Build A Focused Firm with Hector Garcia, CPA

In part 4 of our 8-part series, we'll learn how to create a disciplined, consistent process to win and onboard customers.

Thank you to our sponsor, Avalara! Avalara’s award-winning tax automation solutions help accounting practitioners of all sizes, from sole proprietors to Top 100 firms. Avalara simplifies sales tax compliance with real-time rates, automated returns filing, registrations, tax research and automated tax solutions for specialized tax areas. We live and breathe tax so you don’t have to. Learn more at Avalara.com/Accountants.

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(00:00) - Filtering out bad clients
(00:24) - Welcome to Part 4: Sales Process and Onboarding
(03:52) - Pre-Sales Strategy
(04:31) - Defining a few key concepts
(07:06) - Customers perspective
(09:23) - Value and guarantees
(15:46) - Pre-sales marketing strategy
(17:57) - Thank you to our sponsor, Avalara
(19:42) - Sales Process Step by Step
(23:30) - The 5 filters of client selection
(42:09) - Summary of what these "filters" mean
(44:03) - Lets apply this theory to a real world example
(48:31) - The why conversation
(58:11) - Asking key questions about expectations
(01:08:41) - Delivering a proposal
(01:11:51) - Some viewer comments
(01:15:08) - Onboarding
(01:26:49) - Thanks for joining, where to watch live and how to earn free CPE
(01:27:44) - 3 exercises to do if you enjoyed this lesson

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Build a Focused Firm Session #4 Slide Presentation
https://drive.google.com/file/d/1Dorglzauml2LS52ak88ZsHBykGsflUMv/view?usp=sharing

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Join the Focused Firm email list to get notified of future streams and CPE courses:
https://go.earmarkcpe.com/the-focused-firm

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https://app.earmarkcpe.com/?course_id=11d08a91-988a-4465-8e0c-e974240b637d

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Connect with Hector Garcia, CPA:
Website: http://hectorgarcia.com
LinkedIn: https://www.linkedin.com/in/hectormgarciacpa/

Connect with Blake Oliver, CPA:
LinkedIn: https://www.linkedin.com/in/blaketoliver
Twitter: https://twitter.com/blaketoliver/

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Apple: https://apps.apple.com/us/app/earmark-cpe/id1562599728

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Creators & Guests

Host

Blake Oliver

Certified Public Accountant. Co-host of @cloudacctpod. Founder of @earmarkcpe. I have approximate knowledge of many things.

Host

Hector Garcia, CPA

Quick Bookkeeping & Accounting LLC. QuickBooks® Training Services. Business Consulting. Tax Planning. My e-mail: hector@garciacpa.com / office: 954-414-1524

What is Build A Focused Firm with Hector Garcia, CPA?

If you want to build an accounting or bookkeeping firm that gives you joy, you need to stop, and focus. Learn strategies and best practices for practice management and earn FREE CPE while you're at it!

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Hector Garcia, CPA: [00:00:00] The challenge is that we never know which kinds are going to stick. We never know which is are going to be the good ones. We never know which are the ones that are going to say yes. And we're never truly know which clients have the problems that we are good at solving because we have to understand the problem before we know how to solve it. So long story short, we've got to filter out the ones that don't work quickly. So I'm building for you. I'm creating for you a framework for five filters.

Blake Oliver: [00:00:29] Hello and welcome to our series Building a focused firm with Hector Garcia, CPA. I'm Blake Oliver, your moderator for today's episode. This is the fourth installment in an eight part series all about how to build an accounting or bookkeeping firm that gives you joy by focusing on what matters. And thanks to our sponsor, Avira for their financial support to make this series possible. Avalere is award winning tax automation solutions help accounting practitioners of all sizes from sole proprietors to top 100 firms. Avalere simplifies sales tax compliance with real time rates, automated return filing registrations, tax research, and automated tax solutions for specialized tax areas. They live and breathe tax so you don't have to learn more at Avalere Accountants. Let's talk about CPE continuing professional education credits. You can earn one CPE credit for joining us today. Sign up for the app. Click the link to the course and you'll be able to take a five question quiz and get your CPE certificate. Now that that's all out of the way, let's get to our topic today. Sales process and Onboarding. Hector Garcia Welcome back. I am so pleased that you are well, I take it your surgery on your your voice has has come back.

Hector Garcia, CPA: [00:01:49] Yes, I have a new voice now. So thank you very much for your to earmark and Ava Laura for letting me take a break in December and January and most of February so I can continue this series now with a with a new voice. All right. So we're ready to go. I'm excited. All right. So building a focus from episode four, Episode four is sales process and onboarding episode four out of eight episodes to help you build a focused firm in this mini series. So part four sales process and client onboarding. It's very dear to my heart because this is where all the concepts of your business model that we talked about in a previous episode, your positioning strategy, the technology that you use, this is where all of these theories become go from theory to practical, and this is where we kind of put these things to practice and see if they actually work. So we're going to go through what a sales process looks like, client onboarding from my perspective, and then you guys can figure out how this pertains to your clients, your firm, how you're set up. So we're going to talk, we're going to cover this in three themes or three topics. And these topics also have to do with the sort of timeline of bringing a customer on board. So first we're going to talk about pre sales strategy. These are all the things that happened prior to you actually starting to offer your services or a solution to the customer.

Hector Garcia, CPA: [00:03:21] Then we're going to talk about the sales process step by step. So once the customer says, okay, I think I'm interested in working with you and they've already done all the pre sales homework or you've done your sales homework to make sure that customers come with the correct expectation, then we'll talk about what that looks like step by step. And then lastly, it's okay, we did a great job. We sold it the customers in how do we bring them on board to make sure nothing breaks at that point? And then if we have any Q&A at the end or even after each of these subsections, we can have that as well. Okay. So let's talk about the pre sales strategy. So prior to you going out and start offering your services, you need to have a cohesive strategy that will essentially set the stage for the entire sales process and the onboarding process essentially through your very first deliverable. That was really important because that is when the customer gets gratification for their purchase. Our very first deliverable, it's really important and you need to sort of set it up throughout the entire process because at that point that's where we prevent that dreaded buyer's remorse, right? That first deliverable is really important. So I'm going to talk about everything through that first deliverable.

Hector Garcia, CPA: [00:04:31] Now let's define a few concepts first so we can be all on the same page. First concept is positioning. We spend tons of time on this on episode one, but we can summarize that in answering six questions. So a positioning strategy will answer the six questions as all you really need to know. I mean, I recommend the hour plus episode that we did on positioning. We went pretty in-depth on it, but if you wanted to bring it down to one minute, it would be this one. The WHO question Who does the work? What is what? Who are the people inside your organization that do the work? So if you're a single person firm, that would be you, of course. But if you have multiple people in the firm, you know that the position strategy will answer that question to your client when they or to your prospect, when they go out and search for accounting firms and they're looking at, well, who's doing the work? Right? So that's what your positioning does. It answers that first question. Second question, the answer to your customer is whom? Whom do you serve? Who is your target customer? Who is your desired customer that you are? You were put on Earth to serve and the customer wants to feel that you were meant for them. Not that you're just one of many accountants that can do generic accounting work.

Hector Garcia, CPA: [00:05:41] Can you do the accounting work? That matters to me, That matters to my business? Three What? What is the problem that you solve? This is your specialty. This is your your know how. Let's call it that. Then when when do you do the work? And really most importantly for your client is how quickly you do the work. Like speed is a really important component of positioning. You see, you know, Jiffy Lube, for example, that's what they're known for, is not the quality of the oil or the friendliness of the people or the precision and accuracy of the work. It's it's it's all about speed, right? So, so, so different firms, different companies, they're known for for their speed. And that could be a positioning of strategy that you're putting together. The fifth question that it answers is how how do you solve the problem? What is your unique process or that unique knowhow in your organization that enables you to solve that problem differently or uniquely for that particular client or the particular client problems that that they have? And lastly, why Why do you do what you do? What is your firm's purpose? So a good positioning strategy answers those questions. And if you don't have good enough language in your website and your social media in your advertising that explains these things or answers these questions, then you've got to go back to the drawing board and you got to rethink your positioning strategy and and make sure you emphasize really on answering those six questions.

Hector Garcia, CPA: [00:07:06] Next thing is to talk about the customers perspective. All customers, all people really come with a perspective with a particular perspective. And what I want you to understand when I talk about customers perspective is perspective is everything your customer knows and understands about you and your firm. They come with this bias, whatever they think that you are or what you represent or what you might be. Because sometimes they could be wrong too. It could just be a perception. They come with that bias. So you need to understand that before you go out and offer a service, you need to understand what perspectives they come with or reframe or fix or position your way into the right perspective that you want. Second, major perspective customers come with is everything they know and understand about the problem they're trying to solve or seeking someone to solve. So your customer could also have a perspective that could not be accurate about what the problem is, what the problem actually is, really. So they come with that perspective. The third major perspective they come with is everything they know and understand about how much it should cost to have a professional solve it. They come with that bias, they come with that expectation. And the fourth major perspective is everything they know and understand about the time and effort beyond what they pay, that it will be required for you to solve this problem together.

Hector Garcia, CPA: [00:08:31] Because most of the are small business client problems are things that we can only fix together. Yeah, you can always say, Hey, I'm an accountant and I do. I'm a CPA or an agent and I represent people in tax court and they give me a power of attorney and I can do the entire thing where the customer is not involved and I can come back from tax court and win the case or whatever. That's true. That could be a use case where the customer really doesn't have to do that much. But if they want to stop from getting audited and having to go to tax court again, they've got to change behaviors for the future. So at some point in time, solving the problem completely does require collaboration. It requires time and effort from their part, and they might come with a perspective or a bias of what that is. So now you understand those to you understand your positioning, how you come into the market and you understand how your customer comes to you. Now let's talk about what value is because you're in the middle between your positioning and what your customers perspective is. There's value. The textbook definition of value is the importance, worth or usefulness of something? My definition is what customers feel they receive in exchange for the price paid, because I think that value is a feeling where price is a number.

Hector Garcia, CPA: [00:09:50] Value is a feeling. In other words, customers get value when they pay. When the price they pay is below the cost of not solving the problem. Customers get value when they the price they pay is below the cost of not solving the problem. So if they do nothing and they let the problem be right, then that's fine. If they if they could pay something that's below the cost of not solving the problem, then that's valuable. And that's an interesting, different take on that because most people say and they're right, you know, value is what you bring to the table above what they pay. But most of the times, what you do for clients, they could just not do it. They could just let it go. And in many, many situations, they haven't done the thing that they're asking you to do for six months or a year or two years, and then you're coming in, you know, after they have survived not doing it. I mean, they know it's a problem. They know it's eventually going to blow over and become a huge issue with an audit or they might not survive a cash flow crunch or whatever it is. But for an extended period of time, they could survive without solving the problem.

Hector Garcia, CPA: [00:11:00] So when you come in is, hey, you know what? If I solve this problem and it costs less than what it costs you not to solve it. So I think that should be your perspective of value and it really reframes on how you walk in to talk to a customer, especially when it comes to a sales process. Now, a guaranteed solution to a problem is the most valuable thing in the market. A guaranteed solution to a problem is the most valuable thing in the market. So if your sales process implies a guarantee, then obviously you're going to be able to command a much higher price. And we'll talk about pricing on the next episode. But I just to to set up the value of a guarantee. Now there's different types of guarantees. And when you when you sell your services, you might be implying certain guarantees. Some are written, some some are unwritten, some are set, some are understood, some are misunderstood. But there's different types of guarantees. So one of the guarantees is called a performance guarantee. And a performance guarantee means you will do it until it's done to specifications. Right? So you will you will do it, redo it, do it, redo it until it's done to specifications. Another type of guarantee is just a refund guarantee, which is, hey, it wasn't done to your specifications, here's your money back. And those two things can be completely exclusive to each other and you can have a guarantee of one or the other.

Hector Garcia, CPA: [00:12:21] Now, if you combine the two, that's what some people might call a risk free transaction. And you see this in TV all the time, purchase risk free. Right? But one of the challenges with a risk free type of transaction is that, yes, you will refund the customer for what they pay you, but who is going to cover the costs that the customer has incurred because you did it incorrect. So a true risk free transaction is not only you will do it until it's done to specs, not only you will refund the payment, but you will also cover the cost of doing it incorrectly. One good example of this is, for example, a QuickBooks offers payroll services. And if if they if you if you get audited and something goes wrong and this is only on the highest tier, they will cover the cost of the penalties and they will cover the entire representation, in other words, or completely take out all the additional costs incurred with doing it incorrectly. Same thing with Avelar with the premium service. If they make the mistake on the sales tax return, for example, they're going to cover all the costs that that involves. You're fixing it completely, including penalties and that sort of thing. So you have to remember that if you are going to offer a risk free transaction, you not only have to think about performance and refund, you also have to think about what are those ancillary costs that my customers would perceive to have or or or actually truly have in terms of a cash outlay.

Hector Garcia, CPA: [00:13:54] Now, how do you structure a guarantee or how do I suggest you should structure a guarantee? So one of the ways to structure guarantee is satisfaction. Basically, it says, Hey, Mr. Customer, you have a subjective measure you can use, which is if you feel is not right, then you feel it's not correct. If you don't feel satisfied again, totally subjective, you can trigger whatever the the guarantee is, whether it's a performance structure or whatever it is. The second one is or the second one type of structure would be a result. This is when it's an objective. Measure. And again, it's measurable. So it's a measurable result or an objective measure that the customer and accountant agree to. It's something that's, hey, like any third party, any mediator, anyone that doesn't know anything about accounting, an arbitrator or whatever can look at that objective system of measurement and say, Yep, it was over ten or is over 100, over a million, whatever it is. And yes, it did pass the threshold or no, it didn't pass the threshold. And the last type of guaranteed trigger you can structure is an external event. So this is when a third party triggers the guarantee.

Hector Garcia, CPA: [00:15:03] So something like an audit that would be. Just a perfect example or something you don't control is completely outside of the client accountant relationship. It's triggered by some third party event. The insurances do this right like the act of God, the holy right, There's something, there's a hurricane or whatever, right? So these type of things are they're not measurable, they're not objective, they're not subjective. They're just things that happen to any of you. And at that point, that guarantee or the or the claim to the guarantee could come along. So it's really just keep that in mind that if a customer asks for a guarantee, you're going to offer a guarantee. Be very clear on how you're going to offer that guarantee, because I see a lot of people saying, Yep, satisfaction guaranteed. And that means different things to to different people. So the basic pre sales marketing strategy is communicating your positioning, keen understanding of your customers perspective. Framing price around the value you create and guarantee for your customers. And the whole pricing conversation will happen in episode five. So stay tuned for that. Now, why is this relevant? Why would I spend 50 minutes talking about this before jumping straight to sales process? Because a strong presale. Process reframes who needs who the most in the transaction. Hint customers need you more than you need them.

Hector Garcia, CPA: [00:16:29] Now, I could prove to you that with math, Right. Most small businesses have one accountant. Most accounting professionals have many clients. So that's enough evidence to tell you that customers need the accountant more than the account that needs the client. Right? Because if the customer loses their accountant there, they went from 100% accountant to 0% accountant, right. Where an accountant can have 20 clients and they lose one client that went from 100% clients to 95% clients. So you think about that, right? So most of the time the small business needs the accountant more. Now, I could use actual math like 32 million small businesses in the US. According to the SBA, 1.3 million accounting workers. If you do simple math, there's one accountant for every 24 businesses. Yeah. Granted, some accountants, you know, are not in public practice. Some or not someone private. I get it. There's a whole plethora of of of, of, of a combination of how accountants are organized. You know, like a company like Apple can have maybe 1000 accountants inside the organization. I get it. It's not a perfect ratio, but if you just use the general arithmetic here, there's 24 businesses for every accounting period, right? So every accounting accounting firm should have at least 24 clients. That's that's how I see it. Anyway. So, Blake, that's the end of the first part. That's the presale strategy. Any questions or comments on that?

Blake Oliver: [00:17:56] No questions so far. But I do want to say thank you to our sponsor for their financial support to make this series possible. Did you know that 52% of accounting practitioners from small to large still rely on spreadsheets and manual processes for sales tax compliance? It's time to stop and focus on automation. The Avalere four Accountants Suite empowers even the smallest practitioner to support clients tax compliance needs. All firms can benefit from their referral program, simply refer clients to Avalere and let them assist on your behalf for practices that offer direct compliance services. You can use Avalere four Accountants award winning tools to help you start or grow a tax compliance or CAS service expressly designed for accounting service providers with multiple clients. Solutions include real time rates, automated returns, filing registrations, tax research and automated tax solutions for specialized tax areas. Partner with Avalere to grow your practice with efficient and accurate sales tax compliance while reducing risks for you and your clients. To learn more, contact Ava Lara at accountancy Cavalera dot com or visit them at avaliacao slash accountants. And please do go ahead and ask your questions of Hector. When it comes to sales process and onboarding, I'm monitoring the chat. We'd love to get your questions. I know everyone's busy with tax season, busy season right now, so you may may your brain may not quite be working in terms of creating those questions, but we'd love to hear them. All right, back to you, Hector.

Hector Garcia, CPA: [00:19:39] Absolutely. So thank you, Blake and Laura again. So we all agree at this point that or at least you were listening in the last, you know, 15, 20 minutes is that you should not go out there and try to sell sell your services. And and you can really have a sales process without a sort of brief sales strategies. Oh, you always want to walk in into a sales process where you have designed or reframed what it is. What what does it mean to work with your firm? What does it mean for your customers to seek you out for a solution? So let's talk about the sales process step by step. My favorite quote from Blair, and she's the author of a book called Win Without Pitching Manifesto is the sale is the sample. The sale is the sample. We all love going to Costco and getting free samples of the little bread that you put in the oven right before you buy it. And then you're blown away and then you buy it. In the services world, we really don't get that free sample option. It's very difficult to give someone a free sample of an accounting service of a of a of a of a tax return. It's very difficult to do. So. The closest thing we have in professional services is the sales process. The sales process is the sample. So if the customer. It's able to build trust or you're able to build trust with your customer, able to trust you more if they feel if they feel that you're using the right technology, if you feel you're communicating the right amount.

Hector Garcia, CPA: [00:21:10] Not too much communication, not too little communication. If they feel you're guiding them through the accountant selection process without an agenda of wanting to sell every client, you're truly helping them find the right solution and you being one of the options they're going to get, that's going to be a sample to your services and they're going to just feel really great about what they're buying. So that is the truly the closest thing we have to to the free sample, right, in professional services. So let me walk you through how I feel. You can give someone the greatest, the best possible sample of the quality of your services. So the number one answer to this is the best way to give them the best possible sample of services is spend as much time as humanly possible with that prospect through the sales process, taking into consideration that you have tons of other prospects and tons of work and there really isn't that much time you can spend with them. So I understand that we have this this strange situation like double edged sword where we want to spend tons of time with the prospect to make sure that the right fit and selling them the right service or product or whatever. But we also have many other things that we need to do.

Hector Garcia, CPA: [00:22:23] So I understand that there's a total finite amount of time you can spend with a prospect. So the key element to that is to filter out the non prospects and non customers quickly create quick filters to get them out the door. Right. And the don't spend too much time with the ones that are not going to close because I know for a fact that many of my colleagues are okay with spending 3 hours with a prospect or 4 hours or something that sounds ridiculous for hours, but if they can guarantee that this prospect would be one of their top VIP clients and they're going to have that client for four or five years and a wonderful relationship and be able to cross-sell services and they're not highly demanding and they're just like this great, perfect client. Like if there was a magic wand that could guarantee a client to become that you, I'm pretty sure you would spend 3 to 4 hours because it's worth it, right? The challenge is that we never know which clients are going to stick. We never know which is are going to be the good ones. We never know which are the ones. They're going to say yes. And we're never truly know which clients have the problems that we are good at solving because we have to understand the problem before we know how to solve it.

Hector Garcia, CPA: [00:23:30] So long story short, we've got to filter out the ones that don't work quickly. So I'm building for you, are creating for you a framework for five filters. So filter number one. The lead expresses interest in working with you, and they do it exactly in the medium that you request they use. So if you have a website that says how to work with us and how to work with us requires them to answer, let's say for questions in your website and upload a document, right. And then hit send. And then after hitting send. Picking a time on your calendar for 50 minutes for a follow up. And they don't do that. Instead, they send an email or they call the phone number. Then you got to spit them back out. Does that make sense? You've got to split it back out. Like you have to have a consistent single process. Aye, aye, aye aye. Funnell Per se, and I don't mean for my marketing funnel, just like visually, visually think of a funnel, like a kitchen funnel or a bottleneck, it's like, I need you to, I need you, all of you to converge at this point. And if you cannot get through this simple request, we asked then that should be an indication of whether that's going to be a good client or not, because if they're not, they can not answer four questions on a website and upload a document or whatever happens to be, then you're going to have a challenge.

Hector Garcia, CPA: [00:24:49] So that should be your very first filter, right? Can can, can they go through that filter? And many times that filter, especially if you put it a little questionnaire and in that questionnaire you have you have your price minimums, like, Hey, do you agree that our firm only takes customers of 10,000 a year or or or more? If they say no, I don't agree, then your questionnaire should spin back out and say, Sorry, we can help you, or yes, we'll send the information to our our accounting manager or whatever anyway, but most likely we'll probably send you somewhere else so you can actually build in, you know, your minimums or whatever those minimum requirements are in the very first filter. So that's filter number one, right? Filter number two. If the lead passes the filter and there within your target market, whether its desired price point, a type of industry type of product or whatever it is, you need to immediately respond with a clear expectation of what the next steps are. And that could be just an out of reply email saying, Hey, by the way, we got your information, we're going to go through it, and within two days we're going to call you or we're going to email you, or we're going to have somebody from my office text you or whatever it is, we're going to give you access to our portal, whatever it is.

Hector Garcia, CPA: [00:26:02] And then at that point, you know exactly what the next step is going to be. You want to do that because you don't want you don't want that customer to send them the lead and then get antsy because they haven't gotten a response in two days or whatever, and then go out there and keep shopping you around. And unfortunately, not that I'm against customers shopping accountants around. The problem is it just adds more noise and it makes it harder for you to build. Like there was a reason why they contacted you in the first place. There was a reason they had a need. There was a pain point. There was an ache of some sort. So you don't want that? That's sort of hot, right? It's hot, it's there. And you want to quench that pretty quick. And if you need to take three days to answer it, because that's normal, right? Especially in busy season, just let them know, hey, we're reviewing this. We're going to have two people look at it and within three days we're going to contact you. If if you tell people what you're going to do and you do it, that's good. Most people are patient. Filter number three. So possibly at this stage, maybe you have an actual interview with them. It could be a phone interview, it could be a Zoom interview or it could be a total digital interview.

Hector Garcia, CPA: [00:27:09] Like some people send client organizers like the 200 page organizer. That's a crazy thing. But if you want to have something like a like a new customer intake interview and you want to have maybe ten key questions that are maybe semi customized, so you have maybe two or three different templates depending on the type of lead. So for example, if a tax lead comes in, then the questionnaire is it's different questions that if it's an accounting services lead or a QuickBooks training lead or sales tax resolution compliance lead, whatever happens to be, you know, maybe you send them a customized set of questions so you understand the problem first. So that's assuming you're going to keep a digital or maybe maybe through an email or through a portal or through another questionnaire or even a phone call. But you need to have all those questions and they need to answer the questions clearly, and they cannot hold back. So they can't be like that. Those people that have an ace under their sleeve and they're trying to hold it back because they feel that giving you too much information gives you more power or whatever. You've got to be able to read through that quickly and make sure that you don't think intake the clients that, hey, they gave me 98% of the information, but they're holding back two or whatever. You got to tell them, Look, I will be transparent with you.

Hector Garcia, CPA: [00:28:21] I need you to be transparent with me. I can't help you if I don't understand the entire picture. And sometimes a little tiny piece of information. It's really crucial for me to understand whether or not this is going to work out. This happens a lot with documents where you want to see last year's tax return before you even talk to them and they don't want to show it to you. So if they don't trust you at this point, I'd already been to the first two filters and they don't trust you at this point. You something went wrong in the first two filter process or your entire pre sales strategy. Something was broken where they didn't trust you enough to give you the key information you need to be able to know whether you can help them or not. So if they go through this third filter, give that were transparent, they didn't hold back and they give you the documents, then it goes to the next stage. So now we got filter number four. So filter number four is at this point. At this point, we know this is our target customer. We know we get solved. At least we have a general understanding to what the problem is. We have a good bird's eye view of of the business where they've been, all that stuff. Then we can have a value conversation. So at this point we can have the actual value conversation, which some people call the why conversation.

Hector Garcia, CPA: [00:29:35] We'll discuss that pretty soon. And this is where we're going to get to the crux of the issue. This is where we're going to dig deep and go, okay, what is not just a problem the customer is describing, which is very clear to us. We have the documents, we have the tax return, we have the IRS letter, whatever happens to be we have all the stuff laid out in front of you. We understand what the problem looks like in the surface. But do we understand why the problem got generated in the first place? Do we understand how to how to not just clean up the problem but fundamentally change the organization or the person to make sure it doesn't happen again? And how we can essentially re-engineer some systems and processes to make that person spend all their energy making money serving the customers instead of just putting out these type of fires. So that's that's essentially the value, the value conversation. And this this stage is the most expensive one for your firm because this is the one that requires your your I don't want to say the smartest people, but the people that are keenest, keenest at understanding client problems and reading between the lines and all these things, that's going to be your smartest, most experienced person is probably going to be the one having this value conversation or the one that's most skilled at having value conversations.

Hector Garcia, CPA: [00:30:47] And in some cases you charge for this. And we'll discuss that a little bit later. But this is the fourth filter. The fourth filter is can we understand the why, the why of the problem? So we go through that filter and at that point, after the value conversation, we can offer a price and options and we'll cover that in episode five. We'll get into the mechanics of that and then we offer a service or a product or service and the customer filter. Number five, the customer accepts it without asking for a discount. That's a really important piece of this, because the minute they ask for a discount, you have to reframe that conversation. So in some some customers just say, Hey, can I get a nice face discount? And they're kind of half joking around. And when you say no, they say, I get it, I get it. I'm sorry I messed up. You know, I want this problem to be solved more than, you know, attempting to do a bad joke about a discount. But some people are serious about it. Say, no, no, no, I need this. But a half price or or you get into the whole issue where people start fighting the price. So there's a particular set of processes you have to follow if you get to this point. But that would be the fifth filter, which is. They agreed to the price and agree to the terms.

Hector Garcia, CPA: [00:32:00] They paid the first payment, whatever happens to be and didn't ask for a discount. So those are the five filters and you want to go through these five filters before you intake any client. I believe you could add more or concatenate some of these, but I believe that if you create these five filters, you are going to have just an incredible great pipeline of customers coming in. Now, the other thing I recommend and you can't see this in you can see this in a podcast format, but if you go into the notes of the episode and you download the slides, I went to Zoom white board and I created a process map where I go through the five and I recommend you do this the same, whether you're going to have five filters or four filters or say seven filters, whatever it is, and you create a process map that takes you through, okay, what if the customer says yes? What if they say no? What if they pass this filter? What if they don't? And then create those workflows? So everyone in your organization knows what you're supposed to do. Like, for example, let's say we are in the white conversation and we need to understand the real problem. And at that point, you as the consultant can't figure out the why of the problem. They say even even you spend 45 minutes with the customer and you you still cannot figure out the why of the problem.

Hector Garcia, CPA: [00:33:15] Well, if you are not ready to to to recommend a service, then I recommend that you either say, Hey, mister customer, I can't help you because I don't understand. You know, the issue or two is I think we need to have a workshop. I think we need to have a paid assessment. I think we need to have a paid diagnosis where I could dig into it and actually test it, like sit down with you and press buttons and move paper around and and test the control system and see who in the organization drops the ball or whatever, so I can figure out what the problem is. And that, that that's sort of a half engagement. It's a pre engagement to really just understand what the issue is. And then if you go through that, then you could try to see, okay, do I now understand the real problem and then move into an actual monthly service or engagement or whatever. So so that's all built in that should all be built in, in, in a graphical process map so everyone organization knows what to do. So, Blake, you know, I know many people will listen to this in a podcast that you want because you're much better at describing visual things that I am that you want to talk about the process map a little bit or have any questions at this point.

Blake Oliver: [00:34:26] I just am curious when it comes to this, these filters, do you have one that is the most important to start with? Let's say I have no filters right now. What filter would you put in place?

Hector Garcia, CPA: [00:34:38] Yeah, so that's a good one. My favorite filter to have is the you read my open letter to new customers, right? So like, that would be my very simple right. You can just email it to them immediately. So like if you actually Google Hector Garcia open letter new clients, you will find that in my website where I have this open letter and this open letter, I say, Hey, mister Customer, I know that you want to work with me and you know, I know you want me to solve all your accounting problems, but let's talk about what an accounting problem is. Let's talk about what we actually do. Let's talk about what we don't do. Let's talk about how much we would charge for a diagnosis. And we kind of walk people through, you know, like what is this interaction going to be like? So if you want to just simplify instead of having all these filters, just have an open letter to new leads, open letter to new customers and have people read it first, it would be nice, you know.

Blake Oliver: [00:35:30] That kind of what I'm thinking at the end of that email, you could you could have some sort of instruction that says, you know, if you have read this email in its entirety, please reply with the following. Right. And it's sort of like the I don't know if you ever played that game or had a teacher that did this in school where they'd give you a test and it was a test about like following instructions and you had to do, you know, 20 things on the test. There's 20 items and item number one is read through all of these items before you do anything. And then item 20 is put your pencil down. Thanks for reading everything in advance. You don't have to do any of the other steps. And so then the students who listened or who read the instructions and follow the instructions are done in 2 minutes because they read through the exam and they put their pencils down and those who didn't are proceeding to do more and more ridiculous things like stand up and shout and walk around the room and, you know, all these crazy tasks.

Hector Garcia, CPA: [00:36:29] That's actually that's actually a credible, insightful comment there because, you know, I don't trick people into like, you know, like doing the wrong thing, you know, So they read through the whole letter. But at the end, I can say something like, Hey, at the end of the letter I described for customer personas, and which one do you feel more identified with? And then, you know, like whatever it is I described. Okay. Customer That's. Knows that the bookkeeping is a mess and because of that, they can't make the right decisions or customize the fields that they get into taxes and completely not knowing and just writing that check is the one that causes you more anxiety or whatever it is. So sometimes you want to do is you want to drive people into like three or four options and they would have to have read the letter to. Then I give you a cohesive answer. Otherwise they could give you an answer that could be even not good for them. And the customer also doesn't want to give the wrong answer because it's truly looking for a solution to the problem. So yeah, I completely yeah, I could completely see how that would work.

Blake Oliver: [00:37:33] And I like yours better. It's more productive.

Hector Garcia, CPA: [00:37:35] Right? But but again, people could also just pick one and just give you one. And it could be, it could be the wrong thing I think, at the end of the day. At the end of the day, I think that was what solves. The problem is having a blanket policy where every new client needs to pay for a pay diagnosis, but you'll make an exception to that for the people that follow this specific process. So it's almost like, okay, all right, there's a backdoor. Okay. Okay. So good. I get it for free. I don't have to pay, you know, 500 bucks or whatever. I'll pay a deposit or whatever, but have to follow the specific process. So that could also be another way for you to for you to do that. Say, hey, by the way, I know you don't like the process. I know you don't like the homework. If you want to get on a Zoom, call and explain it to me via a Zoom call, that's a pay diagnosis. So because some people always want to. Before. For the average small business owner, it's difficult to explain their problem like especially. Accounting is mostly an afterthought for most people. And for the most part, the problem has to do with the bank declining a loan or the tax return, or the tax liability being higher than expected, or getting pesky letters that they don't understand what they mean. And that requires some research to understand whether am I compliant or am I not compliant. So that's typically the stuff that kind of annoys people that that that that essentially is the only thing that drives them to go find an accounting professional.

Hector Garcia, CPA: [00:39:02] So in the absence, in the absence of that, you almost have to you have to create that need. And in order to create that need, you need the customer to think through like what's the relationship with accounting and how do they want that relationship to get better? And that requires them to reach something, that requires them to think about something, that requires them to possibly research something prior to coming to work with you. And ideally, ideally, if they do the homework prior and you only need to spend ten or 15 minutes with a summarized, synthesized version of the problem, you can quickly move to the next stage or not move to the next stage without having to spend a whole bunch of time. But it's the customer that says, Hey, my accounting is a mess, I don't know what to do. So we get on a Zoom call and then they want to brainstorm on the spot right there and think through the problem. Right? They're only completely taking your time and disregarding for the value of your time with your other 23 customers or whatever the ratio is right that you have. Right? So so that's something that you want to keep in mind that a lot of people just want to explain the problem on the spot via Zoom because it's easier to say it via voice than just sit down and write it down and research.

Blake Oliver: [00:40:14] Well, and we have to be careful, right? We don't want to give away too much before we've actually gotten the customer. There's a lot of folks out there that want to get free advice.

Hector Garcia, CPA: [00:40:23] Sure. Now I agree. But how much free advice from a one hour call could really customers use and turn into something truly tangible if you think about it? Now, I can tell you I understand how someone is stuck and they can't reconcile one of the bank accounts. And that's the one thing that there are other accounts and told them, hey, I can't move forward until you reconcile that bank account and in through the sales process, they're just trying to figure out what buttons do they press so they can undo the reconcile or move forward so they can continue to work with the other professional. Yeah, I totally understand how we want to completely stay away from that and being someone else is tech support. But in the long run, in a 45 minute call, in a one hour call, how much free advice, quote unquote, can they really use when you think about it? Really, truly, can they really use it? They can't. So you almost have to be careful with being in the mentality that customers are just out there for free advice. If you have a sales process that forces the customer to answer a whole bunch of questions or not even relative to the one thing they want you to fix, then it's just going to completely filter them out automatically. And trust me, this is coming from a public persona that is synonymous to QuickBooks for many people that actually has the answers for most QuickBooks questions and has the ability to answer them via email that gets 15 to 20 emails a day with technical support questions of QuickBooks.

Hector Garcia, CPA: [00:41:49] And and I have to manage that daily and figure out, is this an opportunity to turn into a sale? Should I just answer this or should I tell people, hey, there's a, you know, paid training? So we go through this decision tree every single day with every lead that comes from my YouTube channel. Okay, So in summary, what do these filters mean? Well, it means that you will design a sales workflow that quickly dismisses leads and cannot that cannot pass through those filters. So you can go back and reinvest all your energy and resources on the leads that do. And you need to have an exit ramp. That's a really important piece, an exit ramp for the leads that don't pass the filters because it's the hardest thing is to be be sort of halfway invested in the sales process and then realize it's not going to work. And as humans, we don't we we think that sunk costs are real costs. And we're like, you know, already invested a lot in this customer. I can understand the problem. It's not my right customer, but I'm going to reframe my services around fitting into this customer, and that's going to give you a client that's just not fit for for your strategy. So if you have a quick exit ramp like, Hey, here's a frequently asked questions on my website, or here's a video or here's a book I recommend, here's a list of other accountants.

Hector Garcia, CPA: [00:43:13] If you have a quick exit ramp where you don't feel guilty about sending them there, you're most likely just to just send them there because a well positioned firm, a focused firm, a niche firm. A target client from whatever you want to call it. If you're focused on who you serve, you should probably only be offering to one of the four leads that come in because leads are usually not that good at qualifying themselves. So if you're focusing, then your focus should show in your closing rate. So now that you want if you know for a fact, if you accept the premise and you know that out of four customers, three are not going anywhere, you really want to spend an hour with each of them, you don't. So that's why you need to build in these exit ramps into your system. Now, what does this look like in the real world? So let's let's this is all theory, semi tactical, real world. Step one lead reads a blog article on your website, follows you in social media, learns about your firm through some other mechanism like a client referral or even a Google search. So they they know about you in any possible way. At this stage. The customer should hopefully self select if you don't specialize in them. So if you don't do taxes, make sure your website says we don't do taxes. Some people are afraid of saying, just say we don't do taxes.

Hector Garcia, CPA: [00:44:37] And then they think that I know it's negative, but you can reframe it and say, because we don't do taxes, we're super mega specialized on bookkeeping, or because we don't do bookkeeping, we can we can be super mega specialized on on tax. So you could take what feels like like a negative and turn it into a positive. And if the customer lands on that website and they're looking for the opposite of what you do, they should self select immediately also by using the language of your target customer. So if you talk about if you serve doctors and you talk about your patients and you talk about Medicare and you talk about insurance claims, you talk about all sorts of things that maybe a graphic designer wouldn't connect with, they should self self select too. So again, all of these ways that people learn about you that they should be self selecting. And if you get client referrals, I think you should tell your customer and say, Hey, by the way, if you know any of the customers like you construction companies, yeah, I would definitely take a referral. Like you got to teach your clients what a referral looks like because if you just call yourself an accountant and you're a great accountant, they're going to recommend to any other friends and family that are also looking for an accountant. Right? And it's harder to say no to other especially great client referrals. So I know exactly what that feels like.

Hector Garcia, CPA: [00:45:55] So you've got to retrain your clients to, to, to, to also be self selective about who they refer to you. So step two, step two is you're aware that the lead exists. You're you're aware that the lead has interest and you give them some homework and it could be any of these or it could be all of these, as we talked about earlier, fill a questionnaire, read an article like an open letter to the clients, have them pay for a diagnosis. That's that's homework, by the way. So having to enter the credit card on a page and paying you 500 bucks for a diagnosis, that's homework. And they also might need to show up and they also might need to give you access to their GL, Whatever it is, they may also have to submit documents, all that stuff. So so that's what that's what it looks like in the real world, right? So now we know about the lead. It's sort of kind of within our target market. Now we're going to give them some homework and they got to do the homework. Otherwise they're not interested enough maybe to have a quick conversation, but not with a principal team member with one of the admin people or something like that about this other pieces of homework. So it could be all of these or some of these. Step number three. So at this point, we diagnosed the value conversation. It should not be longer than 30 to 60 minutes, even though you think the longer, the better.

Hector Garcia, CPA: [00:47:13] First, for most people, it's just way too much like like just like being interviewed for an hour, like being asked questions for an hour about something they're not that comfortable or excited about. That might be too much. That really, truly might be too much. So you want to be stay within 30 to 60 minutes for this diagnosis or needs assessment. I think you should always call it a diagnosis or needs assess. Don't call it a conversation or to talk about your services. Just call it a diagnosis, call it a needs assessment. Give it a name that's sort of like in mean serious business. It means that we're not here chit chat. We're here to talk about the problem. We're going to solve that problem. It is truly a value conversation, but never call it a value conversation, because that's that's that's confusing. You can call it a priority conversation. Say, hey, let's talk about priorities. That's what the call is, all priorities. That's fine. Diagnosis needs assessment, priorities, call whatever it is, that's fine. Now, the better the the firm positioning is, the more customers knocking at your door and the more customers you sort of kicking out because you don't have capacity, the more they will do this with a pay diagnosis. But again, if you're not there yet to always charge a pay diagnosis, start start aiming towards that, right? So at least start calling it a diagnosis or a needs assessment.

Hector Garcia, CPA: [00:48:35] And this is what we're going to have. The white conversation, which I think the white conversation is the most important tool in your sales process. So what is the white conversation? This comes from Alan Weiss from $1,000,000 consulting firms. $1,000,000 firms, I think is called. And and the other book is value based fees, of course. So the white conversation basically forces you to not talk about the customer self diagnosis and take it for granted. But it's like take a step back and go, okay, I hear what you say. I hear you what what what triggered you to call me? I hear that you have an issue with your books or your your tax return. You're paying too much taxes, whatever, whatever trigger you to call me. I hear that. But let's discuss with more depth. We're going to peel the onion. So at first one is why this why this means why do you think that this what you diagnose the problem is worth fixing? Why do you think that this is the most important thing to fix? So you basically immediately question your your your your your your lead potential client, question them on the self diagnosis being the the one thing that they feel is the most important thing. And then my answer you well, because you know I paid too much taxes or whatever it is right so make sure and you ask more why conversations so why do you think you pay you pay so much taxes? Well, because we don't do enough planning.

Hector Garcia, CPA: [00:50:03] And then you say, well, why do you think you're doing a funding? Well, my accountant doesn't make the time and question Why didn't you pick an accountant that would make the time? Well, because I don't have time to follow up. I want to count as our proactive. Okay, So why do you think proactive accountants would be useful? And they go, Well, because a proactive accountant will look into my books and will know what's happening ahead of time. So why don't you think the hiring someone maybe weekly to look at your books, could it be more useful than what you're saying, which is annual or quarterly? And they'll go, Well, that's a good point maybe weekly makes. And again, you start going deep and deep and deep and deep into it. That sets you up for the sale, sets you up for the for the onboarding and everything else. The next why question is why now? So you can say, Hey, I've noticed that you've let go of this issue for the last six months. It looks like you haven't reconciled since July of last year or whatever. Why now? Why is it important now they can go Well, because my tax return is due. Oh, well, because I have a banker waiting for a financial statement. That is, that I need to apply for a loan or I'm going through a divorce and I need to and I have a forensic accountant coming in. So why now? There's there's a very important piece of information that has to do with urgency and how important this this problem is.

Hector Garcia, CPA: [00:51:20] And you want to know you need to know you need them to disclose how important the problem is, because usually the severity of the problem from the client's perspective will bring more pressure to you and your team to get it done quickly. And that's okay. I might be able to do it quickly. I might be able to have every single employee drop what they're doing to get this result for you, Mr. Customer. But here, are you willing to pay the price? And we need to understand if, again, if the price you're paying is below the cost of doing nothing right, the next question is why us? You need to build the courage to go. Why do you think we can help you with this problem? Again, this is a weird question to ask because it's almost like asking the customer like, do you think we have good. Marketing or good positioning? Do you think we have a good brand? So have the client the lead reiterate back to you what they understand about your firm, what they understand about your positioning to go, Yeah, I think you can help me because you have this or you have that or I read that, you have this or I read your article or I saw your video or I read your website. And if the why ask question is a very difficult question for you to ask, you've got to go back to the episode one on positioning and you've got to build positioning.

Hector Garcia, CPA: [00:52:33] You have to be able to confidently ask why us can't skip this one? Because again, if you can't answer it, you have bad marketing, you have bad strategy, you have bad positioning, and all you do is go go back and fix it. One episode away from from implementing better positioning. And the last one is why not just leave it be? You know what? If we just don't do it? What if you just let it let it go and the customers to come to you? You know what? If I don't fix this, my wife will divorce me. If I don't fix this, the IRS is going to shut me down or whatever it is, right? The state is going to shut me down or the IRS is going to charge me a big penalty. If I don't do this, I won't get the loan or I lose this deal or I lose this employee. Right. Because I don't have the financial statements to figure out the commission to pay to my employees, whatever it is. Right. So you want to understand what is the cost of doing nothing, so you understand what you're against. Because most of us think that our competitors are other firms, but in reality our competitors is apathy. We lose more deals to apathy that we do to a colleague. What do you think, Blake, about that one?

Blake Oliver: [00:53:47] I would agree. You know, I work with a lot of software companies serving the accounting profession. And more often than not, it's not. That we lose a customer or a potential customer to. A competitor, it's that the customer simply decides to keep doing things the way they're doing them, which is to do nothing. And I would say that's 80 or 90% of the time in software. And I'm curious, what do you think that percentage is when it comes to services?

Hector Garcia, CPA: [00:54:17] I think when it comes to accounting, it's high, but. 95% of people filed the tax returns. I don't know what the percentage may do. So I would say I would say that from the highest level, yes, they're compliant, but there's everybody reconcile their own bank accounts. Probably not. There's everyone review their accounts receivable every week to make sure that they're invoicing their customers the right amount and adjusting it and doing the discounts if they paid on time. Probably not. It's everybody going through the vendor list and looking for alternate vendors that might be able to give you more favorable terms or pricing. Probably not. It's everybody sitting down and reviewing the sales by employee and breaking down the performance and seeing the historical trends. Probably not. Is everybody looking at your item list and seeing what products inventory is becoming obsolete and you should probably not be taking space in the shelf. And what are the opportunities to replace that with new ones? Probably not. If everybody building custom reports for the entire team to have financial transparency. So you can build systems where everybody in the team is engaged in the performance of the organization, but also blocking or limiting the sensitive financial information that I want to see. Probably not. So we can we could go down the rabbit hole as to what people are actually doing and everything else they have apathy towards. And everyone wants to be like Apple. Everyone wants to be like Microsoft, everybody wants to be like Google. But if they're not building systems in place, strategic tactical execution to these systems, you have to monitor and continuously improve the processes. They're not going to get better. So our accounting professionals have this huge opportunity of things they can do for people, but most of the time they have apathy towards doing all these little things. So yeah, absolutely, absolutely true.

Blake Oliver: [00:56:11] Okay. Well, and I love I love I love that you're asking these y questions because this is what ultimately is the reason the customer will or will not sign up with you. And most of the time we just don't ask these questions in in the sales process. And so we don't really find out why. We don't find out why we got the customer, why we didn't. And so we can't improve unless we ask these questions. That's why this is important.

Hector Garcia, CPA: [00:56:35] And the reason we don't is not because we don't know how to do them. It's because we don't have time to do them, because we spend so much time with the with the other customers that we're never going to close because we didn't filter them two or three filters ago prior to getting to this stage. That's why you only want to do why conversation of people already in the in the in the later stage.

Blake Oliver: [00:56:58] I know you got a lot more to get to and we don't have that much time left, so I'm going to hand it back to you.

Hector Garcia, CPA: [00:57:03] Awesome. Thank you. All right. So again, the last step, if somehow the third step wasn't enough, the white conversation was enough. As I mentioned earlier, we need to revert this back to a workshop, a paid engagement, a pay diagnostic, something where the customer actually pays for you to find those y answers. Because sometimes the customer might not know, Sometimes the customer might not be able to tell you or know. And you go, You know what, Mr. Customer? You're right. You have a tax planning problem. But I can't figure out through this conversation what the root cause is. I might need to spend two days with your with your staff, with you, just kind of observe what happens and how the receipts are being managed. And and maybe I go with you to Walmart and see what you spend money on and why you use the red debit card that's business and not the blue debit card that's personal or whatever. Like I might need to like truly, truly, intimately understand the behaviors of everyone in this organization to know the answers to this why questions. And for that, you got to pay, right? So if you can't answer the questions and you truly want a solution to the problem, I might need to hang out with you to be able to discover that. So again. You're doing all this stuff prior. So asking key questions about expectations. I'm going to do a couple of examples of what are the key questions that allow you to sort of have the right expectation.

Hector Garcia, CPA: [00:58:24] One of the questions I like to ask is when you have a general accounting or tax question, how quickly do you expect an answer? It's very simple, straightforward. Everyone's going to say yesterday. Some people might say in two days, some people might say in a week. Doesn't matter. Just get the wrong answer. The second layer of this question could be how thorough or documented do you want this answer to be? So how thorough or documented this answer could be? Give me one second here. They spell thorough there in the in the slides. I apologize for that. So how thorough and them might also be missed. Sorry like. Documented, like sort of what are you you're expecting for me to say yes. Is deductible or is deductible if Section Zakk applies and there is an exception to the rule and exception to the rule is this and that. And here's a website on the iris that confirms this. Et cetera, etc.. So that's a really important thing because some people just want the answer, the gut feeling answer, and somebody want like the book answer, Right? And also through which. Via Slack, via an email, that sort of that sort of thing. So what what medium did you expect the answer to be given through? And at that point you ask, the answer is you have you have raw answers, you ask the questions, you have raw answers, and you can just explain at that point how the firm works and then come to an understanding.

Hector Garcia, CPA: [01:00:09] So, hey, this was your expectation versus how we work. Can we move forward? And that's another this is more of like a sales process filter within a filter. Right? Next, key questions to ask about expectation is what does a perfect accounting firm relationship look like? Just ask a regular open ended question. Okay, so what is a perfect kind of relationship look like? The next sort of layer to this question is what could we do or fail to do? That would be a total deal breaker. Again, open ended question. Let people answer. Some people can say you could take more than three days to answer my question, and that could be if that's a deal breaker to your customer and your firm cannot handle that, that that's a filter within the filter that you're going to get through. Now, the question you can ask is what did the previous firm do that trigger you wanting this change? You need to make sure you know this. You got it. Because sometimes people complain about the last firm. And honestly, if you were to talk to that colleague, you would realize that, yeah, the problem was the customer. Not not the firm. Not the firm. So you want to think about that.

Hector Garcia, CPA: [01:01:21] And at that point, again, based on those answers, you want to at that point explain how your firm handles those situations. And again, figure out can you get through that filter. Now, the key question to ask, which I really like, is called a Dan Sullivan question, which is if you and I were sitting in a cafe three years from now and we were celebrating the success of our relationship, what would need to have happened in those three years for you to be so happy? And if you can, if you can execute this question. And shut up. Like, don't add more framing or reframing to it. Just ask the question. If you and I were sitting in a cafe three years from now and we were celebrating the success of our relationship, what we need to have happen in those three years for us to be so happy. If you could be quiet and let the customer talk, they're going to give you the entire roadmap of what that relationship could look like. And all this stuff that you can cross-sell in the future and how much you can grow that customer relationship in the future. So I love that question. And at that point I pay attention to verbal cues, nonverbal cues, because everything they're going to give you is called. Another key question you can ask is this is one of the I call the capstone question, which is, okay, we've talked a lot of it.

Hector Garcia, CPA: [01:02:43] Clearly, this this issue needs attention. Clearly, we are we want to help you with this. So if you were to invest 20000 to 50000 per year and again, I'm just throwing a number out there, whatever, whatever, whatever that range, whatever that range, in your mind, your thinking is going to be what you're going to offer. Again, we're not even making offers at this point, but if you were to invest 20 to 50000 a year and. And I like to preface that or footnote that immediately with what percentage of the annual revenues is because that context is valuable. So if you have a customer that's a $1 million revenue company, you say, Hey, if you were to invest 20 to 50%, I mean sorry, 20 to $50000 a year, just 2 to 5% of your annual revenues for improving your accounting situation, what results would you expect to see within the next three years? So now we're now what we're doing is we talked about Dan Sullivan question, which is more like imagine a perfect world and now it's, hey, you've actually invested 2 to 3% of your revenue in this particular problem solving endeavor, right? In this accounting situation. Tell me within three years what what results you want to see. And I like to say within the next three years, because typically most accountants think about a year and in reality it takes more than a year to change behaviors.

Hector Garcia, CPA: [01:04:10] And it really it really it's more like year one. We're experimenting with changes. Year or two, we're finally implementing the changes. And year three, we're reaping the benefits of the changes, right? So we kind of we we might need a whole three years for this. You could reframe this conversation around months. If you are solving the type of problem that's more sort of short term. But I think this is the framework to use regardless. And then after they give you the answer, whatever it is, then your follow up question is what type of hard guarantees are you expecting to have in exchange for this investment? So you do so not only the results that they're expecting because expecting is a soft word, a hard guarantee is a hardware guarantee is a hard word. It means it's tangible, it means it's measurable, It means, you know, you can sue me or I can sue you or whatever, and then there's a third party can come in and look at the contract and go, You know what? It's in writing. It passed the threshold or it didn't pass the threshold. Whatever happens to be, you want to ask that in there. And at that point, again, you can you can explain if the firm could even make those expectations or how much of that guarantee they could meet, because you could do partial guarantees.

Hector Garcia, CPA: [01:05:21] You can say, you know what, you're right, I can't guarantee that result. But it might be. I might. I can't promise you anything. I might be able to guarantee half of that. So for half of the range I just gave you 10 to 25000 with this half of guarantee or half of what you expect to guarantee, would something like this work? And you start again. You said reframing around investment versus guarantee investment as a percentage of revenue versus guarantee you give and then all of a sudden we're no longer talking about doing tax returns, We're only negotiating and transformation, We're investing in transformation. That's all it is. Another really cool question to ask again around expectations setting is if you or anyone in your organization requests work, that is clearly something we cannot do. It's something that we just don't have the capacity to do. How would you like us to communicate that? So again, we're talking about something that we don't do. So if I am not a CPA or enrolled agent, I cannot represent you in front of the IRS. Maybe you don't know that or understand that, or your employee knows. I understand that. But how would you want me to communicate to who and or whom or which group of people that we got requested something that we just don't do? How do you want to do that? Honestly, it seems like like a question that shouldn't be asked, but it's a really good one to ask because your customers, you should go back and go, Wait, what are the things that you can't do? Right? And that's a that's a valuable piece of conversation if you didn't have that already.

Hector Garcia, CPA: [01:06:49] And the other follow up question to is, is what if same request, but is it is a service that we can do something we have the capacity to do, but it's not included in the original agreement, it's not included in the price, it's not included in what we negotiated. How would you want us to negotiate? I mean, how would you want us to communicate that? And again, it's just to completely immediately talk about out of scope work. So so at that point you can explain how your firm works in these situations. Another and also sort of capstone question to this is, hey, are you the type of person that is just looking for a just take care of it type of engagement? Like are you that type of person where you hire an accountant and then whatever accounting means to. To you if something happens that to you means an accountant should do it and it is within the purview of the things that we have the legal capacity to do. Are you the type of person that just wants us to take care of it? In other words, do you want us to just be your virtual CFO or your virtual controller or a complete outsource accounting department? Are you are you that type of person? Are you requesting that type of service? Ask for that upfront because if the customer tells you, no, no, no, no, I like this.

Hector Garcia, CPA: [01:08:04] I am not the type of person I want to know what you do, what you don't do, and I want to respect that. Or they might just say they might just say, No, no. Yeah, absolutely. I just want to just take care of that type of engagement. And if they say yes, then you say, okay, I will include that option for that type of service when I present the pricing option. So you you completely frame it that this is a super premium offer. This is an option. And if they opt out for this, they opt it out for this. It's just very clear in your conversation. So that's an example of what this value conversation kind of kind of looks like. And then the last step in this case simply is. You are going to deliver a proposal with your options, pricing or guarantees. This should be probably 30 to 20 to 30 minutes max. You don't need. You've talked enough like this might just be like going through like the fine print and that sort of thing. And then again, we'll cover value pricing and offering guarantees in detail in that we just went through value conversation.

Hector Garcia, CPA: [01:09:07] But on episode five, we'll talk about pricing options. So that's what step five looks like. And just the last sort of summary here is prior to closing the deal, make sure that your customer has key understanding on what to expect in these five areas. One is what is the onboarding process going to look like? So make sure they know upfront that they paid you. What is the next step going to look like or next steps? Second one is what does the first deliverable look like and when to expect it? Because nothing can create more anxiety for a brand new customer than not seeing something in return for what they just paid for and the time that they invested, possibly in a diagnosis or the time they invested, answering a gazillion questions during the value conversation. And you want to avoid that proverbial buyer's remorse by for them having a keen understanding of what that first deliverable looks like. What the third question, the key area that they need to have a key understanding of is what does access to your firm mean? So in terms of people and systems like how do they access people, how do they ask questions, how do they know where to raise an issue to that sort of thing? Make sure they have a keen understanding of what triggers a change order and out of scope requests.

Hector Garcia, CPA: [01:10:27] We just talked about this. What does that process look like? And lastly, how would your customer communicate issues? Feedback breaks. This will happen and you. And you kind of have to be okay with telling. Admitting to your client, hey, stuff happens, right? We have a process for it. And and we respond and we fix it. And if we don't fix it, it triggers a guarantee, whatever it is. But we want to improve and we're not perfect. And, Mr. Customer, you're going to be a pivotal part of that. And this is a process to do that. And again, once that's all set up, then. Just have them sign the proposal. Very important to me. I feel that if the customer doesn't pay something at the same time they agree something's disconnected. Like I do have somebody sign an engagement and get a bill 30 days later, not you've got to sign the engagement with money. All in a single action, either money or some sort of authorization to charge monthly or whatever day of the month. So have the credit card and the. And the signature on ones because that that just that that brings closure to the sales process. That's the final closure to the sales process. I Blake we just have onboarding next which is a pretty quick one because once you have sales process set up, onboarding becomes easy. But any questions are comments on what we've talked about so far.

Blake Oliver: [01:11:55] We had a comment from a viewer. I like budgeting, accounting slash finance services as a percentage of revenue. This can help to frame expectations, unique industry needs and level of service. I tend to like that as well. I actually when I was in practice, I would often gut check all of my pricing as a percentage of revenue to make sure it was not too low or too high. What do you think of that?

Hector Garcia, CPA: [01:12:20] Yeah, I actually did a prior to. I like this comment because prior to doing this presentation I had to cut out like eight slides from the presentation where I did this sort of thought exercise and mathematical because I'm an accountant of course, of so I don't have slides for it, but I'll just talk about it quickly, which is all right. The gross domestic product of the United States is 25 trillion, 26 trillion, and that all mostly comes from businesses. That's that's where domestic product comes from. And there's 32 million businesses in the US. So that means that there's 19. And I'm remembering the numbers. I'm not doing math in my head, by the way, there's $19 million in revenue per. Per business, right? Actually, no. Sorry. There's 1.3 million accountants. According to the labor statistics. Forget about number of businesses, 1.3 million accountants and 25 trillion gross domestic product. That means that for every accountant in the country, there's $19 Million in revenue for every accounting in the country. That's 19 million in accounting revenue in revenue. So think about it, right? You only need one accountant per $19 Million to produce in a business.

Hector Garcia, CPA: [01:13:38] Now, if you take, you know, the average or the median salary of an accountant, which is 78, 80,000, and you divide that by the 19 million, this is like half a percent. So businesses are only investing. This is all averages, right? They are only investing half a percent, the revenue in accounting people. Right. So if your business is spending that in average and they're not getting the results that they want, they're going to need to spend. They're going to need to spend more. Right. If they're not spending even that, they should at least spend half a percent of their revenue in that. So you start thinking, start actually thinking numbers and you go back and go, holy crap, There's literally 1.3 million accountants in charge of accounting for $25 trillion in revenue across all businesses. Accountants can do a lot. Right. So so if you add just one more accountant into the mix or one more accounting profession or one more accounting service, how much more can that strengthen your your revenue or your business?

Blake Oliver: [01:14:43] I love that context, Hector, because it it backs up what I've always known to be true, but I never really had proof of it, which is that when I was pricing accounting services, just the, the bookkeeping, the work to do, the accounting for business, I would never let it be below half a percent. It just felt wrong. So now I know why.

Hector Garcia, CPA: [01:15:05] Hey, numbers don't lie, man. There's a debit for each credit, right? Okay, so let's bring it home to onboarding. So step zero and step zero means before we start onboarding. So step three means you got to be able to have a summary of all the findings, the conversation, the value conversation, the client history, the scope, the documents looked at, the price, the engagement letter. There needs to be one place where the customer, the customer goes, all right, Everything we did at this point, it's here, whether it's a portal or a folder or an email or whatever it is like that needs to be summarized because it's very difficult to start onboarding until the customer knows that everything that happened, it's archived somewhere. Plus, if there's going to be a change in hands, which happens very often, where the person that sells the engagement, not the same person that starts the onboarding process, then that needs to be somewhere. If it's a CRM system, if it's a portal, it doesn't matter, but at least make the customer feel that none of that stuff went into the ether like that. All that knowledge, all that intelligence. Q About your customer, it's collected somewhere, so just make it a habit to send them a summary or send them to a place where there is a summary for all this. So at least they feel like, okay, good. So now it looks like there's a true transition from the sales team to the production team. Most accounting firms fail at this point and most of the stuff it's in the brain or the memories of the person that they talk to.

Hector Garcia, CPA: [01:16:38] So that's a really important piece. And also this might be an opportunity for the customer to go, Yeah, yeah, you're right. However, I said I had three PayPal accounts, not one PayPal account, whatever it is, right? So the customer can go back and at that point make sure they clarify or correct anything where they were misunderstood. And also it gives them sort of a sense of progress. So it's a sense of, okay, we're getting there. So maybe we didn't collect and this is true, you can do as much homework as possible. It isn't until you're literally entering every transaction in the bank statement where you realize, Oh, there's another American Express, you know, that sort of thing. So like, it's almost impossible to truly collect the entire universe of that client's financial situation until you're deep into it. But at least you want them to feel that we're like 95% there, or you want to yourself feel you're 95% then plus, I feel personally as a customer that having to explain myself many times is my number one complaint from any customer service that I consider to be bad customer service. So you never want to give your customer the feeling that they have to explain themselves again. So if you don't put that summary of information somewhere, guess what? They will explain themselves again. And I'm telling you that stuff accumulates and like the rage around having to explain yourself, It is a weird unconscious feeling that it builds up and builds up and it gets worse and worse and worse and it eventually explodes.

Hector Garcia, CPA: [01:18:15] So yeah, that would be a really dumb way to, to, to, to just like, break your customer relationship by not just putting a summary of everything you talked about. So at one in the onboarding process is make sure your customer understands your systems right. What is your system for communication? What's your system for document delivery? Sit down with them and make sure you watch them log in into the portal. I'm telling you, the best investment in time you can make is watch your customer login into the portal, create the username and password if you have one. And by the way, if you don't have one. Welcome to 2023. You need a portal of some sort, but watching your customer log in to the portal, create an account and like do it with you and go, okay, so we agree you have access to the portal. Great. That's going to get rid of like 80% of your problems in the future. Second one is sit down with them and have them upload a document. Just have them like, Hey, grab a document, upload it. You see a little checkbox at the end. You see that listed there, you see the time frame, you see the name of who upload it. Like you see like you went through the experience of uploading a document. And lastly, I have a sample document in there that they download, so make sure that they go to the process of downloading a document.

Hector Garcia, CPA: [01:19:33] You do that maybe in a Zoom call, maybe not recorded, Zoom call that you send over the recording to them. Again, that's going to take away so much anxiety because they are using your systems, they are using your portals. And if your systems have a chat and messaging option, what you don't want them to text you, you don't want them to give you verbal instructions, you don't want them to email you, you want them to use your chat system, or whether it's slack or or your portal system, have them send a message and you reply. Back. Hello? Got it. Whatever it is. Right. If you do that, I'm telling you. I mean, I've been in practice enough and have enough customers to tell you that when people use your portal, everything is night and day. I mean, it's just. Just completely changes your process. Step number two, introduce your customer to all the people that will be interacting with on a regular basis and to the backups. Just having that just a quick introduction. Hey, this is John. He's working on your account and here's Robert. He won't be working in your account, but when John is on vacation or sick, he can jump in, read the notes and answer some questions, or at least do enough until John gets back. So make that make sure that they put a name to a face.

Hector Garcia, CPA: [01:20:47] They know who's who. That sort of thing. You know, maybe a quick zoom call. And some people just have bios on the website with all the emails and all the phone numbers. It could just be an email. With everybody's bios there, whatever it is, just the customer goes, This is the people you will be interacting with. Make sure that that that's that's how they feel. Step number three is this cost escalation process. Make sure they understand that as a firm, you want to empower your lowest level employee to do as much as possible, not because you're trying to save money. And that's a really important piece. Be very careful about that. Don't say we're trying to be efficient. Don't say that, because that to the customer means, oh, you're just being cheap. You want your cheapest employees to do everything. You have to say, Hey, we want this your first line level employee because they're closest to the issue, right? Because not because they're cheapest, not because, you know, because I'm the partner and I'm so important. It's because the person closest to the issue is most likely to solve the problem and make sure they understand that there is a policy in your in your business for proper escalation. And they have a supervisor, a manager, a partner, and make sure that the customer knows that your process is set in such a way that if the customer tries to skip it, you might catch the next person off guard and that will delay the process of getting the problem solved.

Hector Garcia, CPA: [01:22:14] So if you allow your team to go to the proper escalation process, the right amount of information moves to the right person that can make the right decisions because a partner that needs to issue a refund or something like that doesn't need to look at a bank statement to do this. They don't need to look at an issue with the balance sheet or whatever, like so. So it's very important that they understand that your your team is set in place with a particular set of skills and you have a again, all you have to say is we have a process in place for escalation because most people just don't trust that you do. If you say it and they believe you, most of the time they'll respect it. Okay. Step number four of the onboarding process is lastly, make sure your customer understands that all the promised timelines are dependent upon them to respond all the questions and upon them to upload all the documents, because generally the customer says, Hey, we're going to have a return by and you can say, Hey, at this pace, if you upload all your documents, I can have it done, whatever it is, March 10th. But then they don't upload stuff until March 9th, and then they call you and say, Hey, where's my return? You said March 10th. So that's a really important piece where you have to communicate that the timelines, the deadlines, the promised delivery date starts, the clock starts from where all the documents are uploaded and your and tell them my employees are instructed not to start a file until the file is complete.

Hector Garcia, CPA: [01:23:43] Period. We just we're not that good and starting and stopping, starting and stopping. And for your sake, for efficiency, for accuracy. I do not want one of my employees to be working on ten different files at the same time and potentially confuse one file with the other and severely slow them down or or or have them have just be inaccurate. So. So tell them, tell your customers, hey, I have instructed my employees that they can only move forward once the entire file is complete based on the list we gave you, based on the the the things that we requested, that sort of thing. So that's the most important thing. And also make sure that. Again for your firm. For your firm. Urgency is based on how quickly clients get you the required information. For you. The customer urgency is when do you need it? But we don't know when you need stuff by. Like we could hear it, but we don't know it. We only understand urgency within the context of how quickly you gather the required information. Nothing to do with how much in a hurry you are, because we just can't. We can't accommodate everyone. So like for us, when you give us the stuff, that means it's urgent. You don't give us a stuff. It means it's not urgent. It's just a very simple thing for us.

Hector Garcia, CPA: [01:25:09] Next step is explain to your client how they can learn more about accounting and accounting processes. I know many accountants don't want the clients to know, but in reality the better educated your small business client and their employees are about accounting processes in general. Doesn't mean they have to do stuff, but the better they understand what you do and why it matters, the more collaborative it can be. Look, I do it like this, I tell them. Remember, the more we as a firm learn about your company, the better we can sell you help. We can help you solve your problems. Conversely, the more you as a client learn more about what we're doing and the right things that you need to do in order to make our job more efficiently, the faster we can get results. So yes, there's there's always an overarching theme here, which is if you get better at processes yourself based on our guidance and we'll explain to you how we want you to learn this, the better our services will get. Long term. And I would say finally, just have a reference guide of all the steps. You know, have a have a breakdown, a PDF, like a mini manual, a playbook, whatever you want to call it, of all these tasks and, and, and sort of how to navigate the, the, the work with you and that's it like that, that entire presales strategy, sales process and client onboarding will most likely help you build that focus for.

Blake Oliver: [01:26:50] Thanks so much, Hector, and thanks, everyone, for joining us. Thank you to Avila for sponsoring. We really appreciate their support. You can learn more about Avila and their solutions at Avaliacao Accountants. Be sure to subscribe to our email list to get notified of future live streams and very importantly, to get the link to the course for CPE when it is available. The course will be available on the earmarked CPE app next week. Download the app if you have not search for earmark CPE dot com and you'll get the link to download the app there on our website. All right. Anything else you want to add before we go, Hector?

Hector Garcia, CPA: [01:27:33] Yeah, we can add a couple of next steps. Like what I would recommend. So. So you, you loved what you learned. You think this is something you want to implement. What can you do? So there's three exercises I would recommend exercise. Number one, get a random person outside your organization, someone that doesn't know who you are, what you do. There's people out there that actually offer these services and have them look at your website, look at your email out of responders, look at your email signature, look at your social media, your posts, actually call your office and inquire about your services and have the person report back to you things about your firm like Who are you? What do you do? How do you do it? Who do you do it for and why do you do what you do? Just have them go back, give you a quick one page summary of that. And if at any point in time that person or group of people give you stuff that's not congruent, then there's something with your pre sales marketing strategy or whatever your positioning that needs to be fixed. Exercise number one. Exercise number two is you can use something like Zoom Whiteboard or there's all sorts of process mapping software that's free out there or even pay for one. I think it will be totally worth it. Develop a process map of every customer interaction your customer has from pre sales, from inquiring about your services through the sales process, through onboarding. Finally, through the first deliverable and cleanly delineate at least four things in your workflow. One is what actions or tasks are initiated in your firm to what actions or tasks are triggered or initiated by your customer.

Hector Garcia, CPA: [01:29:16] Which technology portal, whatever is being used through the process and at each event. What is the action plan that you have internally for when the workflow breaks? And finally, what is the customer expecting to observe and which elements of the process you want to make visible versus invisible? And of course, if there is a opportunity to collect feedback on any of the stages, how you would do that. So you want to lay that out in a in a process map. And the third exercise is for your leads. Is it clear what the price of your services are or a price range? And what is the process of getting a price, scope and understanding of our AI? Sometimes the prices on your website. Sometimes it's very difficult to put a price in your website, but it's a clear for a lead to know how they go about getting a price right. So what's the process to get a price? That way you're not charging an hourly rate, right? Because obviously this entire context of building a focused firm is we don't charge hourly rates, right? We charge a price that's below the value we create, period. That's that's the fundamental business model that we have. So is it clear for your customer what what is a price or price range or how do they get finally get a price? Those are the three exercises. Blake I want every firm owner or firm manager, firm leader to walk away with this session.

Blake Oliver: [01:30:46] I love those great, great exercises to do. Please join us again for our next live stream. Subscribe to our earmark YouTube channel and you'll get notified. Hector, have a great week. I'll see you here next week.