TaxCoach Briefs:    January 29, 2009

Volume 4, Number 6

• Marketing Minute: Walmart Sees The Light
• Marketing Minute: Section 7216 Part Deux: Strategy
• Subscriber Q & A: Trade Show Strategy

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MARKETING MINUTE (EAL)
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WALMART SEES THE LIGHT

Keith and I have always urged you to set your fees according to the value you deliver -- not the time you spend delivering it, and not by whatever your competitors charge.

When it comes to low, low prices, Walmart sets the bar. Not very high. Back in July of 2006, Keith and I discussed "Pricing Don'ts from Walmart" -- and our comments are just as valid today:

Here are four reasons to make price-cutting your last strategy for generating business:

• There's always somebody hungrier who's willing to undercut you.

• Price shoppers are generally more difficult clients. They're more demanding, and more concerned with squeezing every dime's worth of whatever they perceive as 'value' out of the fee they reluctantly pay.

• Price shoppers are generally less loyal clients. If they jumped ship for your lower price, they're just as likely to leave you for someone even cheaper.

• Price shoppers are less likely to give referrals. That's because they're less likely to see your service as delivering real value worth referring.

I know what you're thinking. "What about Walmart?" Yes, Walmart made billions by cutting prices. But Walmart has the clout to extract (extort?) concessions from vendors that nobody else has. Walmart makes far less profit, per employees, than any of its competitors. And there's only one Walmart. We'll never be Walmart, so why should we follow their model?

I'm pleased to report today that Walmart has listened and seen the light!

I must have spent more time in front of the boob toob than usual this Christmas, because that's when I noticed that Walmart had scrapped their 19-year-old slogan ("Always Low Prices") and replaced it with one focusing on value as well as price. That new slogan, if you haven't seen the commercials yourself, is: "Save Money. Live Better."

(Then I went online to research this article, and discovered that they had rolled it out last September. Well, better late than never.)

When a corporate giant scraps the 19-year-old slogan that helped make them an industry leader, it's worth noting. When that giant is Walmart -- and when that new slogan rejects the single-minded focus on prices that built their reputation -- it's even more significant. (And when TaxCoach finally figures it out, 15 months later, well, it's seismic.)

Here's the lesson. Walmart knows more about cutting prices than you or I ever will. When Walmart, of all firms, decides it's time to focus more on value, so should we.

Many of you are familiar with marketing guru Dan Kennedy. Keith and I have used his lessons to grow TaxCoach, and we've done our best to adapt them for your use as well. Dan says that if your clients don't flinch, at least a little, when they see your bill, you aren't charging enough. He goes on to say that one of the reasons he commands high fees for his work is that he can keep a straight face when he quotes them!

Today's recession means this may not be the time to make clients "flinch." But it shouldn't be a reason for you to roll back your prices -- so long as you give your clients the value to justify them.

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MARKETING MINUTE (EAL)
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SECTION 7216 PART DEUX: STRATEGY

You probably know that the IRS has issued new regulations under Code Section 7216 limiting disclosure and use of "tax return information" by tax return preparers. These new rules may apply if you use TaxCoach with current tax-prep clients.

We discussed the rules last week -- but we know not everyone reads these Briefs as regularly as they would like. If you haven't already done so, you owe it to yourself to take a few minutes to read the discussion now. The rules are already in force, and potentially far-reaching -- so you should know how your particular practice is affected.

Today I want to focus on one specific and timely issue. Section 301.7216-2(n) lets you "compile and maintain a separate list containing solely the names, addesses, email addresses, and phone numbers" of your clients to offer tax information or additional tax return preparation services. However, if you use an outside company to coordinate or administer the mailing, this is considered disclosure requiring consent.

Keith and I tend to focus our attention helping you attract and close new clients. But, especially in today's economy, it can be even more important to keep your current clients. Client acquisition may be more fun, but client retention sustains your practice and turns it into a real business.

We believe a monthly mailed newsletter is your most effective client retention tool. When I say "monthly," I mean "monthly" (not "quarterly, or "whenever you get around to it). When I say "mailed," I mean "mailed" (not emailed). I know it's tempting to settle for cheap and easy email. But clients aren't as likely to read email as they are snail mail, and nothing replaces the impact of a tangible mailer showing up each and every month. That's one reason we mail The Lineup to members every month, in addition to these weekly Briefs.

Once you commit to sending a newsletter, you have three options for getting it out the door:

1. You can write it, print it, and mail it yourself. Clients will probably love it -- but who has the time to write?

2. You can buy a canned newsletter, print it, and mail it yourself. Now it's less work for you, but just as much for your staff.

3. You can engage an outside service (like our Hall of Fame program) to do it for you.

Choose Option One or Option Two, and you can use your clients' "tax return information" to mail newsletters with no consent required. Choose Option Three, and you'll need their consent.

Alternatively, you can ask clients to sign up for a separate list you compile and maintain solely for newsletters and email. If clients give you their contact information specifically for those purposes, it falls outside the "tax return information" rules and lets you hire a vendor to manage the actual mailing. And what client says "no" to tax-saving news and information?

So here's the crux: if you believe there's any chance you would engage an outside company to administer your mailings, then now is the time to start compiling that list -- better than any other time throughout the entire year. Why? 'Cuz it's Tax Season! You're about to see all your clients anyway. Why not give them a reason to help you implement an important client retention tool you know you should be using?

Typically an opt-in is accomplished with a pre-printed index card, requesting the client's name, address, and email address. Since Section 7216 doesn't apply, there is no specific language or format required, only that a client knows he's opting in to a mailing list. So we'd suggest adding just a tad of salesmanship, reminding the client why it would be a good idea to receive regular mailings from you.

We've created a sample card for you as a starter -- you'll find it in the Playbook within TaxCoach, under the heading "Gathering Client Data." You can have these printed on cardstock for cheap at your local FedMaxStaplinko's; they'll spread them 4 or 6 to a sheet and even cut them up for you. Just hand them out to clients when they visit, and ask that they complete them before leaving the office, so you can keep them informed. Et voila -- you've set the stage for rolling out a big boost in client loyalty anytime in the coming year.

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MEMBER Q & A (EAL)
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Q: A local restaurant association does a trade show every March, and I was thinking about doing a booth this year. What is your opinion of doing trade shows? I did one several years ago, and really didn't get any clients out of it, but it was when I first started my company. I am hoping that things would be different this time around.

A: Trade shows can be great opportunities to generate leads if you work them right. And I would think this particular show would be very much worth it for you.

Most people work trade shows passively — they sit back in the booth, wait for visitors to stop by their table for candy or tchotchkes, and consider themselves lucky if they unload all their brochures. Then they go back to the office, wait for business, and wonder why it never comes.

The key to making trade shows work, just as with seminars, is having the right, strong, call to action. Book appointments on the spot — or at least get visitors' permission to call them back to book the appointment. Give them some sort of discount on a service or special bonus if they meet with you as a result of the trade show. You can even look for speaking opportunities — many of the show participants will be from outside/related organizations who could use you at a meeting of their own.

Exhibiting at the trade show also positions you as an industry expert when you pursue the same market outside of the trade show. If you can mention, early in a conversation with a prospective restaurant client, that you attended a particular presentation at the show — or, for that matter, you can establish in any other way that you have a particular affinity for that market — you'll score valuable points that your competitors who don't have that same affinity can't score.

Still not sure whether to commit the time and expense? Ask yourself what the typical client you'll generate from the show is worth. Let's say it's $500/month and they stay with you for 8 years. That's $48,000 over the life of the relationship. How many of those clients do you have to win to make the show worthwhile?

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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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