You have decided that you want to make the transformation and become a 21st Century Advisor to your high net worth business owner clients.
You are introducing new added value services to your clients – but you seem to be “doing too much for the money” – you’re over-delivering and getting underpaid. Why?
Why service businesses over-deliver and get underpaid
This concept impacts most professional service businesses – and particularly CPAs.
This is because most CPAs have historically provided a purely tangible product – like a tax return – a “commoditized” product for a clear and distinct price.
However, by contrast added value CPA services are more likely to be “intangible” in nature. Think about words like “proactive”, “planning” and “business advisory services”. They are all valuable services – but they are all rather intangible – and unlike a tax return they are “very difficult to touch”. You need to be able to know where to start and where to stop delivering.
Start by thinking about “service level jumps”
Imagine that your CPA business (metaphorically) offers to “jump over a 3' high jump bar” for your client for a price of $3.
Most CPAs will focus on clearing the 3' bar and will worry about jumping too low and “knocking the bar off” – resulting in a client complaint.
But in fact, “knocking the 3' bar off” is typically not the biggest problem for the CPA. The problem is not “jumping too low”- in fact a much bigger problem for the CPA is “jumping too high”.
The typical CPA who is trying to add value for a client does not stop at jumping 3' and in fact will often jump 4' or even 5' in their efforts to please. But even that is not their really big problem.
The CPAs really big problem is that they don’t get paid properly for jumping higher and adding value.
If the CPA was able to charge their clients $3 for the “basic 3' jump” service and $4 for the “added-value 4' jump” service and $5 for the “super added-value 5' jump” service that would have been great news.
The really big business problem for the CPA is that they are regularly jumping 4' or even 5' for clients - but far too often only charging $3 for the privilege. The CPA has over-engineered the service and is “doing too much for the money charged”.
The reason CPAs “do too much for the money”
The reason this happens is because the CPA has not clearly “separated” or properly defined their added value service levels.
Essentially, they need to “productize” the intangible service and make it more “solid”. They need to make it easier for client to touch and feel – and ultimately easier for the client to choose to buy.
Once the CPA has defined the difference between the service levels / benefits –the client can choose between (for example):
Without clear separation it is difficult (almost impossible) to sell the extra benefits to the client. The client may not even be aware that they are receiving extra value from their CPA – much less appreciate it.
Even worse the CPA will sometimes compound this problem by going to their client (after the event) and saying – “I know I said we were going to jump 3' but actually we have jumped 5' - without checking whether you wanted us to do that - can we now have $5 instead of $3 please'?
Sometimes this discussion may result in a “compromise” (e.g. the client agrees to pay $4 for 5’ jump) - but actually the result is nobody is very happy. The CPA has jumped 5' for $4 - and the client feels like the CPA has taken advantage of them. That is not a good approach to building a valuable client for life.
CPAs who want to provide value added services must work harder (in advance) at defining and “separating” the different service levels and corresponding price/value points. They need to ensure that the differences in benefit (at the point of sale) are clear. They need to provide the client with a choice of added value services.
In the simple illustration above the separate service level choices have been separated and defined as follows:
“3' Basic Reactive Jump” – for $3 we will provide you with the normal tax and accounting compliance service. We will be “reactive” (you call us when you need particular help). Note - sometimes this “basic” level of service may be included in the choice precisely because you want the client to perceive and value the difference between traditional “reactive” and added value “proactive” services.
“4' Added-Value Proactive Jump” – for $4 we start with a half-day facilitated planning workshop to help you clarify business direction/vision. We work with you “proactively” – stimulating new ideas to help grow your business. We meet quarterly helping you to drive implementation of plans and team accountability – to help you to maximize your business potential.
“5' Super-Added-Value Strategic Jump” – for $5 we start with a one day facilitated planning workshop to help you clarify business direction/vision. We work with you “strategically” – stimulating new ideas via 4 planning modules to help grow your business. We meet monthly helping you to drive implementation of plans and team accountability. We will provide a business coach/mentor service to help you maximize your business potential.
Having separated and defined the differences in service levels it becomes relatively easy to provide the client with choices and to explain the benefits to the customer in advance.
The answer is clear – “Separate” – that’s HOW to stop over-delivering and being underpaid for value-added services.