Poor service, change in ownership at your firm or at the client’s company, perceived lack of expertise, dissatisfaction with fees: The reasons may vary, but the results are often the same. Clients walk.
Robert Fesnak, A&A partner with the Devon, Pa.-based firm Smart and Associates, LLP, believes most firms lose clients simply “by not servicing their needs. Accounting firms tend to view their services as only audit or tax compliance,” he notes. “They don’t address the real needs of their clients.”
Consultant Jay Nisberg of Jay Nisberg & Associates says the world of client service has changed in the last 20 years, and accountants have fallen behind. “It used to be common for a CPA firm partner to have clients to their home for dinner, and do breakfasts with clients. For some reason, the profession has lost its concept that this business is still a matter of personal relationships.”
Allan Boress, president of the consulting group Allan Boress and Associates, agrees that the profession has grown complacent about client retention. “Most CPAs will tell you the reason they lose clients is fees. But the number-one reason is lack of communication and lack of responsiveness,” Boress says.
Causes for Exit
Most agree on the common reasons for losing clients. Pat O’Malley, MP at the Chicago firm of Coleman, Epstein, Berlin & Company LLP, says, “First is some capital event, such as an M&A, or new decision-making personnel, where the acquiring company’s relationship exists with another accounting firm. Second is poor service. This usually manifests itself in the areas most visible to the client: poor communication or untimely service.”
Fees may actually not be that important to clients, though this landmine subject does sometimes surface when clients walk. Admits Fesnak, “We’ve also lost clients due to fees, where the client’s only criteria in selecting a firm is price. Clients leave more often due to a perception that the accounting firm doesn’t have an interest in, or an understanding of, their business, rather than any other reason, including fees.”
John W. Dean, of the firm of Heard, McElroy & Vestal, LLP, in Shreveport, La., thinks the circumstances of some client losses may even be an avenue of strengthening relations with a client. “Some result from circumstances outside of the client/CPA relationship, and can simply not be controlled. Sometimes a much larger out-of-town company acquires a nice audit/tax/consulting client, usually a once-in-a-lifetime event for your client, and you should enjoy the process with them rather than worrying about the loss of business.”
Before he became a marketing consultant to CPAs, Robert N. Kohn, senior VP with Los Angeles-based Kohn Communications, worked in his family’s lending business, and was involved in the hiring and firing of CPA firms. “There are several major reasons firms lose clients,” he notes. “One of the most obvious is that a firm is simply doing a bad job: constantly making errors, or is slow or forgetful. Another reason clients leave is that their needs change, and the CPA is either unaware of or unable to meet those changing needs. Clients grow or shrink. They go public. New decision-makers are hired who have their own ideas about which CPAs to use. And, of course, a client’s loyalty may be tied to a partner in a firm who decides to move.”
Signs Clients Might Bolt
O’Malley thinks that the clients most prone to leaving are those that view price as the most important aspect of your service. “When price is the major decision point in a relationship, you can be certain that your client will shop that price around,” he says. “Often, these clients fail to recognize the value of any additional services your firm might provide. They’re also the clients you’ll under-realize on, as well.”
Fesnak cites a number of warning signs that a relationship with a client is hitting the rocks: