TaxCoach Briefs:    December 11, 2008

Volume 3, Number 48

• Marketing Minute: Referrals on Steroids
• Member Q & A: How to Raise Fees

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MARKETING MINUTE (EAL)
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REFERRALS ON STEROIDS

Christmas is almost here. This is our first holiday in the new Lyon house, and we're not sure where the decorations are, but I'm sure we'll dig them out before the big day. And I'm excited for Santa to squeeze down our chimney and fill my stocking with new TaxCoach members! (Keith and I should probably work on a backup plan for 2009, just in case I wind up on the "Naughty" list!)

You're probably not counting on Santa to fill your stocking with new business. But if you're like most TaxCoach members, you do count on referrals, especially as "the season" draws near. Referrals are generally "pre-sold" on your competence and credibility. And clients who come in your door via referral are more likely to refer out as well.

So how can you get more referrals? Think about using seminars, group meetings, and written testimonials as "referrals on 'roids."

My favorite marketing strategy has always been speaking at seminars for real estate agencies, investment clubs, and local business and trade associations. It's obviously easier to assemble an audience when you let someone else do it for you. But these sorts of sponsored seminars give you a real advantage that hosting your own seminars can't, and that's the implied endorsement of the sponsor. In effect, just by putting you in front of their group, the sponsor is referring you to their members.

You don't have to be a polished speaker to profit from seminars. The week before Thanksgiving, I watched one of our Cincinnati members, Mike McCormick, give his very first seminar to an audience of 35-40 "buying units" (individuals and couples) at our local real estate investors association. Here's what he emailed us on December 1:

"Just wanted to say thanks to you and Keith. TaxCoach has given me the kick that I needed to really get busy marketing my services. Using the TaxCoach real estate materials I gave a presentation on November 20th. I walked out with many positive reviews and 15 appointments (as of 12/1 I’ve already met with four). I’ll probably do between 5 and 10 tax plans. I also now have a lead on a 60 person MERP. TaxCoach membership is truly priceless."

Since then, Mike reports he's sold seven tax plans, for fees ranging from $325 to $550. And he still has half a dozen more leads to pursue. Not bad for his his first time out!

Sometimes you don't even need to speak to a group to profit from association. Sometimes just "working the room" does the trick.

Last month, Savannah member Sherry Stanton used her new-member personal consultation to ask about marketing at a local trade show for crafters and other small vendors where she regularly exhibits. We discussed how she could distinguish herself from local competitors and created an "elevator speech" for her, based on the "Formula for SUCCESSful Ideas" we discussed in the September 18 . Here's how she fared with the 75 attendees at the show:

"What were my expectations? Not much. What did I gain at the show? 6 booked appointments, 8 more to follow-up as serious inquiries for appointments, 18 prospects, and 4 invitations to speak at large, very credible groups! Not bad for about 2-hrs. work!"

Sherry says it best herself: "Not bad for 2 hours work!" She started with built-in credibility as a member of the group, then used our strategies to highlight the value she can deliver to her fellow members. They felt more comfortable talking with her in that setting, which put the power of referrals on steroids.

Seminars and meetings are great places to turbocharge referrals. But what if you're not a networker? What if the mere thought of pressing that much flesh sends you scrambling for hand sanitizer? There's one more tool you can use to put your referrals on 'roids, and that's written testimonials.

If you've studied advertising at all, you've heard it defined as "salesmanship in print." If that makes sense to you, then think of testimonials as "referrals in print."

How do you get testimonials like the two from Mike and Sherry? Just ask.

Have your clients ever thanked you for ideas you've given them or complimented you for work you've done? When they do, ask them to write down their compliments and send them. That's all it took to get Mike's and Sherry's. (I actually cut five paragraphs from Sherry's so you wouldn't think I was printing it just to blow my own horn -- but you can be sure we'll reproduce it in full when we add it to the two dozen already on our web site!)

If clients procrastinate, you can offer to write the testimonial yourself and submit it for their approval. Of course, it's better to present those testimonials in the client's words, as the authenticity shines through. But if clients aren't comfortable writing testimonials themselves, it's better to "seed" them than lose them!

Here's your "takeaway" for this week. If you like referrals, look at sponsored seminars, group meetings, and written testimonials as "referrals on steroids." You'll fill your appointment book faster, with higher quality clients, than with just about any other marketing.

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MEMBER Q & A (EAL)
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Q: I need to raise my rates on individual taxes by about 50% next year. I don't want to shock my clients, so I was considering notifying them ahead of time. What's the best way to handle this situation?

A: That's a great question, and we could fill an entire Briefs with our response. Obviously the specific answer will turn on exactly how you raise fees. Will there be a higher minimum? Higher per-form charges? Will everyone see the same percentage increase? But here are some general ideas to consider:

Congratulations on getting over your fear of raising rates! Fear of charging too much is probably the single biggest reason tax professionals aren't satisfied with their incomes. Too many TaxCoach members think they "have to" charge what "everyone else" charges. Too many others think they have to charge less!

We've even seen some members looking to national chains for pricing guidance! That would be fine, if you were offering clients the same value as the chains. But why would a degreed accountant, with professional certifications and year-round availability, price their service the same as a seasonal storefront offering just tax-prep service? Our consistent advice is that you compete on value, not price.

You've certainly heard the cliche that if you double fees and lose half your clients, you make just as much money for half the work. But the truth is, you'll lose far less than half of your clients -- especially if your fees are currently under market.

And which clients are you likely to lose? Probably the lowest-value, highest-maintenance clients in your book. You may also lose some who choose you solely on the basis of price. But you'll find that the increased revenue from those who stay will more than offset the loss from those who leave.

At the Tampa PowerUser Roundtable, Hall of Fame member Sean O'Hare told us that when he raised his minimum fee from $185 to $300, he saw his top line go slightly down, his bottom line go up, and his headaches go way down!

Yes, you should alert clients before you bill the new fees. You can attach an announcement to their organizer, or send them a letter or postcard. You might also ask them when they come by for their appointment or to drop off their information whether they've seen the new fee schedule.

Now for the hard part. How do you justify higher fees, especially when they're obviously more than just inflationary? ("My old car needs a new transmission and I'd love to replace it with a hybrid" probably won't work!)

Your best bet is to tie the increase to some specific benefit that clients would pay for separately. Perhaps that benefit could be audit protection, free response to IRS notices, or a year-end tax-planning meeting. Whatever that benefit is, your best bet is to position the fee increase as the vehicle for providing it.

You can certainly be sensitive to clients' unique circumstances -- especially in today's economy. Are there clients who just can't afford the higher fees? If you still want to keep them -- and by that I mean you won't resent working for the old fee -- you can always waive the increase. But make sure they understand what their fee should be, and make sure they understand you're doing them the favor. (This is especially true if you do Rod Blogojevich's return -- save him enough tax and he might make you a Senator!)

In the long run, you'll score more points by raising fees and waiving the increase than you would be simply not raising them. That's because pricing your service higher -- even if you don't collect it all -- actually makes clients value it more. I realize this sounds like a marketing gimmick -- but there's no shortage of academic and real-world research to show that it's true.

Seeing old clients pay higher fees now will also give you confidence to charge new clients what you're really worth.

Keep us posted on how it goes -- we'd love to share your results with our readers!

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We're happy to answer your questions on TaxCoach content, features, or marketing. While we give first priority to our All-Star and Hall of Fame members, we work to answer all questions. For best response, email support@taxcoachsoftware.com. If we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

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