Tax Season Business Development

Editor: Steven F. Holub, CPA, MBA

Whether a firm’s busy season tax practice resembles a well-drilled marching band or a bustling herd of cats, tax season presents practice leaders and staff with an opportunity to interact with current and prospective clients at a time when interest in the firm and its services is at its peak. While the primary goal of the season for the tax practice is and should remain delivering high-quality and profitable services to clients, the firm can and should take advantage of this yearly marketing opportunity to win new business.

Making the Best Use of Your Resources

While there should be little argument that current and prospective clients are uniquely well-primed for a firm’s business development efforts during tax season, there is also likely broad agreement that the resources to make those efforts are thin at that time of year. Accordingly, balancing a firm’s scarce resources against its need to strike while the iron is hot is a common thread in the marketing activities discussed in this column.

Advertising

While advertising can yield collateral benefits with current clients and staff (e.g., by reinforcing the client’s choice of the firm or the employee’s understanding of the firm’s market position or culture), the primary purpose of advertising is to inform a prospective client of the firm’s identity and its services, that is, to position the firm as a top choice. Ideally, this can occur precisely when that prospective client is choosing a service provider.

On the downside, an effective advertising campaign is not created overnight and will not yield benefits overnight. However, if the firm has laid some of the groundwork, tax season may be a good time to initiate or increase efforts to be top of mind for prospective clients.

Advertising in traditional media, such as by running firm profile ads in newspapers, business journals, and trade publications, is good for positioning and awareness, but online and social media advertising, such as through Google AdWords and Facebook advertising campaigns, can be linked to specific services offered to yield immediate (and highly measurable) results, making this a better place to concentrate resources during tax season. Since the time commitment of the firm’s professional personnel during busy season is likely to be minimal, developing and monitoring an advertising campaign, especially a digital media-based one, may require a marketing consultant.

Public Relations

Much like advertising, the primary role of public relations is to create awareness of the firm and its services in the minds of prospective clients and to position the firm as one of the top few choices a prospective client should consider when choosing a service provider. A CPA firm’s public relations initiatives typically take this process a step further, however, and couple general information about the firm with specific content that may promote the firm’s practice by demonstrating expertise in a particular industry or technical service area.

Public relations efforts may take the form of books, newspaper columns, magazine articles, blog and social media posts, radio and television interviews, speeches, webinars, podcasts, and event sponsorships, to name a few. CPA firms may have a seemingly unlimited assortment of venues for publicity, but a significant challenge to carrying out a public relations campaign during tax season is the time-intensive nature of producing high-quality content (and of disseminating it, in the case of interviews and other performed works). One way to mitigate that limitation is to use ghost-written or canned material, but that is difficult to do and still accomplish the objective of distinguishing the firm from other providers with prospective clients.

In the end, the opportunity to set a firm apart from its competitors during such a key time of year may make the investment of professional time worthwhile. To do so, the firm may want to consider producing content early and then disseminating it during busy season. The firm could have a staff member write an article about state and local business matters, plan a press release about staff promotions and accomplishments, sponsor a trade show, or give an interview to the local newspaper and then publish excerpts online or via social media. The firm can ensure quality control by involving less experienced staff in disseminating, rather than producing, the material.

Brochures and Newsletters

As part of a business development program, brochures and newsletters play different but complementary roles. Brochures often highlight a firm’s services and help establish its position as an authority on a topic or a specialist in an industry. Newsletters, depending on the topic covered, can serve some of the same purposes but also function to maintain contact with referral sources as well as current and prospective clients. In some respects, both serve the same role as advertising and public relations, to the extent that they help precondition prospective clients to view the firm in a favorable light as a top choice.

A significant weakness of brochures and newsletters is that they require professional time to produce a quality result that appears authentic and unique to the firm. Otherwise, the desired purpose is likely not to be achieved. On the positive side, brochures tend to be more static and can be produced in advance of tax season. Newsletters, on the other hand, tend to be more topical. For this reason, the firm may choose to distribute newsletters less frequently (quarterly or bimonthly) during tax season to minimize the production burden.

Brochures and newsletters are both excellent materials to make available in bulk to referral sources in printed form, thus enabling the firm’s source to pass copies on to prospective clients, to post on the firm’s website, and to feature in blog and social media posts. Newsletters in particular are good choices to distribute via email to current and prospective clients.

Referral Sources

Some of a CPA firm’s marketing activities may be easier to conduct during tax season than others, but the most productive component of a firm’s business development efforts is building and maintaining a network of people willing to refer the firm to prospective clients. The key advantage of a referral-based approach to business development is that the referral source is ideally well-positioned to screen a prospective client for the firm and to recommend the firm to that prospective client. This reduces the time the firm needs to invest in connecting with, screening, and promoting its services to prospective clients, making it a good fit for tax season efforts, when time is at a premium.

Building and maintaining a referral network consists primarily of making and maintaining contact with a number of centers of influence, i.e., people well-positioned to encounter prospective clients and enabled by their positions to make trusted recommendations of those prospective clients to the firm. Examples include attorneys, bankers, investment advisers, insurance agents, financial planners, other CPAs, and current clients. In addition, while sometimes they are not as well-positioned as these centers of influence, people with strong ties to the firm also make good referral sources. Examples include the firm’s significant vendors as well as partners’ and staff members’ friends, relatives, and neighbors.

Building relationships with referral sources requires accepting appropriate referrals and serving those clients well, being available as a technical resource to those referral sources, and making appropriate referrals to the sources. It is very much a two-way street. The chief attributes of referral-based marketing are that it is time-consuming and, when properly conducted, a year-round activity; however, the payoff is that a higher percentage of referrals from a center of influence will become clients, making the investment worthwhile.

Notwithstanding the potential for competitive conflicts, other CPAs are a great source of mutual referrals. These referrals often come when the other firm is unable or chooses not to serve a client or prospective client on a particular engagement but has a connection with a CPA who can and will do so. This can be a very rewarding relationship as long as the firms work fairly with each other and keep the affected clients properly informed.

The groundwork for a referral network is laid over months and years, but once the network is established, the effort expended to maintain and use it during busy season does not require a major commitment of resources. Most of the sources in a firm’s referral network are themselves professionals and understand (or think they do) what tax season means to a CPA firm and are accordingly appreciative when a tax CPA makes time for their needs. During tax season, the focus for CPA firm partners and staff should be to promptly respond to phone calls and emails and maintain regular contact with key referral sources.

Up-Selling and Cross-Selling

The best targets for a CPA firm’s services are the people who are already sold on its value proposition—the firm’s existing clients. Current clients already have a business relationship with the firm, know some of its people, and have developed a level of trust with the firm. In addition, the firm has existing lines of communication with the client and is very likely to have personal contact multiple times during the year. Tax season is thus a great time to leverage the firm’s existing relationships and seize the opportunity of communicating with clients about their need for additional services.

A firm faces numerous challenges in effectively marketing to its clients during tax season. Chief among these is the tunnel vision effect that develops early in the season. Partners and staff members alike are focused on getting information in the door, preparing returns, and getting those returns out the door. That focus and the quality work that results from it is an important part of what a firm delivers to clients during tax season, but (better) communicating that result is also essential and provides the platform for expanding the scope and level of services to clients.

While every contact with a client offers its own opportunities (and challenges), marketing additional services to clients during busy season is most effectively done during the initial tax interview and/or upon delivery of the completed return to the client. The first is a great time to have an open-ended discussion with the client about financial and nonfinancial matters. The interviewer will often discover information relevant to preparing the year’s return but may also find that the client has personal financial planning needs or could use some help with small business accounting. Delivery of the return is a good time to provide the client a review of the tax return, and this conversation can easily transition into scheduling a follow-up engagement in the summer to review estimated tax payments or in the fall to do year-end tax planning as well as explore other tax planning opportunities.

Business Development Activities by Position

At its best, business development is a continual process embedded in the firm’s daily activities with a role for each staff member to play, whether that person is a new associate or the managing partner. The business development activities discussed above work best when each person’s responsibilities cater to his or her strengths and position within the firm. While each firm’s action plan should be tailored to its own situation and to its people, the exhibit below contains an example of a basic set of activities that might fit into a firm’s tax season and how members at different levels within the firm might contribute. Staff, in particular, should work with more senior members of the firm to ensure quality and consistency with firm marketing objectives.

The Need for a Plan

Business development does not, and should not, just “happen.” Marketing is an important, resource-intensive function of a CPA firm. To make effective and efficient use of a CPA firm’s resources, business development should take place within the context of a marketing plan built on the foundation of a firm’s strengths, weaknesses, opportunities, and threats (a SWOT analysis). The plan should target specific clients, industries, or service areas that are consistent with this analysis with an eye to achieving specific goals in revenue, market share, or profitability. The plan should identify the resources the firm will need to carry out the plan and develop tactics to move toward the identified goals. Finally, the firm should agree on how to evaluate the plan’s success or failure.

Closing the Loop With Clients, Referral Sources, and Staff

Whether a firm’s tax season business development efforts are broad or narrow, deep or shallow, the end results will likely include opportunities to win the business of prospective clients who respond to its advertising or public relations campaign, are recommended by a referral source, or in some cases found the firm in the phone book. One thing those prospective clients have in common is that each will need to be screened for suitability and sold on the firm’s services (to a greater or lesser degree) if accepted. In addition, the firm will likely want to evaluate the success or failure of its various marketing efforts and appropriately acknowledge the people involved.

For a firm that has devoted resources to business development, it would be a shame to leave those clients (and staff) hanging. While extensive (and expensive) customer relationship management systems have been developed for these purposes, a minimal system involves tracking information regarding the prospective client and engagement, the partner or staff person responsible, and the related referral source in a business development log. At a minimum, each opportunity should be evaluated and pursued and closed, referral sources thanked, and staff acknowledged and rewarded.