Start with trends in your clients’ industries.
By Bruce Marcus
Professional Services Marketing 3.0
EDITOR’S NOTE: CPA Trendlines was privileged to have a long relationship with Bruce W. Marcus, who was ahead of his time in his thinking and practice in marketing for accounting. We are publishing some of the late expert’s evergreen work, which retains wisdom for the present.
I’m puzzled by the accounting firm that continues to function today as it did many decades ago – in so many areas, as if the world continues to be as it was decades ago.
MORE: How Marketing in Accounting Has Evolved | How Marketing Evolved to 3.0 | Why Value Pricing Works | Accounting Marketing 3.0: New Rules | Accountants Don’t Sell Soap. | Why Competition Matters Most | Nine Fundamentals for a Healthy Marketing Culture in an Accounting Firm
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At the same time, in the midst of all that’s changing in the professional world, I’m surprised that change in the marketing process for professional services is evolving so slowly. There are indeed exceptions, in which a handful of firms have extensive programs that are innovative, and very large staffs to execute them. These few firms have specialists in such activities as business development, media relations and so forth, but considering the vast number of accounting firms, their number is a small percentage of the professions.
There are many reasons for this, not the least of which is the amorphous nature of professional services management and marketing education. The quality of academic and firm marketing education in this field is dismal and retrogressive. The relationship between the marketers and the professional is too often built on mutual misunderstanding. And perhaps it’s because accounting firm marketing is so subsumed by a firm’s professionals with too little understanding of the process that too many marketers are either unwilling to risk innovation or else are incapable of it.
Perhaps, too, the external factors that require new vision for professionals and their marketers are happening too fast, and are overwhelming both.
And perhaps the traditions and stringent (and sometimes anachronistic) ethical requirements of both law and accounting inhibit innovation.
Still, there are techniques to keep professionals relevant to the changing needs of the clients, and to keep marketing functional and successful beyond the mundane. For example, consider that while the ultimate aim of marketing professional services may be to get clients, growing a successful firm is a function of keeping a firm relevant to the changing nature of its economic and social environment, and particularly the needs of the clientele. Obviously, then the marketer must understand that environment, which then becomes the canvas upon which the marketing program is painted.
This is certainly true in professional services marketing, where recycling old ideas instead of bothering to come up with new ones is a too-common practice, and where the failure of professionals to fully grasp the reality of the crucial role that marketing plays in a practice tends to suppress innovation in so many firms.
It’s certainly true in the professions, which are too often inhibited by antiquated traditions, irrational views of ethics in the 21st century, the anachronistic thinking of state and local bar and accounting societies, and a mentality of “We have always lived in the castle.”
Possible Changes in The-Not-Too Distant Future
Predicting the future course of events can be a fool’s game, especially if the prediction is an extrapolation of current trends and practices. Anticipating future events, by the way, doesn’t work well by looking at current practices alone, then – there are too many unpredictable factors.
The reason that predictions are so hard to get right, then, is simple to fathom. In today’s dynamic world, any course of action will likely be affected by unforeseeable random events that alter that course. For example, just a few years ago, who could have predicted LinkedIn, or Facebook, or Twitter – much less the impact the social networks would have on society and business? Many of us remember when blogs were considered to be fads that would ultimately die or fade away. Now, blogs are ubiquitous, and an integral part of the business process. The fascinating thing about these devices is that they impacted the business world so rapidly that there wasn’t time to predict them before they became important business tools.
What, then, are reasonable assumptions about the future of the legal and accounting professions in this dynamic society? Here, we can surmise – if not predict – a future by extrapolating two things from the past …
- Not as an extension of the past, but a clear view of the dynamics of the process of change itself – its causes and our responses to causes. Change, as we have noted, is not an event – it’s an evolutionary process, the result of which is change.
- By looking at trends – not just trends in the legal and accounting professions, but rather in the needs of the clients, in the economy, in new law – all of which are evolving rapidly; faster, in fact, than most law and accounting firms are changing. Trends in clients’ industries portend changes in the professional firms that serve those clients.
Product manufacturers have an easier time, relatively, than do lawyers or accountants. They use market research to track consumer tastes. They use sales figures to monitor consumer purchasing habits. They have many sources and techniques to analyze and define customer buying practices, particularly for online purchases.
Accountants’ clients tend to have distinctive or unique problems, which makes it more difficult – but not impossible – to track and aggregate. Market research, which is too expensive for any but the largest firms, is another way. But at the same time, there is a way to divine trends that can be helpful in long-range planning. That way is to track trends in the clients’ industries.
That kind of information leads to an understanding of trends in the needs of clients in the near future. And the needs of clients are what define the trend in law and accounting firm management, business planning, governance and even financial planning.
Why should this work? Because virtually all the changes in professional firm structure and management have come about in response to the needs of effective competition, and the changing demands of clients. The professional services world has been redefined by the ability and the need to compete – a world opened up by Bates.
Technological advances have caused changes in the mechanics of the professions, and will continue to do so. The danger is in believing that the technical advances and the new media are responsible for these changes. Not entirely so. They have facilitated changes, and created new media – but they have not specifically caused change in firm structures and practices.
Remember, Bates and the ability to compete came well before the internet affected legal and accounting practice. The internet, remember, is simply a new communications structure. What it has done is causing substantial changes in the print media, and caused the development of new techniques for dissemination of information. But the changes in law and accounting firm management are responses to the changing needs and demands of the clientele, to the economy, and to new laws and regulations – and again, the need to compete.
What, then, are the potential areas of change? Some possibilities …
- The fragile partnership structure, which can slow down decision-making that should be responsive to changing economic decisions. What will replace it?
- Law and accounting firm billing procedures, which may have a value in informing clients of the time spent in the client’s behalf, but rarely reflects the value of the service performed.
- Value billing is emerging, but is still evolving. Who knows for sure which methods will emerge as the standard?
- Partner and non-partner compensation changed radically during the current economic turndown. What will it become as the economy recovers?
- During the course of this recession, thousands of lawyers and accountants were discharged. What will be their availability as the recession recovers? What will be the shape of the accounting and law firms in the recovery? We already see signs of changes in firm structure, in productivity measures, in internal focus on skills rather than status.
- Growth requires capital, which may be more than a firm’s partners can contribute. Is the publicly held law or accounting firm in the foreseeable future? When I suggested this some time ago, a lawyer said to me, “Over my dead body.” To which I answered, “Let’s talk about all the things that would happen over your dead body – that already have happened.” “How do you think it can possibly happen?” he asked. “I don’t know,” I said. “But when the need becomes imminent, you lawyers are very smart. You’ll find a way.” The same is true, by the way, of corporations owning law and accounting firms, which has already been seen in some iterations.
- The shortage of brains and talent in the world today is too acute to continue the caste system in professional firms. Talented professionals may not be “partner material” (whatever that is). But the need for their skills suggests that in the future, firms may be structured on talent, rather than on traditional methods and requirements like rainmaking abilities and longevity (the two-tier system).
- Today, law and accounting schools send their graduates into the world with little or no education about the economics of practice, nor an understanding of the crucial role modern marketing plays in firm management and growth. Fordham Law School in New York City is having success with courses in law firm management and marketing, promulgated by the marketing expert and educator Silvia Hodges. I’ve lectured in those courses to a growing attendance. At the same time, the brilliant lawyer and economist Bruce MacEwen is bringing the important subject of law firm economics to an increasing number of law firms. We see signs of change here – but only in isolated incidents to become universal in both professions. That should change – but how?
- In the three decades since Bates introduced the concept of frank competition to professional firms, a new and distinctive body of marketing technique has evolved. It has also become clear that professional marketing is integral to the growth of professional firms. Yet today, only the largest of these firms, and a few smaller ones, accept that concept. The sustaining tradition is that only lawyers and accountants have full hospitality in law and accounting firms – despite the well proven efficacy of organized marketing in practice development. How will this disconnect be resolved in the future?
- Despite three decades of experience in professional services marketing, remarkably little innovation seems to have occurred in its practice in recent years. Part of this is because of the random education in professional services marketing in business schools; part because marketing itself is an art form in the way the process is executed – and there are not that many artists. Yet another reason is the lack of formal education in professional services marketing, which is very different from product marketing. A significant factor is that accountants and lawyers have little foundation in how to hire and evaluate marketers, which often results in unsatisfactory marketing process, and failure to judge good from bad – effective from ineffective.
- Because of the disconnect between professionals and marketers, many marketers don’t innovate, even in an arena in which all marketers have the same tools. The winners know how to use those tools innovatively; the losers do not. The marketers either feel intimidated by the stature of professionals, or don’t know how to do anything except by rote. Perhaps time and competition will temper this situation.
Functioning in a Changing World
While evolution can rarely be accelerated, nor its ultimate destination be accurately foreseen, there may be ways in which it can be accommodated. Accommodation is essential, simply because control of events, when possible, mitigates unpleasant surprise.
Several things beyond outright behavior modification can make it possible for both professionals and marketers to participate in the change process …
- Learn to fathom those elements, both economic and social, that are currently changing. For example, new technology, including the new social media. Even if you don’t plan to participate, learn it. You’ll understand a great deal of the dynamics of new aspects of society and the economy. You’ll spot trends.
- Don’t insulate yourself from the marketing process if you’re a professional, or from the nature of accounting or law if you’re a marketer.
- If you’re a marketer, try to understand the lawyer or accountant. This means the people – the lawyers or accountants – as well as the process. The attitudes, the points of view on the clients, the way they think, their values. Don’t try to turn them into marketers – marketing is your job – but rather teach them how to be participants in the marketing process. As a marketer, you’re not going to change the professionals, but you can educate them within the context of their professions. For example, some years ago, at a major accounting firm, I wondered if an audit could be used as a business management or planning tool. The answer was more arcane than practical, but I learned more about auditing than most non-accountants usually know, and the auditors learned more about marketers and marketing than most of them knew at the time.
- If you’re a professional, you don’t have to be a marketing professional if you don’t want to, but you should know enough about the process to be able to participate in it as appropriate, as well as to understand the marketers and how their minds work. Ultimately, in a successful marketing program, you’re going to have to participate in the process and in bringing the prospect into the fold. Learn how to do it well. It’s a process well within your training and experience.
- Read the trade media – both the appropriate law and accounting trades and the publications serving the industries the clients are in. Not just for the news, but for the trends.
- When you spot a trend – particularly one that veers from traditional professional practice (such as moving from hourly billing to value billing, or keeping associates or accountants who are talented but not partner material) – don’t make snap judgments. Not only are these strong trends, but even if you’re not ready to bring them into your practice, they may eventually be right for you.
- If you can’t innovate, at least learn to respond to external factors that can affect your practice, your firm and your clients.
- Competitive intelligence is important. You should be aware of other firms and what they’re doing that you’re not – but should be. Or that may eventually be right for you.
Learn to question everything you do. Ask yourself the question, “This is the way I did it yesterday. Is it the best way to do it today?” You’ll be amazed at the answer.
In every aspect of life, there is nothing – not an article, not a process, not an event – that is unaffected by something else. That’s why everything you do – large or small – will ultimately change, whether you choose it or not.
Is change a marketing tool? Absolutely, if understanding and dealing with it puts you a step ahead of your competitors. And remember, evolution is constant, and change is coming – whether you participate in it or not. Change is not an option, when the old way is made obsolete by competition. And so the response to the changing needs of the marketplace, and the need to compete, completely altered the nature of the practice – and continues to do so. In three and a half decades, there has been a substantial evolution. It’s a microcosm of the evolutionary cycle. It continues today.
