Retain Clients and Help Them Recover


The economy may be on the road to recovery, but typical clients still face uncertainty. Recently, I asked a friend how business was going, and he dryly responded that even the customers who have no intention of paying are not buying.


Not all of your clients may be struggling this badly, but most are likely feeling the impact of reduced consumer spending, budget deficits, financing uncertainty and a volatile stock market. Clients with a limited discretionary cash flow might be spending less on one-time project work that your firm has done in the past. In an effort to reduce costs, your clients may start to reconsider the scope of their engagements or even begin shopping around for a firm that charges less—a prospect your competitors will aggressively pursue. If any of these conditions are affecting your bottom line, now is the time for your firm to turn to its existing clients as a source for tangible growth.



Prospecting for new clients is probably not a first priority in a down economy. Most CPAs are willing to invest 20 to 40 hours or more to attract a $50,000-a-year client but are instinctively reluctant to spend a few hours with a current $50,000 client if they can’t put it in work-in-process and bill for their time. Yet, spending time doing what it takes to retain an existing client clearly has a greater return on investment after factoring in the prospecting time (in lost billable hours) and the typical first-time costs associated with new client engagements. Exhibit 1 (below) illustrates the cost of the time investment in new vs. existing clients.


A satisfied and loyal client is likely to stay with the firm longer than a new client that might shop for new CPA firms every few years looking for a better deal. Thus, more future value may be gained by retaining an existing client than by attracting a new client. While the comparative efficiency of keeping existing clients is not a new concept, few firms do what is necessary to achieve significant client satisfaction and growth through client service.


Exhibit 1: New vs. Existing Client Investment


Attract New $50,000 Client Retain Existing $50,000 Client
Time Investment 30 hours @ $250/hour Four hours @ $250/hour
Opportunity Cost $7,500 $1,000
First-Time Engagement Costs $5,000 None
Profit Margin 25% = $12,500 25% = $12,500
Profit Margin Minus Expenses $12,500 - 12,500 $12,500 - 1,000
Positive Net Profit $0 $11,500



Is your strategy to hunker down, get the basic work done, and hope difficulties pass quickly? Recent history and economic indicators have shown that recoveries after recessions of this magnitude are slow at best. Instead of maintaining the status quo, proactively address the risks by investing in outstanding client service. This means going beyond your standard high-quality work, accommodating personnel and timely delivery. Firm partners should spend regular face-to-face time with “A” and “B” clients—without the clock running (see sidebar, “Grading Your Clients,” below).


Client-focused contact shows your best clients that you value the relationship and want to help them through times of economic distress. You and your partners should help them explore their alternatives and share some best practices when appropriate.


Stephen Smith, principal at Holbrook & Manter, a firm with locations throughout Ohio, says his firm recognized the troubles ahead for clients and decided to embark on a mission in early 2009 to become more client-focused. It developed a client matrix that listed all services the firm could provide versus the actual services being provided for clients that accounted for 80% of the firm’s revenue. Members of the firm talked to those clients about their current needs, asking such questions as: What key decisions do you need to make in the next year or so? How are you monitoring business? What is keeping you up at night?


“If, during the course of our client-centered conversations, an opportunity arose to educate them about services we could provide for them to help them with their upcoming needs, we worked it into the conversation. But mostly we were there to listen to them. As far as bringing in more revenue, only time will tell, but most important is what happens to our clients down the line. If they don’t flourish or survive, we could lose a client,” Smith said.


Make sure the client understands that you are there to help and are not trying to sell them something. Demonstrate your firm’s commitment to “A” and “B” clients and retain their business by offering some or all of the following activities at little or no cost:


 Forecast obstacles. Are your clients expressing uncertainty about the future? Compile what you know about their industry and their company to help them anticipate potential challenges and put a plan in place to address them.


 Improve lender relationship. As your clients deal with diminished lines of credit and strained cash flow, maintaining regular communication with their bank is imperative. Be by their side in these meetings and help them provide accurate interim as well as year-end financial statements and/or projections for their lenders.


 Explain statutory changes. The impact of President Barack Obama’s administration is a perfectly good reason to connect with your clients. Examine the new legislation and proactively give them tax-saving advice customized for their situation.


 Invest in “I care” time. At least once per quarter, find the time to meet face to face with your clients (beyond the required interaction during engagements or when they give you a call). Spend time strengthening your personal relationship by learning about their families, their hobbies and their passions. Act as a sounding board and give them a chance to vent without trying to supply all the answers.


 Conduct cost-cutting review. Before these clients begin to look at your services as an inflated line item, offer to review their entire cost structure to help identify possible savings with their processes, vendors and suppliers.


 Discuss your fees. Let clients know that your firm is constantly working on efficiency improvements as well so that you can continue to offer the same services without raising fees. If the situation warrants, be willing to discuss possible fee reductions (see sidebar, “So Your Client Wants Lower Fees …”).


 Define excellent client service. Tell clients that you are working to improve your client service, and be sure to ask your top clients what “better client service” means to them. Make the question as informal—and inexpensive—as you like. The important thing is to document their responses, communicate them to the rest of the firm, implement strategies for improvement, and track your success by checking back in with those clients.


 Communicate value proposition. Make sure your clients understand the benefits of the services you provide. For example, cost segregation studies are more than depreciable life and engineering studies. They create increases in cash flow and economic profits.


 Be proactive. This means doing the unexpected without being asked. A CPA firm that merely responds to requests as they come in is easier to replace than one that offers unsolicited advice and best practices. If you read an interesting article or discuss an innovative solution in the office, think about how that information could benefit your clients. Then take the next step: Pick up the phone and tell clients about it, or mail them the article with an invite to lunch.


Bob Paz, principal with Sax Macy Fromm & Co., a large regional CPA firm in Clifton, N.J., found a new way to go above and beyond his firm’s standard services for a client. He recently offered to help a troubled construction client prepare a specific approach to dealing with the financial crisis and went with the client to share the plan with the bonding company.


The effort made a huge difference in the client’s life. The bonding agent admitted that it was ready to pull the client’s bond until it saw the plan and was impressed with the client’s proactive approach to sharing information.


“We didn’t get paid very much,” says Paz. “But we will have a client for life as a result of the investment.”



Grading Your Clients

The concept of ranking your clients is nothing new (see “Letting Go: Evaluating and Firing Clients,” JofA, Jan. 08, page 54). No matter what criteria your firm uses in this evaluation, it’s important to identify your “A” and “B” clients. Everyone in the firm should know who they are. Factors to consider in classifying clients include:

  • Amount of revenue they bring in.
  • Number of services your firm provides.
  • History of positive growth.
  • Profitability.
  • Punctuality of bill payment.
  • Willingness to give referrals.  




While working to retain existing clients certainly realizes the best return on your business development time, your firm should not abandon prospecting for new clients altogether. As businesses feel the pain of the economic downturn, some will be interested in lowering their accounting fees. Be aware that your standard fee structure might represent a price drop for a segment of prospective clients currently working with larger CPA firms that have higher fee structures and more overhead. Focus your prospecting efforts on this group, and be aggressive enough to start a conversation with them.


Scott Olinger, vice president of Harding, Shymanski & Co. in Louisville, Ky., says his firm has been able to grow in this market. “This environment has helped our top of mind with the people that influence those who make decisions to hire CPAs, developing those relationships and educating them on what we do, so that when opportunities arise, we’re one of the top three firms that people call on.”


As you approach prospective clients, the key to success lies in understanding why your firm should be the firm of choice for any company that is feeling the impact of a bad economy. Your firm can’t rely solely on lower prices or the statement: “We are the firm to turn to in tough economic times.” You need to be able to define what this means and what kind of service a prospective client can expect.


Develop a sound firm-wide understanding of the services your firm can offer those companies. Then, work to implement the following strategies to help grow your client base:


  • COI networking. Tell your story to all of your centers of influence (COIs)—individuals in the business community who influence decision makers in your target market and act as good referral sources (bankers, attorneys, chamber of commerce members, industry association leaders, etc.). Make sure they know that your firm is interested in helping their struggling clients.
  • Targeted prospecting. Stay aggressive, but focused, with targeted prospecting. Examine your marketplace and identify companies that resemble your current “A” clients or represent new opportunities for your firm. Share these names with your COIs and current clients and ask if anyone can introduce you to the decision makers.
  • Client referrals. Stay close enough to your current clients to understand which of their vendors and suppliers may be in trouble. Offer to step in before the vendor’s struggles affect your client’s operations. All your client has to do is let the vendor know your firm may be able to help and make the initial introductions.


The current economy may still represent threats to your practice. However, your firm can deal with these dangers by investing in client service. In another economy, focusing on value-added services might be too much of an investment for your partners. By incorporating these strategies you’ll be overserving your important clients, but the benefits are undeniable. “We’re only successful as an industry and a firm if our clients are successful. Their growth oftentimes becomes our growth and success as well,” says Stephen Smith. “If they don’t exist, we don’t exist. It is that simple.” Challenge your partners to seize the opportunity to increase market share or, at a minimum, to improve the quality of your clients. This approach will help your firm not only survive the recession, but also contribute to long-term growth with a loyal client base in a brighter economy down the road.



So Your Client Wants Lower Fees…

Realistically, you will have good clients who really like working with your firm, love your service and think your fees are fair, but they just won’t be able to pay your standard rates until profitability improves. When a client asks about reduced fees, consider the following:


1. Be prepared. Identify the “A” clients you want to invest in so you know who you are willing to make fee concessions for if the issue comes up. Be ready with a planned response for these “A” clients so you are not taken by surprise if they ask. At the same time, be willing to let some clients go. You do not want to discount the fees of a “D” client in bad times and perpetuate the pain going forward.


2. Be proactive. If you know one of your “A” clients is suffering, approach them with suggestions to temporarily reduce your total fees. This investment can save you a lot by salvaging your overall client relationship and giving them little reason to search for a less expensive firm.


3. Be reasonable. Most importantly, be willing to discuss the subject with clients. Do not hesitate, act offended or yield at the first sign the client wants a reduction. Instead, empathize with them but remember that you are charging a fair fee for the services you provide. If you have to invest in a client, make sure they know it is a temporary situation and that you are willing to do it because they are an important client and you want to help.


4. Reduce scope. Explore changes in scope that can impact the total fee. Will a review be sufficient for a year or two versus an audit? Can you do a collateral-only audit versus a full-scope engagement? Can your client play a larger role in coordinating on-site work so your audit team can invest less time finding information and people?


5. Arrange payment plans. Perhaps large lump-sum payments are your client’s real concern. Review their cash flow situation and arrange a term payment plan to help them pay the fees more easily.





 The economy may be on the road to recovery, but your clients might still be struggling. Invest in improved client service to protect your firm’s bottom line and achieve growth for you and your clients in the months ahead.


 Maximize business development ROI by doing what it takes to save your existing clients.


 Retain your “A” and “B” clients by proactively overserving them, that is, doing the unexpected without being asked.


 Promote your economy-related services to strengthen your brand and position your firm for new business.


 At the same time, don’t abandon prospecting for new clients altogether. Employ focused, yet inexpensive, strategies to land new clients.


Larry Bildstein ( is the president and founder of The Whetstone Group Inc. in Marion, Iowa.


To comment on this article or to suggest another article, contact Loanna Overcash, senior editor, at or 919-402-4462.





JofA article

Letting Go: Evaluating and Firing Clients,” Jan. 08, page 54


Use to find past articles. In the search box, click “Open Advanced Search” and then search by title.



  • Advising Clients in Tough Times (#029885PDF)
  • Ride the Bear: Strategies for CPA Firms to Thrive, Survive, and Grow in a Down Economy (#091050PDF)



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