This blog post was prompted by a tweet. It was posted by a top 30 firm of accountants:
“Are you aware of the range of services we provide? We do more than just a set of books at year end. Take a look”
There was then a link to a page on their website which described all the services the firm offers. It was pretty generic and almost identical to the list you’d find on almost all medium sized firms’ websites.
And that’s part of the problem for firms like this.
They have to allow for the variations in style, approach and service provided by so many people within the firm. As result the overall service promises are bland and interchangeable. Of course they are.
Each medium sized firm’s name and branding only takes them so far.
Their ideal clients will shortlist a number of firms as advisers. I’ve done it myself in recent years when seeking new accountants for a charity and for a members’ club. The first time I did this from the client side I realised how much it’s down to the individual partners to impress at pitch meetings. They need to evidence their teamwork – beyond bland assertions. And they need to distinguish their service offerings from their competitors. And yet – how different can they really be?
What makes the difference when it comes to choosing one firm over another? The people are often interchangeable. This is evident from the way so many people move between firms. There is even more movement and poaching of partners from firm to firm now than there was when I was in practice.
So is it the firms that are really different or just their branding and marketing? Most often it is only the latter. Is that enough? I think not.
What also struck me about the services on the web page referenced by the tweet was that the list started with a reference to ‘auditing’. Given that most companies with a turnover below £10million no longer need an audit it seemed an odd service to highlight to visitors from the firm’s twitter account. I doubt many CFOs or major shareholders of substantial corporates are following the account. So talking about auditing will have been irrelevant (and thus a turn off) for the majority of those who might see the webpage.
Ok. Maybe that simply highlights an overly ambitious social media manager. It’s all too common to see accountancy firms tweeting to a non-existent audience. I’ve addressed this topic before on my blog so won’t say more today.
My final observation by reference to the tweet concerns the language used on the webpage. It’s really jargon heavy. I don’t consider myself a marketing or copywriting guru. But I do recognise when language isn’t appropriate for the target audience. That page is written for accountants rather than in language that will resonate with clients. Again, this is a common mistake made by accountancy firms – of all sizes.
If I’m generous perhaps the tweet and the webpage are actually intended to support the firm’s recruitment effort. In which case well done to those involved. But this doesn’t change the main point I am making here.
The problem for medium sized firms is that they rarely offer a compelling reason for smaller growing businesses to engage them. Unless the individual partners have built solid reputations and followings. And cost conscious business clients are increasingly aware that larger firms charge higher fees than smaller firms. Yet the medium sized firm offer pretty much the same service as smaller firms. So why go to a larger (medium sized) firm and pay higher fees?
The standard reply to that question is that ‘our firm offers a wider range of services. All available under one roof.’ Ok. But how does that benefit me as the client? Especially if I have to pay higher fees for the basic services I need every year?
I first referenced this challenge in a blog post in July 2010: No long-term future for ‘halfway house firms of accountants’. This was a term I used to reference the same medium sized firms that I am referencing in this blog post. In 2010 I said:
“They are constantly fighting to become more efficient so as to reduce costs and maintain, let alone, improve profit per partner.”
“The only mid tier firms that will survive and thrive are those with clearly defined niches. By this I mean those that are known for having an area of expertise that makes them really stand out from the pack. They recruit staff and partners specifically to bolster this expertise and they don’t waste time and money trying to be all things to all people. And these firms will only survive as regards those specialist areas. The more generic areas of their practices will shrink as partners retire or leave to go to smaller firms with lower overheads and potentially higher profits per partner. The smaller firms will often be less pressurised environments too – especially if they stick to clearly defined, promoted and valued niche”.
“Those mid-tier firms that have no such recognised niche expertise will face increased pressure from the egg-timer squeeze of both the largest firms and of the smaller more focused and cost-effective firms. The larger ones are perceived as having more credibility for the provision of a wider range of services – when these are needed and valued. The smaller ones are able to provide compliance, advisory and special services more cost effectively.”
Since writing that blog post we have seen a further merging of medium sized firms. This will continue to happen, I suggest, at a faster pace over the next ten years.
There aren’t enough larger clients to go round. Medium sized firms of accountants have many smaller clients too. Clients who don’t need access to a wider range of services and who would typically be more profitable if their accountancy fees were lower each year.
The problem for medium sized firms is that they have to charge higher fees than smaller practices. And plenty of consultants are encouraging them to charge ever-higher fees too. I believe that a sizeable majority of clients of the medium sized firms do not secure enough additional benefits to justify paying higher fees than are charged by sole practitioners.
Over time the smaller clients drift away from the larger (medium sized) firms. This is evident from the number of established businesses that move to my clients – savvy sole practitioner accountants. They are able to provide more advice and to spend time with clients without being pressured to increase their billable time or to leave clients in the hands of managers.
The survival strategy for larger firms invariably involves merger and hope. And yet this only defers the inevitable.
A future in which there are fewer medium sized firms and more small firms and sole practitioners providing more cost effective and genuinely personal services to the majority of small businesses in the UK.
This all helps explain why I specialise in advising sole practitioner accountants.
I’ll happily speak at conferences and events run by larger firms. When I do that though my focus is generally on the individual partners and senior staff. I don’t advise firms on what they can or should be doing (other than re social media strategy where I do have a bit of a reputation in this regard). Many more medium sized firms will merge or break-up over the next ten years in my view.
So I address the individuals in the firms as ultimately it is them, their reputations and their expertise that clients need to buy. Backed up by the firms’ branding.
This is the real challenge for medium sized firms – they need to invest (even) more in making sure their people stand out from their peers and competitors. And yet, as partners build their reputation, credibility and following, so they become better placed to leave the firm and to take ‘their’ clients with them. And the more attractive becomes this prospect when coupled with the prospect of lower overheads, less firm politics and increased rewards. And fewer generic tweets about the generic services available from another medium sized firm.