actions in servicing these clients have caused them to be rated as B clients. • Are you underserving them? • Have you introduced other team members? • Have you functioned more as a trusted historian than a trusted advisor?

33. ARE THEY READYFOR AN UPGRADE? • B clients who may be ready for an upgrade: • Have solid growth potential • Exhibit a high potential to use other firm services • Would be able to pay for a trusted advisor relationship

34. Watch for indicators a client may be ready for change: • retirement/resignation of key personnel • planned business expansion • acknowledgement of need for improvement • demonstrated ability to make course corrections

35. 3. DEVELOP INDIVIDUALIZED PLANS Go on a fact finding mission and identify barriers keeping a particular client from becoming an A client. Develop an individualized plan for each client. Identify specific things to be done by the firm and by the client.

36. OUTLINETHE BENEFITS To secure buy-in from clients, help them get excited about the opportunities by identifying potential benefits. These might include: • A team approach • Firm presence at client strategic meetings • More strategic approach to their financial planning

37. OUTLINETHE BENEFITS • Proactive contact with them throughout the year • Unconditional guarantee on all work (they don’t have to pay, if they don’t see an exceptional level of service) • Priority given to their work because they are marked as A level in your system

38. 4. SCHEDULE MEETINGSWITHCLIENTS Hallmarks of a successful meeting: • all participants recognize the benefits to be gained from a deeper relationship • participants on both sides are committed to change and are not easily offended • communication is direct, open and honest

39. more than two people from the firm are involved • a list of expectations on both sides is developed during the meeting • an annual review of services and service is scheduled

40. 5. MONITOR PROGRESS Utilize checkpoints, mileposts, deadlines, etc. to mark progress. Recognize that progress is about change for both the client and the firm. Remember that relationships are built over time and require work.

41. QUESTIONSAND ANSWERSEmail questions tosama@upstreamacademy.com

42. UPCOMING EVENTS MANAGEMENT PRESENTATIONS How to Create an Annuity in a Consulting Practice November 6 & November 17, 2015 BESTPRACTICES CONFERENCE Grapevine, TX October 21-22, 2015 LAUNCH OF HIGH PERFORMANCE FIRM GROUP Chicago, IL October 29-30, 2015 42

43. Thank You! sama@upstreamacademy.com