Culling Your Client Base of Low Realization Clients

When CPA firms are adopting a new growth model, it is important to eliminate low realization clients, establish client profitability guidelines, and focus the firm’s marketing initiatives and activities on high-quality targeted clients. As a first step, evaluate each current client to assess the appropriateness of the fees and engagement efficiency. Each should meet pre-determined minimum profitability thresholds. If any client does not produce the desired profitability, the fees should be increased. In no instance should fees remain below the minimum profit threshold.

Some clients may decide that the new fees are excessive and subsequently decide to engage a lower-cost firm. This potentially accomplishes three positive results: (1) allows for replacement of the lost engagements with more profitable work from new and existing quality clients; (2) increases profitability from remaining clients; and (3) allows partners more time and resources to market and pursue quality clients and referral sources.

The most successful CPA firms are selective about which new clients they accept and therefore, they might decline a significant amount of new business. Similarly, you should define your target clients based on your firm’s talents, resources, and specialties. Then you can develop a strategy to market services to these prospects.

Adopt a long-term, continuous marketing strategy that focuses on quality clients and terminating relationships with ‘C’ and ‘D’ clients. The result will be sufficient capacity to handle staffing and seasonal demands.  Marketing for quality, not quantity, may be one of the most important business decisions your firm will make to add value to your practice and ensure the firm’s long-term success.

Nancy A. Damato is the co-founder and President of Accountants Advisory Group and the Senior Consultant, Marketing & Business Development. Nancy has over 30 years of accounting firm marketing experience, including with two Big 4 firms, a large national firm and a medium-size regional firm.

Stacie Malgieri is a Digital Marketing and Social Media Consultant with Accountants Advisory Group, LLC and with The Growth Zone, ® Accountants Advisory Group’s marketing and lead generation program for the cannabis and hemp industries.

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