For a CPA firm to thrive, it is a good idea to know what your would-be clients want from their trusted adviser. Hinge Research Institute recently conducted a study titled “Inside the Buyer’s Brain,” a comprehensive look at the buyer-seller relationship. Lee Frederiksen, managing partner of Hinge in Reston, Va., joins us to examine what the findings say about client service in the accounting landscape.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor

Podcast Transcript

If you are going to thrive as a CPA firm, one way to make sure you do that is to know that what would-be clients or buyers are looking for so you can acquire their business. With this in mind, Hinge Research Institute recently conducted a study called “Inside The Buyer's Brain,” a comprehensive look at the buyer/seller relationship, including that of the accounting landscape. To review the findings of that study, today we have with us Lee Frederiksen, managing partner of Hinge in Reston, Va.

Before we get too specific, can you give me an idea of any expectations you had for the findings going into the survey and how the actual findings confirmed those expectations, or even defied them?

[Frederiksen] We knew going into the survey that there has been a long-term trend toward going digital, and we expected to see that would continue, but there was another trend that was really brought out and highlighted, and that was really beyond what we expected. That is the issue of relevance, how are you relevant to the client's issues and problems that they're having? That is becoming much more important than it had been in previous studies. That was a big surprise.

What did the survey say about how would-be clients are currently finding and engaging with CPA firms? How do they go about that?

[Frederiksen] For a long time, it has always been the number-one way that clients went about solving their business issues, getting information, was to ask a peer or a colleague for a recommendation. That's been the basis for many firms' business strategies is get clients, do good work, and try and get referrals.

But what we saw this year was, for the first time, it looks like doing a web search to address business issues is now on a par with asking a peer or a colleague. As a matter of fact, we also found that referrals have been going down. In other words, people aren't asking for referrals as much. And by that, I don't mean that accounting firms aren't saying to their clients, "Can you give me a referral?" It's more that a business person, when faced with an issue, isn't calling up a friend or a colleague and saying, "Hey, do you know someone who can help me with this revenue recognition problem or a PPP loan?" Instead, they're hopping online and they're researching those issues directly.

What did the survey reveal as to what clients care about when they're looking for a CPA firm? What are the top priorities?

[Frederiksen] It's really an interesting thing because what we've seen is where I mentioned this sort of relevance to them. We saw a big increase in terms of clients looking for people who understand their industry. That is perhaps one of the biggest increases of anything, is it seems like clients are becoming more and more interested in having someone who already can bring insights to them. Rather than bringing them up to speed on their industry, the client wants someone who can actually help them understand the competitive environment, understand what's going on in their industry. That's a big shift.

One of the traditional ways of potential clients learning about a CPA firm has been those recommendations that you talked about, but the survey had some interesting findings in that area. Obviously, it's sort of evening out with the online searching, but could you explain anything else that was revealed there?

[Frederiksen] I think the other thing that is revealed is that we're in an environment where more and more people are becoming more visible. We found that accounting firms generally have good reputations, and the challenge is that as more of them are becoming visible and more of them have better reputations in the marketplace, that actually makes it harder to stand out. The number one thing, as I said, that people are looking for is knowledge of the industry, but they're also looking for talented staff. “Do you understand these issues and can you help me with that?” They're looking for flexibility and responsiveness in the service.

The service that they're looking for, the kinds of client service is not just that you return their calls and that you're polite to them on the phone. It's also how flexible are you and how quickly can you respond to questions and issues that I have. I think, in many ways, that is really upping the stakes for retaining clients.

A great line from a blog you did for PICPA's CPA Now on the survey: "If you suspect that your firm is out of step with changing buyer behaviors, you're probably right." Let's talk about some of the ways these firms can adapt. Correcting misconceptions: what are the misconceptions firms have and how can they begin to address them?

[Frederiksen] I would say the number one misconception that firms have is that they really understand their clients and what their clients' issues are. What we found out when we asked people to identify what they think the primary challenges is that their clients have, and then when we ask the clients, what we find out is that firms often underestimate the client’s issues or they misperceive what the client's issues are. They think of them in terms of language that they understand, and clients use the language in terms that they understand.

I was reminded of a conversation I had with a partner from a firm, and they were going after a particular type of client. We had done some research on that client category and we found out their biggest issue was growth. That was their biggest priority – "We need to grow" – where from the partner's perspective, his immediate reaction was, "Well, we can't help them. We're an accounting firm. What can we do to help someone grow?" And it's like, excuse me? I mean, can you help them with cashflow? Can you help them reduce their taxes? Can you help them with planning? It goes on and on and on, but unless you're thinking in the same terms as your clients and using the same language, you'll probably miss the opportunity to communicate your relevance.

People might assume that basically every firm has this website that's up and going, right? That it's beautiful and everything else. But every once in a while when you take a look out there, people maybe haven't jumped into having the really responsive website yet. What would you say are the important first steps CPA firms have to take in committing to a robust digital presence?

[Frederiksen] I would say the first thing is an understanding that it is absolutely essential going forward for you to have that presence.

The second thing I would recommend is to make sure you understand your target client and what their challenges are and what kind of information they want. Oftentimes, a little piece of research or looking up existing research on particular types of clients will give you a lot of guidance and will help you at least get started in that.

We know, for example, that clients want to check out firms. Having your website accessible on mobile, having it have information about what you do particularly well, what are the things that you want to focus on as a practice? What are any specialties? We also know that communicating something about the expertise of the people you have and publications or research or talks that they've done, making those available on your website help you establish some of that kind of credibility.

Then we know one of the things that people also care about is the culture of a firm. What is it? Commenting on that. And I think if you're straightforward about what you do well and fulsome in terms of the amount of information you provide, that will be the right kind of guiding principle that'll help you get a strong digital presence.

It could be easy for CPA firms who have so much going on, especially right now, to fall into that sort of same as last year mindset, although that might be a little tougher right now with all the changes made necessary by COVID, but how important is it for CPA firms to escape that mindset if they're going to evolve with the times?

[Frederiksen] I think it's absolutely critical that they do. This is probably a change that is going to ripple through it for many years to come because so many people have now experienced working with professionals remotely, no longer face-to-face. Even if you thought that your competitors were only the other accounting firms that are in your location, in your town or city, I think you are going to find out that your competitive set has now greatly increased. Every specialist in the industry that your clients, your current clients are in, will be in a position to take clients away from you.

It's really important that you change the way you focus and, really, it's more about educating clients about how you can help them than it is just putting your credentials up there and expecting referrals to come.

Everything I've read about technology and the profession talks about, obviously, it's growing so quickly, but still, when it comes down to it, people are the most important factor, right? What role does hiring of the right people play in setting a firm apart from its competition, or has the technological growth diminished that importance? What do think?

[Frederiksen] I don't think it's diminished it at all. As a matter of fact, I think as technology sort of ups the level of the playing field, some of the other characteristics, the willingness to discuss business issues with clients, the understanding of industries and how they work, and the ability to do this advisory sort of work, that's probably going to become a more and more important thing as time passes and there'll be less and less on the rote doing the work. I think that's probably inevitable.

We see in another study that we just recently completed that the firms that are growing the fastest are also the ones that are most sophisticated in the technology that they use with their core business processes. In other words, using technology to automate your core CPA functions is one of the things that's associated with higher growth. I think it's something that is inevitable. We're going to see more and more of it.