The Value Train Has Left The Station
How would you describe your firm’s specific value proposition? If the term is unfamiliar, or you’ve struggled with differentiating and continually find yourselves in the price cellar, keep reading.
The search for value is the effort to leverage the specific advantages and solutions your firm offers clients and potential clients. Put another way, it is the ongoing pursuit of distinguishing yourself in a memorable way.
What does value in a CPA firm look like? More innovation and less commoditization. More focused communication and less generalized chest thumping. More sharply defined markets and less “all things for all clients.”
Value: illusive but essential
Value is tough for firms to embrace, especially in today’s crowded marketplace. The problem is that the field is cluttered with competitors, which makes it difficult for individual firms to stand out. Another challenge is that firms are constrained by standards and regulations that restrict creativity and discourage differentiation.
What’s more, many firms are what I consider “fat cats.” I coined the term as part of my four-stage growth model to describe the final stage in the lifecycle of a product or service. As it advances through the stages, an offering contributes an increasingly higher percentage of firm revenue. At the fat cat stage a service like audit yields significant revenue but very low margins. Over time the fat cats become slow and sluggish. That’s when competitors can take advantage by moving in with more attractive alternatives and/or lower pricing.
This is where too many firms find themselves today—with commoditized offerings that are hard to distinguish and lack apparent value. Though they have contributed significantly to firm growth in the past, at a certain point they start to slow and sputter.
One way for firms to avoid this scenario is to precisely define themselves in the marketplace. Decide for example if you are a Nordstrom, known for high quality and impeccable service at a price. Or perhaps you wish to be a Walmart with low pricing and a solid, reliable offering with few bells and whistles.
There’s nothing inherently better or worse in either of these value propositions. But in order to be successful you have to align yourself boldly and visibly with that identity. Otherwise you remain in neither-fish-nor-fowl limbo. For example, if you decide you are a Walmart, use technology to efficiently expand your reach, as you can no longer be all things to all clients in a single geographic area. If you are Nordstrom’s, take a page from their playbook – everything about the retailer speaks to the experience of shopping there, not just the quality of the goods.
Another strategy to extricate your firm from the handcuffs of commoditized offerings is to focus at the market level on specific buyer groups. Break out of the “audits for everybody” mentality and focus instead on construction, nonprofit, legal, manufacturing, etc.
This path to value requires that you establish a profound understanding of the target niche or industry. You do this by committing to, and immersing yourself in the ecosystem of that industry or group. Continuously evolve by conducting Research CallsSM to stay relevant in the industry. Focus on your strategy with innovative offerings that go beyond standard compliance work, identifying powerful distribution channels leading to great quantities of buyers, and carefully selecting the buyer profile most likely to buy.
Communicating value at the market level is important to create a reputation and draw potential buyers to the firm. However, where you drive revenue is by developing value at the individual buyer level. This is a rich vein of opportunity seldom mined by CPA firms. My experience in the cutthroat high-tech industry taught me a selling certitude—buyers make business decisions for fundamentally personal reasons.
It may be that a prospect is new to the position and does not want to take a risk. Or perhaps a more seasoned buyer wants to demonstrate creativity and a spirit of innovation. Then again, the buyer’s agenda might be to consolidate political power. To build value at the individual level you need to be on the lookout for that highly personal motivation from the moment you walk in the door. It is always there and if you’re good, you will find it.
Being able to uncover, build and communicate this type of value is where revenue is won or lost. There are hundreds of thousands of CPAs on the planet. More often than not, the buyer is not going to perceive the (sometimes) infinitesimal difference between your firm and others. But they will remember that you understand them, and this is where value is built.
Yours for the taking
With so much at stake, there’s no excuse for an unremarkable firm whose pricing, offerings and even website are indistinguishable from the competition. There’s abundant value out there. Go out and make it your own.