By Frank Stitely
The Relentless CPA
Younger clients demand electronic solutions. If you want younger clients, evolve your firm.
MORE: Why Millennials Are the Answer | Why Small Firms Can Win the Talent Wars | There Are No Easy Answers | How to Thrive as a 21st-Century Firm | Farm-Aid for Accountants? | Whittle Down WIP | The Tax Practice Traffic Cop
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This evolution becomes even more critical when you consider that paper tax forms are going away. We will harness electronic data feeds from blockchain transaction systems. Annual tax season meetings become totally useless at this point.
Here are the features your workflow software should have to be millennial-friendly:
- Important engagement information all in one place
- Effective workflow and project management capability
- Automated routine communications and reminders
- Secure place to collaborate and exchange messages with clients
- Robust work environment for staff collaboration
- Portal for posting files
- Simple, client-facing interface
- Place where clients can pay you and sign documents electronically
Note how many of these features are client-centric but save you time as well. You won’t have to go to five different systems to serve one client effectively. Integrating with tax and other work product software would be nice, but that’s really overrated.
What information does your tax software really need to exchange with your project management software? Names and addresses maybe? There are disadvantages with integration that are glossed over.
Do you want your workflow software automatically changing addresses in your tax software? At first glance, yes. But it’s a much deeper question. Do you want the workflow software overwriting the address on last year’s tax return? Of course not. Now you have the tech challenge of determining the criteria for when the addresses should change. Should the changes be bidirectional? These are equations without a clear solutions. Trust me. I face these questions every day.
Integration is a mixed blessing with significant and underappreciated costs, except among software developers. The firms that chase complete integration will find it next to the Fountain of Youth, and they’ll end up missing out on great solutions that meet only 95 percent of their needs. The 5 percent costs them 95 percent. Bad math upon which to run a firm.
How do you market to millennials? Is it different from marketing to boomers? Yes and no.
The similarity between marketing to millennial and boomers is that you have to fish where the fish are. You’ll find millennials in different ponds, however. Think about the age of affluent millennials. What were you doing in your 30s and 40s? You probably weren’t playing pickleball with the other geezers.
You were raising a family, buying a house and starting a business. The same applies to millennials. I laugh when someone, boomer or millennial, tells me how different millennials are. A few years ago, the press was writing articles about millennial disdain for home ownership and the suburbs.
Now millennials are having children. Suburbs with yards and great schools are in. Urban areas and nightlife are out. Isn’t it funny how sleepless nights, tending to babies, kills the party life? My stepdaughter told me, “Caring for a baby is hard.” Paging Captain Obvious. The forces of evolution triumph again. They usually do.
Think about all of the places millennials might see your marketing message. For example, we target three communities just west of our office. The houses in these developments start at $500K+. Yes, even for a townhouse. The median annual family income of these communities is $150K+. The people are mostly professionals and federal government employees. There are many two-earner households.
Our primary business niche is professional services: IT firms, medical, legal and anything else that pays ridiculously well. There are tons of business owners in these communities. The people in these communities are generally 35 to 50 years old. Millennials and Gen X.
We are catching them as their finances go from sketchy to comfortable. Most of the homes in these communities are second purchases for families looking for larger houses and better schools. My heart beats faster just thinking about this demographic.
How do we target them? Every way we can think of. Our first involvement is with the HOAs. Of course, we advertise in their newsletters, but we also sponsor their community events like happy hours, networking events and 5K runs. Did I mention happy hours? Who’s against being happy?
We purchased an e-mail list containing these communities. We target social media groups catering to this local audience. Our message is not sell, sell, sell. Our message is, “How can we support you and your community?” Spend a few bucks and the sales happen naturally.
I’m a member in one Facebook group, whose name I cannot mention. Think of the fraternity from the movie, “Old School,” without the college affiliation. You might also compare us to the He-man, Woman Haters Club. The group is mainly millennials in their 30s and 40s. I’m one of the few old men in the group.
We sponsored the beer at the group’s first business networking group. It cost us $500. We sponsor their charity golf events at $2,000 each. After the first year, I had at least 50 clients. A number are multimillion-dollar businesses.
Every time someone asks about an accountant or tax preparer, I get tagged 20 times in the post. Almost every night, I’m on Messenger talking to one of the Brothers about tax problems. I don’t always get or want them as tax clients. Many times, I just answer questions or give free advice. Another CPA in the group asked me to lunch to get hints from me on how I captured the group. You’re getting the advice for free.
Here’s the secret. Be of service. Don’t try to make a buck on every interaction. The group has a charitable foundation. I prepared the 1023 form – for free, which leads to another hint. Get the leader of the group as a client and many more will follow. In our group, the leader is a visionary. He’s great at bringing and keeping together guys of every race, age, political leaning. I am proud to call him a friend. He’s not good at taxes, but he’s damn good at life.
I have had beers with other members to discuss non-tax issues like marriage and divorce. I’m a reasonably successful old man who’s experienced a lot of life. That means I’ve screwed up a lot. I’m happy to add some long-term perspective to their lives. Be of service.
I didn’t join the group as a marketing strategy. I wish I were that smart. Next hint – join groups you enjoy and become part of the core group.
Our strategy in communities is continuous presence – not just February and March. Ideally we would have staff living in these target communities. We have one who does. I live close to one and know many people there. If you don’t have affluent people as clients before February, you probably aren’t going to get them. As you already know, the people who contact you in March aren’t ideal clients.
How do you find time to do this marketing and still make a living? You probably don’t. You’ll be involved, but you need someone to be your boots on the ground. You make the high-level targeting decisions and hire a marketing person to carry out the day-to-day tasks.
Now for the bad news. Most marketing people are garbage. I’m not talking 51 percent garbage. I’m talking 80 percent or more. Most marketing “professionals” are unable to engineer the high-level strategy you have been reading for the past few paragraphs. I know from painful and somewhat expensive experience.
Most of these people specialize in telling you to spend gobs of money on Facebook ads. You probably see these ads in your newsfeed. How great is the targeting when the ads reach other CPAs? I enjoy trolling these people as many of them obviously use the same marketing firms. The wording is exactly the same.
“I’ll bet you think your CPA has you covered. Most people do …”
The ad then explains that you can learn amazing tax reduction secrets only those rich people know. You are a bad person hiding all those rich people secrets from your clients. With apologies to comedian Steve Martin for partially stealing his bit on income taxes.
“Here’s how to pay zero taxes. First, lose a billion dollars …”
When you drill into the advertisers’ tax saving strategies, you find very pedestrian stuff. It’s all strategies we know about, which apply to a few situations, but not to Harry Homeowner in general.
I hope for the advertisers’ sake that the ads don’t do well. I can’t imagine dealing with a few hundred clients who are angry that none of these rich people secrets work for them. I now understand why our profession had marketing restrictions up to the 1980s.
You wouldn’t think CPAs would write stuff like, “We can reduce your taxes by up to 90 percent.” The evidence on Facebook suggests otherwise. I see these ads a dozen times a day. If you do nothing else for the profession, troll these people. It’s fun.
I trolled one moron over his suggestion of cost segregation as a tax reduction strategy. I asked him what discount rate he was using to make the tax deferral work after paying a $20,000 engineering fee for a study on a single-family rental. I’m not certain he understands the difference between tax reduction and tax deferral.
This is what I mean by advertising tax planning strategies that don’t work for very many people. Somewhere a marketing consultant advised him to do this. Don’t do that.
Where do you find a good marketing consultant? I wish I had a great answer. I may be in the middle of a failure now, but I think I’ll have a good replacement after tax season. Our current marketing person is driving me to drink, which admittedly doesn’t take much.
He posted a Mark Twain post to our firm Facebook page. I have no idea what the quote has to do with taxes, accounting or anything else someone under the age of 90 would care about. First, my wife trolled the post with a crickets meme. Then my daughter-in-law followed with something about the quote being from my Instagram page of inspirational old people quotes. I was tempted to post the video of Archie Bunker fake hanging himself listening to Edith.
Why would I persevere through such misery? The stakes are enormous. The rate on investment in marketing can be incredible. Here’s the story of our results the previous tax season with no marketing person – just our scattershot and inconsistent efforts.
We spent $40,000 in marketing over a year to capture $300,000 in new tax return business. A lot of those new clients were businesses. We basically acquired a small CPA firm for $40,000. Tell that to the practice broker telling you that you should be willing to pay 1.2 times revenue for that practice of nearly dead clients across town. He’ll have you pay $360,000 to get a practice for which we paid $40,000. With one exception – the clients we got aren’t in line to become zombies. They’re in our target demographic.
After seeing the return on our $40,000 investment, we decided to double down and spend $80,000. Roughly half of that was spent on a part-time CMO (chief marketing officer.). My theory was to have a person who could create an overall strategy and then be boots on the ground to carry out the day-to-day tactics.
I feel that our efforts are still scattershot, and we always seem to be preparing to prepare to prepare. There’s always some other thing we need to do before we are ready to market. We are in early February and not much marketing has touched actual potential clients. We began in August. Consequently, I am not happy. And, as you know, it’s all about my happiness – as it should be about yours in your practice.
After tax season, I plan on splitting up the strategy and tactics. I believe I have the strategy person. I met her at a conference in November. She was a presenter. She is our target demographic. I have had a few conversations with her and her team. Her approach is “attraction marketing,” and it fits very well with our firm values.
Our approach is, “When you’re done with the hype, come see us.” No overpromising. Earn credibility through solid content marketing. We have plenty of content – that no one has seen. We’ve been preparing to prepare …
Our tactical person will be local. He/she will place the ads, schedule presentations and post our social media content. This person will be Action Jackson. No more waiting weeks for landing pages for campaigns that never leave the launching pad. All of that marketing tracking is wonderful when it doesn’t prevent the marketing from happening.
Have I scared you off yet? I never promised anything would be easy. But the final result will be great. Would you spend $40,000 to get $300,000 in recurring annual revenue? I think you would. So hire that first marketing person and start failing. The failure leads to success. If you aren’t failing, you aren’t succeeding. I’m sorry (not really.) That’s how business (and life) works. But you know this already.
Let’s wrap up by discussing how to create a millennial-friendly office environment. Take a look around your office or better yet, have someone from your family take an honest look. You’ll be surprised at what you hear. People are talking about your office and you’re not hearing. At least I wasn’t.
We recently moved from our condo unit after 21 years. While our new office was being readied, I posted a video of the office in progress to Facebook.
My wife said, “So no more country club pro shop green carpet?” She laughed. I laughed. I got out my Glock – and pointed it at my head, not hers. Other people made similar comments. People were talking and I wasn’t listening. Laura says I’m deaf in one ear (true) and don’t listen with the other (also true). Guilty as charged, your honor.
I thought our office décor was fine. After all, we had a female staff member pick everything out – two decades ago. Green carpet and bright white walls. Why wouldn’t that still be in style? I just come to work and bill. Millions of dollars in billings later, apparently tastes in office décor had changed.
To be at least a little fair to myself, we had begun to look for new office space a year before finally moving. This resulted from a few factors: being out of space, a partner retirement and two new younger partners. The last one was the most important. They hated our offices.
They had a lot of legitimate gripes about the space. There were almost no windows. I didn’t even have one as managing partner. World War III could break out, and we would never know. Parking was becoming miserable thanks to some new neighbors. The traffic pattern around the office was a mess. Driving to lunch was a life-threatening choice.
Worst of all, it was dreary, and that sent a message to clients and potential clients. Our décor was 1990s and so was our firm. That message isn’t even close to being true, but our office broadcast that message nonetheless.
What makes an office millennial-friendly? Ask a millennial. I’m serious. If you’re hiring some, you can easily find out. Do you have IT firms as clients? What do their offices look like? They have standing desks, lots of open space, light, and sparsely furnished offices.
If you’re paperless, why do you need a lot of furniture? You need a desk, chair and a file cabinet – maybe a bookcase, but who keeps physical books anymore?
The summer before our office move, our admin staff played a trick on me. They removed items from my bookcase to see if I would notice. How could I not miss that tax update manual – from 1995? I didn’t notice any of the thefts. They had the books in the back office in case I really needed the 1995 tax update manual, but I never did. Most conferences now publish electronic manuals that we save on our network. We no longer need a dozen copies of the Master Tax Guide. In fact, we don’t need any copies. Thanks to Al Gore, it’s on the internet.
I held a giant clearance sale on all of my old books. The dumpster won with a high bid of nothing. My desk drawers contained years of – I have no idea what. I had hundreds of business cards from networking events. Why? I just might need to know a 345th additional cosmetics sales rep. Everything, and I mean everything except some decent pens and paper clips, joined my beloved tax update manuals from the last century in the dumpster. The homeless guy living in our recycling dumpster could have opened an office supply store. Yes, there was a homeless guy sleeping in our cardboard recycling dumpster.
I had tables full of client files from projects on hold – meaning they were never going to get done. Clients used us as a storage facility. When they ran out of space in the basement and garage, I swear they dumped the stuff on us. We told them to come and get their sssshhhhh stuff or we were shredding it. People who we hadn’t heard from for a decade came in to pick up their precious boxes of receipts from 1995.
My new office has a standing desk with a small filing cabinet, an ergonomic chair and two chairs for clients. I also kept one bookcase, which mainly has family pictures and knickknacks accumulated over 30+ years. Nothing else. When you have no place for paper, you get creative about avoiding it in the first place. Scan and shred. So far I love my new digs.
Take a look around your office. Don’t you love the dark wood, mahogany furniture? No one else does. Back in the 1980s this furniture was a sign of affluence, and clients wanted affluent CPAs. Who would trust a poor CPA?
Some time ago, clients stopped viewing dark offices as signs of affluence. Now they look around for hospital crash carts in case someone dies from old age during their useless annual tax meeting. I don’t know when this change happened. I wasn’t paying attention. I thought green carpet with white walls was still chic.
I’m not asking you to hang autographed Justin Bieber pictures on your office walls. Actually, if you are a local competitor, I am asking you to do that. I am asking you to lighten up a bit.
Spend a grand on a consultation with a local interior designer – preferably one younger than 50. I expect that we’ll be doing this after this tax season. I have a look in mind. We are almost as much an IT firm as we are a CPA firm. I want our offices to represent that. Because I’m a numbers dude, I don’t know how to pull that off. But, I’m certain we can find an office designer who can.
This post is critically important to your future and even whether your firm has a future. Yesterday, I got statistics on our Facebook engagement. The largest age group interacting with our content was 50 and above. That’s not wildly surprising. Here’s what surprising. The engagement from age groups 30-40 and 40-50, when added together, dwarfed the size of the 50+ crowd.
Our long-term future is in the 30-50 age group, and we had better be prepared to have them as clients. We have to adapt to them. They don’t have to adapt to us. That’s the grand takeaway.