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Accountants have been warned of a ‘self-fulfilling prophecy’ when catering to the needs of referred clients who may not be an ideal fit for their firms.
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Referrals can ‘escalate accountants downwards’
23 November 2015
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11 minute read
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Nic Gadaleta, director at Practice Advantage, an online marketing and sales tools provider for accountants, has detailed the mistakes many firms are making when employing a referral process within their firm.
“There’s nothing wrong with having a referral program, but it’s no good setting out a program which basically says, you send us a client and we’ll give you a dinner or a couple of movie tickets,” Mr Gadaleta said.
“There has to be some connection in terms of ‘we’re trying to grow our firm’,” he added.
According to Mr Gadaleta, it is vital that firms inform their existing client base of the types of clients they wish to receive via referrals, in order to avoid clients who are not an ideal fit with the services on offer.
“[They need to say] these are the kinds of services that we represent, these are the sorts of clients we want, and they need to be quite clear in terms of the clients that we’re looking for,” he said.
One of the most common mistakes that firms make in their referral process, Mr Gadaleta notes, is a lowering of their fees in order to keep their existing client base happy, particularly those that have sent them referral business.
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“Accounting firms drop their fees to make sure that they make their client happy because it was referred to them by another client, and therefore it is a self-fulfilling prophecy in terms of it escalates them downwards instead of saying these are the sorts of clients we want to have."
“Lowering fees just to win business is a poor strategy,” said Martin Pike, director of business development and marketing at Verve Group.
“Successful marketing is based on building a relationship of profit between the firm and its clients – both parties have to profit from working together,” he said.
According to Mr Pike, a failed relationship is very detrimental to the firm in terms of costs to replace the client, coupled with a sense of letting down the referring party.
“If the client is pushing on price, then the function of marketing has failed to communicate value for the fee requested,” Mr Pike said.
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