Your Clients May Not Be as Loyal to Your Firm as You Think

The best firm leaders know that they’re not really in the numbers business, they’re in the relationship business. 

INSIDE Public Accounting recently heard James Kane, a loyalty researcher and consultant, discuss ways business leaders can cultivate and maintain an unbreakable bond with their clients and staff. Kane blends the worlds of business, neuroscience and behavioral psychology to produce a presentation that made us realize that some of our assumptions about what makes people loyal were dead Customer-Loyalty-Satisfactionwrong. 

Intrigued, we wanted to learn more and to share his findings with attendees of the annual PRIME symposium, which is scheduled for Nov. 3 – 5 at the Conrad, Indianapolis.

To whet your appetite, we asked Kane to answer a few questions on loyalty.

Q: What’s the biggest mistake professional service firms make in trying to build loyalty?

A: There are two, really. The first is an expectation of most organizations and most people that they deserve the loyalty of their clients. They assume that “doing their job” they were hired to do should be enough to earn them the benefits of a truly loyal relationship and can’t understand – in fact, are often hurt, offended or angry – when those clients consider other options, question fees and contracts, bid out work that was once exclusive, or question the value they receive. Firms fail to understand that offering a great service and a fair price is exactly what their clients hired them to do. Meeting an expectation alone does not create loyalty.

The second mistake organizations make is thinking they can buy or manipulate someone’s loyalty. The word loyalty has been hijacked by marketers over the years and associated with sales gimmicks like rewards programs. The idea is that if I can offer you enough “stuff” or make you so dependent on the product or service I provide that you will be loyal. But that is like saying a hostage is loyal to their captor or an addict is loyal to their dealer. The behaviors may look similar to loyalty, but the outcomes are much different. When a hostage escapes or is set free, or when an addict gets sober, they don’t return to their captor or dealer. They don’t advocate for them, encourage others to get involved with them, forgive them for what they have done, or provide them with more opportunities. They get as far away as possible, say bad things about them, and wish the worst for them. 

Loyalty does not come from trying to manipulate or change the behaviors of others. It comes when you change your own. When an individual or organization is willing to learn and communicate the behaviors that cause other to be loyal, they can build nearly unbreakable relationships.

Q: How about internally? Does your staff need to be loyal to the organization before the firm can expect clients to be loyal?

A: So, it is important to know that from both a neurological and physiological standpoint, human beings are conditioned to be loyal. It is a response that has been evolving inside of us from the time we started living in social groups and communities. Our brains have learned to recognize not only who we can (or should) trust, but also who has our best interests at heart. In other words, our brains know who to be loyal to and seek out, both consciously and unconsciously, the clues and behaviors from others that tell it when it can be. 

Those clues and behaviors come from a variety of sources, so when a client’s brain is “deciding” if it should or can be loyal to a particular firm, it will look at the entire firm, not just a single individual. They will evaluate everyone they come in contact with, every message they receive, every interaction they have – personally and virtually, and determine if the relationship warrants its loyalty. 

To accomplish that, firms need to create and maintain a culture that communicates those loyalty-causing behaviors as a whole. It is a lot like raising children, As a parent, you know you can’t be with your child 24 hours a day, seven days a week for the rest of their life. Eventually, they will start creating their own relationships and establishing their own connections. The most you can do as a parent is instill in them the values you believe will make them successful and teach them how to treat others. When you do a great job with that, the result is that your kids develop relationships with others that make you proud, and are a reflection on you. The same is true for an organization and its employees. When you teach and support and reward and encourage the behaviors you want them to display, you will get the desired results in return. 

Q: How can an accounting firm start the process of building an “unbreakable relationship” with their clients?

A: The first step is accepting that there is no magic pixie dust that you sprinkle on clients to make them loyal. If you want loyal clients you have to be willing to change your own behavior and the behavior of your entire organization. That is a commitment that not all firms are willing to make and prefer to operate under the illusion that what they have been doing all along has worked fine, and there is no reason to question the way they operate or build relationships.

The next thing they need to do is assess their current relationships – not by asking them if they are satisfied with the service being provided – but by determining their client and employee loyalty. The most important benefit to come out of our research is that we have been able to identify, not only the state of an existing relationship, but the precise cause of that state. For example, it is interesting to know that a particular client sees their relationship with a firm as transactional. But the really useful information is understanding why the see it that way. What is causing that client to feel that way? What is shaping their perceptions? What is the firm doing or not doing to prevent a deeper relationship from forming? When a firm can identify the specific behaviors that are impacting the relationships, it can develop strategies and tactics to properly address them. 

Finally, they need to commit to a loyalty strategy. It is easy to forget about the relationships that are important to us when they get too hard or become too much work. Think about the personal relationships you have had throughout your life. So many people form their closest relationships with friends they make in high school or college. They share their deepest secrets with one another, their goals and desires, their hopes and concerns. They are inseparable…until graduation. They keep in touch, still take vacations together, are in each others weddings, still talk and reminisce about the “good old days,” but before long their lives go in different directions, the things they shared and had in common are replaced by new friends and new experiences, and those people who at one time were the most important in the world to one another are reduced to exchanging Christmas cards once a year. 

Client relationships often follow a similar path. Maintaining relationships require work. They demand a diligence and attention that doesn’t occur automatically. 

IPA Announces the Best of the Best Pyramid Awards

Carmel, Ind.-based INSIDE Public Accounting (IPA) has announced that three Best of the Best firms are being recognized with Pyramid Awards this year at the third annual PRIME Symposium, Nov. 4-6, in Indianapolis:

Nigro, Karlin, Segal & Feldstein is the recipient of IPA’s “Pyramid of Excellence” award this year, for the firm’s stellar performance in the 23rd annual IPA Survey and Analysis of Firms. The firm scored No. 1 on the IPA Best of the Best Firms list this year. The firm debuted on the IPA 100 list in 2012, at No. 73. Nigro, Karlin, Segal & Feldstein was also named one of the Top 10 Fastest-Growing Firms among the IPA 100 in 2013.

 Novogradac & Company is receiving the third annual IPA Best of the Best “Fastest-Growing Pyramid Award.” With an impressive 16.6% organic growth rate, with no mergers to boost that number, the firm has seen continued success in a tentative economic environment. This is the third year that Novogradac & Co. has appeared on IPA’s Fastest-Growing Best of the Best list, and has been a Best of the Best firm since 2002. Novogradac is an IPA 100 firm and this year, the firm was also named an IPA All-Star Firm and one of the Top 10 Fastest-Growing Firms among all IPA survey participants.

Katz, Sapper & Miller is receiving the third annual IPA Best of the Best “Pyramid Award” this year. Katz Sapper & Miller debuted on the IPA Best of the Best list in 1996, and has been named a Best of the Best firm 12 times during that time span. Katz, Sapper Miller is an IPA 100 firm, ranking at No. 63 this year.

The IPA Best of the Best firms come in all sizes and are geographically dispersed across the U.S. They demonstrate long-term consistency and exceptional performance, regardless of outside factors. IPA’s independent ranking of the nation’s best-managed firms is one of the highest honors within the profession today. Selections were based on responses from more than 500 participating accounting firms on over 70 metrics. 2013 is the 18th year for the IPA Best of the Best ranking

Join IPA for The 2013 PRIME Symposium – IPA Launches PRIME Website

The 2013 PRIME Symposium

www.primesymposium.com

Enjoy Midwestern Hospitality

One-on-One Focused Time With Peers

A New Approach to Learning and Networking

 —–

Mon. Nov. 4 Workshops 12:00 p.m. – 5:30 p.m.

Tues. Nov. 5 The PRIME Begins 8:00 a.m.

Wed. Nov. 6 The PRIME Adjourns 12:30 p.m.

 

Participation is first-come, first-served.  Only a few remaining spots available.

NOTE: The PRIME Workshops are limited to 50-guests [10 available] and the PRIME Symposium is limited to 100-guests. [22 available]

 We’ve created the symposium so leaders and key personnel can share knowledge and best-practices with others directly – by working within small groups in a relaxed setting. The lineup of speakers, facilitators and moderators is a who’s who of the profession. Roll up your sleeves and be prepared to participate. The PRIME is eligible for 16+ CPE credits. Half-day group workshops focused on key metrics, facilitated by MPs and the Platt Group, beginning on Monday, Nov. 4, at 12:00 p.m. All sessions are focused on key topics. See a summary of the agenda. All participants will be included in the group discussions.

Carl George Advisory Partners with The Platt Group / INSIDE Public Accounting

Carmel, Ind.-based The Platt Group, publishers of INSIDE Public Accounting (IPA), the IPA National Benchmarking Report, and the annual PRIME Symposium announce a strategic partnership with Carl George Advisory to bring deeper expertise and a wider range of services to the profession.

Carl George, who retired last year from CliftonLarsonAllen and founded Carl George Advisory of Fishers, Ind., brings an unprecedented level of experience to The Platt Group, to the annual IPA survey, and the annual PRIME Symposium, built around the IPA Best of the Best firms. George is best known for leading growth at Clifton Gunderson, where he served 16 years as CEO. He played a critical role in the 2012 mega-merger with Minneapolis-based Larson Allen to form CliftonLarsonAllen, an IPA Top 10 firm.

The Platt Group will benefit from George’s knowledge and experience in strategic planning, goal-setting and data analysis. IPA subscribers can learn from George’s insights into solving some of the most persistent management challenges facing firms: partner accountability, successful M&A, leadership development and sustainable growth.

George will work with IPA to author articles, assist in the development of the annual PRIME Symposium agenda, and will be available through The Platt Group for service and consulting offerings to firms looking to move to the next level or striving to become the “Best of the Best.”

“As a longtime thought leader in the profession who has played a huge part in the growth of Clifton Gunderson, Carl will be a tremendous asset. The Platt Group is looking forward to offering a greater variety of services through this alliance,” says Kelly Platt. Platt adds that George’s insights as COO and CEO of his former firm will be applied to the data collected through the annual IPA National Benchmarking Report, benefiting firms looking to grow and plan for the future.

“Carl will help us to dig down deep and quickly identify gaps and areas of improvement for firms,” she says. “I see the challenges and opportunities of many firms when reviewing their survey data, and our team will be better positioned to assist participating firms not only in collecting their data, but in helping them improve their performance metrics, through different offerings. Carl will be a great asset for uncovering best practices, authoring articles and assisting firms willing to make a change in moving forward in best practice style.”

“I’ve long respected the work of The Platt Group, and look forward to bringing my years of experience to this dynamic team in order to assist firms, and the growth of The Platt Group,” George says.

Mike Platt comments, “We have tremendous respect for Carl and have admired his accomplishments for a long time. We’re looking forward to bringing our collective talents together to enhance the value of what The Platt Group can deliver to the profession and to firms individually.”

The Platt Group continues to expand. In May, The Platt Group hired Christie Lugenbeal as the company’s marketing director, and also expanded the 10+ year relationship with Christina Camara, who joined The Platt Group in a much expanded role and currently serves as managing editor of INSIDE Public Accounting. “We are in a positive growth mode,” says Kelly Platt. “We plan to expand our offerings, products and enhance the experience of our clients.”

Save the Date: The PRIME symposium, Nov. 4 – 6, 2013, The Conrad Indianapolis

About The Platt Group

The Platt Group (http://www.insidepublicaccounting.com/) is the publisher of the award-winning newsletter, INSIDE Public Accounting (IPA), and the award-winning National Benchmarking Report. With more than 25 years of independent reporting and more than 23 years of survey and benchmarking experience, IPA works with managing partners, CFOs and thought leaders across the nation to provide practical ideas, benchmarking data and information to help firms succeed. Reach The Platt Group at info@plattgroupllc.com.

About Carl George Advisory

Carl George began Carl George Advisory after his retirement from CliftonLarsonAllen. George has received numerous awards, including being named one of the “Top 100 Most Influential People in Accounting” by Accounting Today, and special recognition from the American Institute of CPAs (AICPA) for its Financial Literacy Initiative, and from Ball State University as an Alumnus of Distinction. He was inducted into Ball State’s School of Business Hall of Fame in 2007. Reach George at carl@carlgeorgeadvisory.com.

Platt’s Perspective: Times Are Tough, But Client Acceptance Rules Should Be Tough Too

Partners are intent upon attracting new clients, especially during tough economic times. The days of growing a book of business by simply picking up the phone and taking orders are long gone. Firm leaders are demanding an assertive approach to business development – as they should.

Based on my discussions with MPs around the country, it appears that intelligent business development has never been more important. The recession hit many clients hard, prompting them to seek fee reductions or take their business to firms with more competitive offers. Firms have risen to the challenge in many cases by focusing on the value they bring to their clients, and working on ways to improve that service. At the same time, the always-important hunt for new business has taken on even more urgency. But prudence is warranted.

At IPA’s PRIME Symposium in November, a couple of comments from MPs on this issue raised some concerns. One MP expressed worry that another Enron-like implosion may be coming within the next five years. Another said he’s concerned about the quality of the new clients coming in the door.

These worries are based in the realities of the business climate today. All partners are pressured to bring in new business, even if that’s not their forte. Managers are seeing fewer opportunities to move into partnership positions, as tough economic times are keeping partners in their jobs for longer periods.

Managers who want to prove themselves “partner-worthy” may become more aggressive about gaining new clients. In addition, consolidation throughout the industry may create a competitive environment in which up-and-coming professionals may feel the need to bring in new clients, no matter what.

Partners need the right resources and the right motivation to attract new business. Firm leaders should already adhere to a set of guidelines for accepting new clients. Has the business changed auditors frequently? Is the company involved in a somewhat questionable business offering, yet there’s an opportunity to make $20,000 in audit fees? The dollar signs might outweigh the danger signs in that scenario.

All firms need to grow to survive, but all professionals must also remain true to the core values that built the firm to where it is today. Remain vigilant. Don’t cut corners. Taking on questionable clients is not worth the risk; nor is it worthwhile to retain every client.

“Firing” risky clients or turning down potentially risky prospects, while initially appearing negative, will pay off in the long term. High-quality clients combined with high-quality service translates into a profitable long-standing relationship that benefits all. Another Enron, and another round of SOX-like legislation in response, benefits no one.

MBAF Earns The Second Annual Pyramid Award From INSIDE Public Accounting

Indianapolis, Ind. (Nov. 2012) – The Platt Group, publishers of INSIDE Public Accounting (IPA), is proud to present MBAF with the prestigious second annual Pyramid award. The award was presented Nov. 15 at the 2012 PRIME Symposium in Indianapolis.

Miami-based MBAF is receiving the second annual IPA Best of the Best “Pyramid Award” for the firm’s overall stellar performance in this year’s 21st annual IPA Survey and Analysis of Firms.

MBAF ranked among the Top 5 in the Best of the Best Firms by Region and is celebrating 10 consecutive years as a Best of the Best Firm. MBAF is an IPA Top 50 Firm, an IPA Top 100 Firm by Region in the Southeast and was named an IPA All-Star in Long-Range Planning this year.

Chairman and CEO Tony Argiz left his native Cuba at age 9 without his parents in what was known as the Peter Pan exodus, in which14,000 children were given “waiver visas” to leave Cuba. Upon receiving the award at the PRIME symposium in Indianapolis Nov. 15, Argiz said, “I had to mature quite early in life and it’s really helped our firm. It’s an honor to receive this award among my peers today.”

Best of the Best firms like MBAF represent the best of what the profession has to offer. Each of these firms demonstrates the right combination of vision, planning and execution to deliver superior performance and client service, in any economy.

“For a firm to make the IPA Best of the Best list in any given year is a great accomplishment and a well-deserved recognition of outstanding performance,” says Michael Platt, a principal with The Platt Group. “But for MBAF to have been named a Best of the Best for 10 years puts them in rarified air among the elite of the accounting profession.”

The Platt Group last week hosted the second annual PRIME Symposium, which brought together IPA Best of the Best firm leaders to discuss management practices with small groups of colleagues.

“In working with these firms for many years, we’ve seen what makes them tick,” says Kelly Platt, principal of the Platt Group and publisher of the accounting trade publication, INSIDE Public Accounting. “We launched the symposium so these leaders and others could share their knowledge, best practices and to openly discuss their challenges, experiences, and to ask questions and brainstorm solutions with some of the best minds in the business.”

Many of these firms have been named to the IPA Best of the Best list previously. Of the 50 firms named to the list in 2012, 29 were among this elite group in 2011, and 22 were on the list in 2010. To read the full list of Best of the Best firms, go to http://insidepublicaccounting.com/pages/IPABest.php.

Grassi & Co. Earns The Second Annual Pyramid Award From INSIDE Public Accounting

Indianapolis, Ind. (Nov. 2012) – The Platt Group, publishers of INSIDE Public Accounting (IPA), is proud to present Grassi & Co. with the prestigious second annual Fastest-Growing Pyramid award. The award was presented Nov. 15 at the 2012 PRIME Symposium in Indianapolis.

New York City-based Grassi & Co. has received INSIDE Public Accounting’s second annual Best of the Best Fastest-Growing “Pyramid Award” for the firm’s ongoing recognition as an IPA Best of the Best Firm.

Grassi celebrated its seventh consecutive year as a Best of the Best Firm in 2012 and was named an IPA Best of the Best Fastest-Growing Firm and a Mover and Shaker in 2012. Grassi & Co. moved up an impressive 29 positions in the rankings, to debut on the IPA 100 list at No. 83. The firm was named an IPA 100 Fastest-Growing Firm, and an IPA All-Star Firm for Long-Range Planning. Grassi & Co.’s managing partner, Lou Grassi, was named one of IPA’s “Most Admired Peers” in a 2012 survey with 430 participating firms responding.

Grassi & Co. is the recipient of the Fastest-Growing Pyramid award – designed to recognize public accounting firms whose leadership, operational, financial and firmwide culture are at the pinnacle of the profession. Upon receiving the award, Lou Grassi said “This is a great profession. I still tell everyone I jump out of bed every day. I’m excited about the profession. I’m excited about the firm and I’m excited about the future.”

Best of the Best firms like Grassi & Co. represent the best of what the profession has to offer. Each of these firms demonstrates the right combination of vision, planning and execution to deliver superior performance and client service, in any economy.

“For a firm to make the IPA Best of the Best list in any given year is a great accomplishment and a well-deserved recognition of outstanding performance,” says Michael Platt, a principal with The Platt Group. “But for Grassi & Co. to have been named a Best of the Best for seven years puts them in rarified air among the elite of the accounting profession.”

The Platt Group last week hosted the second annual PRIME Symposium, which brought together IPA Best of the Best firm leaders to discuss management practices with small groups of colleagues.

“In working with these firms for many years, we’ve seen what makes them tick,” says Kelly Platt, principal of the Platt Group and publisher of the accounting trade publication, INSIDE Public Accounting. “We launched the symposium so these leaders and others could share their knowledge, best practices and to openly discuss their challenges, experiences, and to ask questions and brainstorm solutions with some of the best minds in the business.”

Many of these firms have been named to the IPA Best of the Best list previously. Of the 50 firms named to the list in 2012, 29 were among this elite group in 2011, and 22 were on the list in 2010. To read the full list of Best of the Best firms, go to http://insidepublicaccounting.com/pages/IPABest.php.