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Many tax and accounting firms tend to be interested in how other firms advertise and promote themselves to the public.

They see the “greener pastures” in their competition’s advertising and they have a tendency to want to follow in their promotional footsteps.

Now, if the other tax or advisory business really is promoting and advertising in a way that is truly effective, by all means take a hard look at what they are doing. But in most cases, the “greener pasture phenomenon” is what’s actually going on; meaning, you just think the other business owner’s EXTERNAL advertising is probably the better way to go, so you give it a try.

This is NOT the best approach to building your marketing plan.

Why do we say that?

Because you are neglecting one of the greatest assets you are already sitting on.

You see, one of the greatest marketing secrets of all time is to tap into the un-mined gold which exists within your existing client list.

There are acres of diamonds in EVERY tax or accounting firm database right now. And the quicker you get this through your head and understand the potential profit sitting at your fingertips, the better. (You’ve likely neglected to mine this profit center in the past. Now we want to help you SEE with fresh eyes the riches within all of the information that is quite literally at your fingertips.)

Jay Abraham (a famous marketing consultant) has made a very nice living over the years consulting almost exclusively within this niche area. He hosts large seminars (at $25,000 a seat) diving into the “acres of diamonds” approach. And his primary theme is leveraging the most under-valued, neglected asset of each company in the room –their client lists. (Business owners are happy to pay the $25,000 because once they understand what they’ve been missing — they earn a return on their investment.)

You don’t need to go to this “high priced” seminar to learn this. We’re going to teach you almost everything you need to know right now on this page.

What is getting a new client worth to you? This is perhaps the most important question you should work on. You see, the firm who is able (and willing) to spend the most amount of dollars to acquire a client — because they have an accurate picture of the lifetime value of their client — THIS is the firm that will succeed while others flounder.

So, back to the question at hand — because the mindset here is what we want to first address.

Would you spend $5 to acquire a client? $30? Suppose you are averaging about $450 per client in the first year, and you have a guy on the street come up to you and say, “I’ll bring you five new clients a day for 30 days if you give me $400 for each of them.”

Many tax and accounting firms are unwilling to make that trade. And it is to their detriment. They are unwilling for a variety of reasons: greed, ignorance, shortsightedness and more.

The bigger issue is understanding what one particular client is worth to you over the lifetime he or she does business with your firm.

With this information, you can estimate the revenue he or she will generate over the next five or 10 years.

Here’s a simple formula:

Now let’s go back to the example of the man on the street. It’s the next tax season and you now have a better understanding of your clients’ lifetime value. Let’s say he comes up to you and says: “I can bring you 10 new clients per day for a month, are you interested in giving me $450 for each of them?” (Your fees staying the same.)

Knowing what you know now, would you sacrifice some (or maybe all) of this year’s tax season profits and put it towards bankrolling 300 new clients into your business?

How you answer this question will determine how you market your firm.

Now, let’s move on to INCREASING the value of your clients.

Here’s the first (easiest) place to start…

Definition of a Referral: Those clients that do business with you as a result of the satisfaction of previous clients. They can be first, second, third or more generation. (They may come from someone who told someone, who told someone … etc.)

Purpose of Referrals: To increase your business without the cost of marketing or advertising. (Or increase client acquisition at a much lower cost than normal external advertising means.)

There is no better new client that will come into your firm than one referred by a happy client. The referred client comes into your office with less price resistance, less skepticism and overall is a more receptive client. (By the way, if you do a good job, they tend to refer even more of THEIR friends, co-workers etc.)

This is the simplest-to-implement formula to use referrals to increase your ongoing tax business:

If you are good at what you do (and you should be) you will naturally “earn” more business because your clients WILL talk positively about you. By taking care of your clients you will EARN the right to move to the next part of the formula.

Yes, if you are good (hopefully you’re GREAT at preparing taxes or managing books — and making your clients feel taken care of), then you should have no problem ASKING for referrals.

Many people get hung up on this point. It may be a self-esteem issue, but if you want to build your firm properly, you’re going to have to do what it takes to look in the mirror and get this resolved.

Finally, you REWARD (or “recognize”). If you have gone this far to EARN your client’s approval and you’ve be bold enough to ASK for referrals, then you should finish the race by REWARDING your clients for doing what you asked them to do in the first place.

We have resources aplenty for this type of ask and reward method in our free members area. Access those free templates and how-to’s at the green “Get Started Now” button.

Here’s a quick story that illustrates how your clients will respond to being rewarded for their “good behavior.”

A man rows his little boat out to the middle of a lake for a relaxing day of fishing. Up over the side of the boat comes a huge green snake with a half-swallowed frog sticking out of his mouth. Feeling for the frog, the fisherman whacks the snake with the oar; the snake spits out the frog; and the frog’s life is spared — and that makes the man feel good. But he also knows he has just deprived the snake of his mid-day meal — and that makes him feel bad. Having no food for him, he gives the snake a swig out of his bottle of refreshment, and the snake swims away happy. Two minutes later the snake swims back with two frogs in his mouth.

You’d be surprised what your clients will do when you offer them a little reward or recognition.

How to use the “EAR Formula” specifically to increase your sales

Let’s start off with EARN first. How can you be so good at offering tax services that you “earn” word of mouth business? (This may be one of your “ultimate secret marketing” weapons.)

The answer is simple, but hard to implement on a consistent basis. The simple answer is EXCELLENCE. Your office should ooze with the “smell” of excellent service.

Employees are smiling, enjoying the “fast pace” of all the business. Clients are getting taken care of fast and efficiently. (You can just look at them and tell they are happy.) The phone is being answered properly and new clients are being “sold” with every other ring. It’s an excellent environment to be in.

If you can get an “environment of excellence” 85% to 90% of the time, you’re way ahead of the game. We’re all human and we all make mistakes. And this is somewhat inevitable. An employee doesn’t show up for a shift, you get two “problem” clients in a row and your attitude is temporarily bruised and at the same time a computer breaks down.

Again, that’s life. Roll with it and chalk it up to the 10% or 15% you just can’t control.

What you CAN control should be the excellence of your internal systems. For the purposes of our article here, we will assume that you have this covered. (But understand — your excellence *is* a marketing strategy, albeit an indirect one.)

Why so many times? (Well, why not?)

Here’s an example from a hugely-successful tax firm, in which our CEO, Nate Hagerty directed the marketing:

“Our clients would get TWO letters in the beginning of tax season (whether they had come in already or not.) They were both mainly ‘referral pitches’ asking existing clients to tell their friends about us.

“When clients came into our lobby during tax season, we had brochures and fliers promoting our ‘Refer-A-Friend’ plan. When a tax preparer took a client back and sat down with them to prepare their return on the computer, an ‘inquiry’ (or soft sell) is made talking about the referral program. When the client’s return was completed, he or she was given a brochure or flier (with referral slips to give to their friends) as they were leaving. When they would come back to pick up their refund check or to get the copies of their completed return, we gave them more referral slips and our staff was trained to re-emphasize the program.

“(We even gave Free Gifts to our clients as a good will gesture to help stimulate more word of mouth.)

“Finally, after the process was complete with a client, we would send letters thanking clients for their business and ASKING for referrals AGAIN. If they had already referred someone, we gave them their reward and thanked them some more.”

This entire process is called a referral “funnel”, and it’s critical if you want to maximize the potential value of your clientele.

And, while all of the steps from the above example were completed via direct mail, this process is even more simple to automate and execute through effective email marketing.

Note:
We manage this kind of automated system of email marketing for our clients. Learn more in one of our complimentary Leadflow Acceleration Sessions.

Here’s another story from a tax professional associate of ours:
“A few years back, I had a client come up to me in the lobby of our office and stop me and say, ‘Do you see all of these people in here, I told them to come down and see you guys.’ (I looked around and about 12 people in the room nodded their heads, motioning this was true.) I thanked him for saying nice things about us and I went on my way.

“About two days later I saw the same guy in our lobby. I asked him how he was doing and if he was still having his taxes prepared. He said no, but he was just at the office again showing some of his neighbors how to find the place. He then proceeded to call them out by name, pointing to each one. That day there were seven more people waiting in the lobby he had brought to our office and he said three more were coming down later after work.

“This guy was singlehandedly filling up our waiting room what seemed like every day. Over the next two weeks this one client brought us 34 new clients.

“Looking back on it now, if I had half a brain right at that moment, I should have taken him back to the office, handed him either a $50 or a $100 bill and looked him in the eyes thanking him with sincere appreciation.”

We know you have clients in your database like this. You just have to feel more incentive to find them. (The good ones aren’t looking for incentive in the first place. But when you provide it, they get even more excited to refer.)

One tax business owner in our clientele told us he had one person send him seventy-plus new clients in one tax season. (That’s one client referring over 70 new people.)

When you find your champions, cross their palms with gold and silver just like you would a king.

Finally, we come to cross-selling additional services.

Whether this be tax planning, insurance, financial planning, or other services, you must have at the top of your consciousness what are the main services your tax business provides that puts food on your table. If you are not clear about what your main services are, this will cause multiple problems.

Not only will you NOT be able to adequately target the right market for your services, but your message to them will not match properly because of the uncertainty in your own mind.

We see some tax and accounting firms trying to make extra money in the business by offering other simple services on the side. They offer copying and fax services, package and shipping services and even notary services. They end up spending 40% of their time for net profits at the end of the year, equaling less than 5%.

→ Your cross-sold services should be MORE lucrative than simple tax preparation, not less. ←

This is a TIME allocation problem and should be reevaluated. You think you are making more money because your gross sales have increased. But you are not looking at the bottom line. Your annual net profit could be increased if you dumped those services and used that same time learning how to market your existing bread and butter services more effectively. Eliminate your time wasters and start weighing the opportunity cost of not providing these other services that you are missing out on.

Conversely, many tax professionals are NOT leveraging higher-dollar activities and services that their clients would be very glad to have them handle.

One of the great advantages to marketing tax preparation services is that IRS Circulars provide a much broader framework for marketing than do FINRA regulations or other guidelines that control the marketing of financial service or insurance products. So you can more easily build a firm whose primary marketing “engine” is tax preparation services, but whose most profitable services are ancillary to tax preparation.

So how do you do this?

Look at your client information files from the most recent tax season and “mine” it. Your client tax returns are now a rich vein of information for you. Get a clear picture of your average client demographics. Even better, identify your BEST clients (whether be it revenue or efficiency considerations), and create a profile of them. This will help you adjust your positioning to gather even more of them.

Next, evaluate what services you should be providing, based on need (or desire!). Again, the return information will greatly help you here. Section 7216 specifically allows for such data mining, as long as it’s for internal (research) purposes. Do you have a lot of clients nearing retirement? Then consider adding some sort of tax-planning package for soon-to-be retirees. Clients with kids nearing college? Investigate offering college financial planning services. Business owner clients? Make sure they are set up with a succession plan. Etc. Etc.

From tax debt resolution, to referral-based business valuation arrangements, there are countless opportunities for a tax firm to create a client value optimization “funnel” whereby each client becomes vastly more valuable … and you are able to outspend your competitors in marketing and business acquisition because the back-end of your business is much more than simple tax preparation.

The point is that you have a HUGE advantage over other service businesses, in that you have so much real info at your fingertips.

Use it.

And one of the BEST ways to create this kind of funnel in your business is through the power of segmented, automatic email marketing. Even better, these processes can be set up completely for you, and all you have to do is try it out …