Welcome back to Count Me In,
IMA's podcast about all things affecting the accounting and finance world.
I'm your host, Adam Larson. And this is episode 164 of our series.
Today's featured guest is Gordon Van Wechel.
Gordon is president of the Alchemy Consulting Group.
He is a business marketing strategist and he helps firms recognize the true
business value, grow their business,
and provide strategic support to professionals in business. In this episode,
he talks with Mitch about the value of working with an agency and the benefits
that come from proper advertising.
Keep listening as we head over to the conversation now.
So Gordon, thank you again for joining us. And, you know,
I just want to start off our conversation by asking, in your opinion,
your experiences does a professional practice need to have an
agency working for them?
Well, at the risk of sounding a little bit, self-serving Mitchell,
because I do run an agency.
I'll answer the question with a yes.
But let me give you some reasons why I say that.
There's such a multitude of marketing channels available today.
If you think back just 15 years ago, you know, a practice had, you know,
the yellow pages, they worked off of referrals. Google was in its infancy,
YouTube hadn't been invented, social media, wasn't a factor, you know,
they could do radio and TV, but there just wasn't that much to choose from.
So it was relatively easy to get the word out. That's changed today. I mean,
it would be easy for you and I in two or three minutes to come up with 50
different effective marketing channels that a professional practice
can use and, and be effective.
Now a lot of times when I speak with professional practice owners, they'll say,
well, you know, my business is referral based,
so I don't really need to do any advertising.
What they don't realize is that there are multiple surveys out there that
say that between 85 and 90% of the people who are referred to a business
will first go online and they're looking for two things.
They're looking for the company's website,
because that kind of proves that they're legitimate and,
and they want to look at that about us page and see who they might be dealing
with so they select that company.
But the other thing they're looking at is the reviews.
That social proof has become critically important in the mind of
a prospect because they want to know that the vendor they're considering is
doing an excellent job with their current client and is likely to do an
excellent job with them. Well, putting all of that together,
managing `that diversity of channels and keeping up with the
testing,
knowing where their prospects are going for information updating of campaigns,
you can't legitimately run a practice plus do all of that. So for those reasons,
I think that having an agency is important even for a smaller,
professional practice.
But the caveat to that is to find an agency that understands your business
and that's willing to work with you where you're at with the budget that you
have available at this time and grow with you.
So I think you've probably already addressed two of the answers or possible
answers to my next question. But you mentioned,
relying on referrals and then potentially budget concerns,
my next question is what are some of the biggest mistakes that you see
professional practices make for those that do pursue some form of marketing?
You know,
what are some of the obstacles or challenges that you find to be most familiar?
Sure.
I think one is not having a really clearly stated value proposition in
their advertising. You know,
the value proposition is why should I choose you versus the multitude of other
firms that are available to me in the local marketplace?
Something that we enjoy doing with a new client or even a prospect is
we'll have them open up their website and take a screenshot of the homepage,
the portion that's above the fold,
that a prospect can see when they open up the website,
take a picture of that and print it out and then do the same thing with four or
five or six of their competitors.
And what they'll be surprised to see is how similar all of those websites are.
You know, they all promise the same things.
They all use the same platitudes and generalities.
Many times the only difference between those pages is the phone number.
And if that's the case,
then what your prospect is left with is the impression that everybody is the
same. And if everybody's the same,
all that prospect's going to be concerned about is who is going to give me the
service for the cheapest price. And, that's a war that I don't want to get into.
And I don't think many business owners do.
Nobody wants to be in the race to the bottom.
So not having that clearly stated value proposition and in today's
marketplace,
the absolutely most effective way to state that is in a little short,
60 to 75 second video of the business owner looking right into
the camera and saying, here's who I am. Here's who my firm is.
Here's what we do. And here's why you should consider using us. And just 1, 2,
3 bullet points, you know,
whatever that value proposition is and state it as clearly and succinctly as
possible and literally in 60 to 75 seconds.
Any longer than that and people aren't going to listen.
So taking that a step further,
what is the most overlooked marketing channel professional practices could be
using more effectively based on what you just shared,
it feels like potentially a lot of practices are very interested in the
social media, maybe? Maybe their website is their go-to, you know,
from your experience,
what kind of gets overlooked and really should be focused on better?
Well, let's assume that a firm has a decent,
basic website in place and it doesn't have to be a 10 or $12,000 major
investment. It's got to be something that, as I just said,
states their value proposition clearly and gives a person some insight into
what the firm stands for and who some of the people are.
Assuming that's in place and they have a Google business page that's in place
and optimized that's the foundation.
The next most overlooked step is retargeting.
Now retargeting is a form of paid advertising.
If you're not familiar with that term, you've certainly experienced retargeting.
If you've ever shopped on eBay or Amazon or,
really most any of the major retail websites anymore, you look at a product,
but you don't buy it. You see ads for that product for the next week or 10 days.
Well, you've been retargeted. Retargeting,
I like to tell our clients is the single most powerful advertising you can
do because it makes all of your other advertising more effective.
And if you think about it for a minute, most of us,
when we do marketing for our company,
we're trying to drive traffic to that website. That's our 24/7 salesperson.
But when people visit that website, Google will tell us that 96% of the time,
they don't take an action. They don't fill out a form. They don't click to call.
If you have those links on your site, they don't pick up the phone and call.
They leave. Well with retargeting, you can keep your brand,
your business name in front of them for a period of time, a week, 10 days,
two weeks,
however long the normal person takes to make a decision for your product or
service. So retargeting is critical. Related
to retargeting are banner ads.
Now banner ads are similar to retargeting ads. They look the same.
They're ads that you see on websites,
but with the sensory economy that we live in today,
we can really very finely hone in on target markets with those
ads. And I was doing a presentation a couple of weeks, a live presentation.
And I joked with the audience that if they wanted to target housewives between
the ages of 35 and 45 with two children at home who drove a Volvo
and ate Yoplait yogurt,
I could put them in front of that audience in their town.
That's how precisely we can target things these days.
So for a professional practice that understands who their customers are,
we can very easily expose their brand to those customers and
prospects through, banner ad campaigns.
And then the other aspect of paid advertising is Google ads.
And a lot of firms have had a bad experience with that,
but that's because of the complexity of Google ads. And that,
again goes back to your first question Mitchell.
If somebody's going to launch down that path of spending money with Google,
they really want to have an experienced agency managing that for them.
But I think the most overlooked marketing channels are paid ads.
A lot of companies will jump into search and to optimization and I'm not going
to minimize the importance of that. But the reality is that's a long term play.
You can spend a lot of money over eight to 12 months to get some of your
keywords, highly ranked on Google.
And a lot of firms don't want to spend the money and not get the more immediate
ROI. Well, this paid advertising campaigns will give them that immediate ROI.
Now, obviously this is paid advertising.
So we're looking for the firm to spend some kind of money with an agency to get
the name out there.
You also mentioned just recently that one of the bigger mistakes that some
businesses make is potentially going out of budget or, you know,
not spending money in the right place with the right agency or such.
So when it comes to firms and a lot of our listeners work for
those smaller businesses that you were discussing earlier, you know,
what would be an appropriate practice for spending on advertising?
You know, a lot of agencies will tell you spend as much as you can,
or they'll come up with some trite phrases as well.
If you spend a hundred dollars and get $110 in return on it,
that was a good spend. Well, that makes no sense at all. You know,
that doesn't cover your cost of goods or your labor, your operating overhead.
What we consult with our clients is to first understand what's the average
transaction value in your company. And just a very simple example,
let's say you prepare tax returns for $500.
Now that's low for a business return, I understand, but just as a round number,
let's say you prepare a tax return for $500 and you keep a client on an average
for five years. So that's $500 a year, times, five years,
that's $2,500.
So the lifetime value of a client in your practice then is $2,500.
So the advertising budget question is how much are you willing to spend
to acquire a $2,500 client?
And frequently firms will spend more than the initial
transaction value to acquire that client because they know that
the average is $2,500.
Now I've had people throw up their arms and say, oh,
but we don't keep everybody for five years. And that's true,
but you also keep some for more than five years, we're talking averages here.
And the $500 example is overly simplified because most companies,
multiple tiers of services and products that they offer.
So you have to figure out what your average transaction value is in each of
those tiers and, and judge it accordingly,
but to calculate your budget, you want to really understand those numbers.
And then you,
as a business owner have to determine how much are you willing to spend to
acquire that new customer. But here's a rule that we found to be true. I mean,
in the 18 years we've been in business and I think it's true across every market
niche, you know, finance and accounting, home improvement, trades,
medical practices,
the company that can spend the most to acquire a new customer will win the
market share battle every time. And the only way, you know,
what you can spend is to really understand that transaction value and lifetime
value of the customer.
Now that makes a lot of sense. And the example you shared well,
maybe oversimplified certainly makes it very easy to,
translate to whatever the business is that our listeners are working in.
As I said, you know, we focus on finance and accounting professionals.
We have a lot of small business listeners. We also have those who,
if they're in business on their own or aspire to be entrepreneurs and in
business on their own, a big part of that is kind of, you know,
taking one project and then going on to something else down the road. Right?
So I think a big question is if I'm running my own business,
I'm focusing on my own marketing, so on and so forth,
but this is not my lifelong play. You know,
I have some aspirations of potentially moving on to something else.
What should I be doing today?
What kind of consideration should I have short term or long term for the,
you know,
the sustainability of the business as it is now getting ready to move on to the
next phase of my own business?
Yeah. I think all of us start businesses do so with the ultimate idea that we're
probably going to sell it, you know,
we're going to fund our retirement or our kids' education or whatever, or,
we're just entrepreneurs and we want to do something different in life.
And what we see in the alchemy transition side of our business,
where we help business owners prepare their businesses for sale is one
consistent fact is as business owners, we tend to use a rear view mirror.
We look back with understandable pride on all of the things that we've created,
the people that we've developed and the market that we've developed,
all of the things that we've done to make our company,
the profitable enterprise that it is.
But a buyer doesn't care about that.
A buyer is looking at what's the future cash flow of this business if I own
it. And what's my ROI going to be based on the amount I spend to acquire it.
So when we consult with business owners who are thinking about transitioning
their business in the next three to 10 years,
we have eight different value drivers that we use to help them prepare that
business for sale. Let me just summarize a couple of them. You know,
one is recurring revenue.
Recurring revenue is not the same as repeat business.
Recurring revenue is where you have people that have committed to paying
something every month or every quarter for your services.
I'll give you an example.
We are working with a CPA firm who has a focus on a niche
with real estate professionals and real estate investors.
And so what we've done is helped them create three tiers of support
for those customers,
depending upon how many investment properties they own and how much consultation
they need during the year in terms of tax planning.
So there's three different tiers of support,
three different monthly payment plans. Well,
what that's done is converted a lot of their regular customers over to those
monthly plans because they want that increased level of support. It's not just,
here's my paperwork. Please repair my taxes. It's,
okay I'm buying these next three properties. How do I need to structure them?
I'm selling four properties this year.
How are we going to make sure we don't have to overpay on taxes?
So by creating those tiers of support,
it has created a much more sustainable relationship with those clients.
And in turn created, an increased value to their practice.
Hub And Spoke is another tool that we use.
Most businesses tend to revolve around the owner.
The owners are involved in all the hiring decisions, they're involved in sales,
they're involved in most of the customer transactions that they're the hub and
the rest of the firm are the spokes of the wheel of their business.
The rule of thumb we use that is if you,
as the owner know more than 15% of your clients by first name,
you would recognize them if you were at the grocery store and you would call
them by first name. That's not a good sign from an acquirer's point of view.
The reason being that,
that means there's a lot of customer loyalty to you as the business owner.
And that may bode well for me as the acquirer, it may not.
I know when I'm gonna acquire a financial practice,
I'm probably going to lose 20 to 25% of the clients, or at least statistically,
that seems to be the norm.
But the more I can show that the current owner isn't the focal point
for those clients, then that relationship isn't the strength of the firm.
The better my opportunity is to enhance my return on acquiring that firm and
therefore the more I'm willing to offer for it.
So the focus of that part of our business is helping practice owners
understand how their business is going to be viewed from an acquiring company or
individual,
and try to set it up to be the most appealing to that person as possible.
Very interesting. And, considering that dynamic of a business,
it would make sense that you would like to see the operations and the
organizational
core values translate across the organization, right. Not just be,
personified by one individual. So thank you for sharing that.
I do have one question as a follow up to kind of wrap things up again,
gearing back towards our listeners in finance and accounting.
I know you said you do work with a number of firms in that space.
I'm just curious what you kind of envision as far as how finance
and accounting firms specifically can differentiate themselves, you know,
going back to what you said earlier on, some successful practices,
best practices,
things like that for our listeners who may be looking to utilize some marketing
to get, an extra step up on their competition.
Sure. Well, one is to identify a niche where you have expertise.
I just used an example of a CPA firm that had a lot of experience working with
real estate investors and real estate professionals.
When we started with them,
they had a generic website that didn't say anything about that,
even though a good percentage of their clientele were in those niches.
We wound up creating a completely separate website and doing marketing directly
at those niches and they saw a 25% increase in firm revenue,
the first year as a result of focusing on that niche.
So I think for a lot of firms,
they have areas that they either enjoy working or have specialized expertise in.
Maybe it's it's nonprofits,
maybe it's building trades and doing job cost accounting. I mean,
maybe it's retail,
but really focus on what your expertise is and then identify
markets that you can enhance. That you can go penetrate with that expertise.
Another thing that you can do is consistent follow up with your clients.
Most firms work really hard, five months a year,
and then the rest of the year they're finishing up some business returns.
They're are not following up consistently with our clients and really
involving them in tax planning.
They're not becoming the valued professional resource for their business clients
that they could. And I think when they start to do that,
they increase the relationship as well as the revenue from their current current
client base.
But they also generate a lot of additional revenue because they're providing
that extra value add.
So those are two things that come to mind that a practice can do immediately and
that's even a small practice.
This has been Count Me In,
IMA's podcast providing you with the latest perspectives about leaders from the
accounting and finance profession. If you like what you heard,
and you'd like to be counted in for more relevant accounting and finance
education, visit IMA's website at www.imanet.org.