Client meetings that focus on the future and the potential for clients to increase profitability and the value of their business are invariably perceived as being much more valuable than the typical Year-End meeting that focusses on last year’s filed accounts and not much else – fact!
If perceived as ‘more valuable’, this prompts some questions:
- How much more valuable?
- What’s the best way to charge for the increased value being delivered?
- What’s the best way to implement this as a strategy to increase fees?
This paper explores each of the above topics with the objective of maximising the ‘Perceived Value’ of the services provided, Increasing Fee Income, AND Maximising Client Satisfaction all as a logical, joined-up implementation process.
Maximising Perceived Value
The typical Year-End meeting for most business owners involves a review of the Accounts, (Profit and Loss and Balance Sheet). This covers the 12-month period to the end of the last financial year, frequently this meeting takes place 6 to 9 months after the year-end, you know the drill…
For many business owners this discussion adds very little if any perceived value for one simple reason: Unless there are significant tax savings or other benefits to discuss, the exercise simply allows the owner to submit their accounts and in doing so, avoid a late filing penalty.
How much value does a business owner place on the typical Year-End meeting? For most it is like getting an MOT on your car, you do it because you have to, not because you want to, it’s a grudge purchase, pure and simple.
Just think, by contrast, if you add a new topic for discussion during your Year-End meeting Agenda and discuss the following:
- The indicative value of your client’s business if sold today
- The potential for growth in profitability and improved cash flow
- The indicative value of your client’s business in five years and…
- Ways in which that valuation can easily be improved
How much more interesting and engaging would these topics be? How much more relevant to your client and their personal and professional aspirations?
If the objective is to increase the value of the services you provide for clients, there are some more things your practice could do, things that would open even more opportunities at no, or at next to no cost to you…
Business Owners are in general very good at what they do, (their profession), but many lack the management skills and experience needed to run a successful business and the one area above all that is critical to their success is financial management and control.
The typical business owner’s lack of financial and management understanding causes two problems:
- It is the root cause of the majority of business failures, and even for those that don’t actually fail, it is the reason they do not achieve their full growth potential
- Because business owners who do not understand, appreciate, or value, financial information, and support, are reluctant to pay for it which means it is difficult for you to help them
To address both challenges: Helping business owners survive and be more successful AND helping them understand and appreciate the additional financial support you can provide, it makes sense to train and educate them.
Offering Financial Management training for Business Owners is highly valued by business owners, it also leads to more sales of the higher value Financial Advisory Services and there is perhaps an even bigger win… If delivered by your Client Managers, (CPD for them), they become even more competent and valuable to your clients who will value them higher and be prepared to pay even more in fee income as a result, win-win-win.
- Your Client Managers win.
- You and your practice win.
- Your client’s win… what’s not to like?
If you consider the provision of Financial Management training for Business Owners to be Continual Professional Development for your client-facing team members, for example, delivered in one 1 hour session per week, this modest investment in CPD is effectively converting what would otherwise be a cost, into a revenue-generating value-adding service.
The question is this: If clients find the future-focussed year-end meeting and discussion extremely valuable, and they also value Financial Management training, now much more valuable?
How much more valuable is a future value-focused discussion and Financial Management training?
There can never be one right answer, for some clients the value would be extremely high, and for others less so. The big question is how do you establish the right value and hence the optimal fee increase for your practice and your client portfolio?
To answer this, let us briefly consider the cost: Presumably, you will be meeting your client online or in-person as part of the Year-End meeting regardless. In which case, you are simply going to use the time you would have spent with your client anyway to discuss a different agenda, so the increased cost/time is nil.
Added to this, if the Financial Management training is ticking the CPD box, (which it does), this is not a cost that you would logically seek to recover, so however much more you can charge clients for the added value they receive, you will do so at no additional cost to your practice, so the increased fee income goes straight to your bottom line.
Test and Measure: The best way to establish what clients are happy to pay, or looked at another way, the point at which they start to be less happy to pay, is to test and measure which can be achieved relatively easily:
- Establish the current levels of client satisfaction before you start: Do your clients rate you 5 out of 5 for ‘value for money’, and for those that rate you 4 out of 5, is the reason for the 4 typically something like “we don’t score 5 out of principle because…”
If you are scoring very high then you are on safe ground, if not then your clients will tell you what you need to do to improve before you increase prices. - Give a sample of clients the VIP treatment: Let them experience the Future Focussed Year-End Meeting and Financial Management training. Then interview a sample to obtain feedback. Assuming you are receiving glowing feedback and a resounding 5 out of 5 for value for money, you are too cheap. Execute a test fee increase of 15 to 20% for your test group.
- After increasing fees for your test group of ‘VIP clients’, interview them to establish satisfaction and in particular their feedback in relation to value for money. If you are still receiving 5 out of 5 ratings you can repeat the exercise with a 25%, or a 30% increase to establish the optimum figure.
In this way, your clients will tell you what your optimum fee increase should be.
Keep in mind that over time, as your Client Managers deliver the Financial Management training for clients, they will become much more adept at discussing growth strategies and options with clients, which means the quality of your meetings with clients will improve over time.
What does that mean? If you have delivered even more value, then logically you should repeat the exercise 12 months later to establish what your clients feel your fees should be and ‘avoid leaving money on the table’ unnecessarily.
What about clients who don’t feel the increase in fees is reasonable? Your approach will ideally be flexible, if on analysis your client genuinely derives no additional value from your enhanced levels of support, or their situation means they genuinely cannot afford to pay your fees, you will have to take a view.
As a suggestion, if you communicate to all clients when announcing your fee increase saying something like: “If you are not happy with the fee increase, we will sit down with you, analyse your business, and if we cannot find at least 10 times the fee increase that we can both agree to, we will reduce your fee increase pro-rata.”
The onus is then on the client to tell you, giving you and them the opportunity to explore and discuss the options and decide on a case-by-case basis the best course of action.
Does anyone have to do any selling? No, the beauty of this strategy is its simplicity, the fee increase is simply a part of your administrative process so no selling, no negotiating fees, everyone’s a winner.
We have now effectively answered the three questions posed above:
- How much more valuable?
- What’s the best way to charge for the increased value being delivered?
- What’s the best way to implement this as a strategy to increase fees?
The best way to implement the strategy, bearing in mind it has next to no additional cost to deliver, is to allow clients to experience the ‘Added Value’ as a standard part of the service as a test, allowing sufficient time for them to become familiar with, and enjoy the added support.
Then test and measure to establish the optimum fee increase – your clients will tell you exactly how much they feel your added value services are worth.
As soon as you know what your optimum fee increase is to be, you can either continue to take an incremental approach, speaking to every client in turn, or increase fees across the board to maximise increased revenue and profitability for your practice.
What will you do? Click on the ‘Live Chat’ on the right to find out more, or ‘Contact Us’ to book a time to discuss.
