Capstone Marketing Blog, Firing Clients

Clients: When to Hold, When to Fold

The 2011 PCPS CPA Firm Top Issues Commentary identifies retention of current clients as one of the top three issues for firms of all sizes.  Yet, are you retaining all the right clients?  Our SevenKeys to Successful CPA Firm Management research reveals that Leaders are five times more likely to fire clients that don’t fit their target.  When to hold and when to fold on client relationships?

Develop criteria to identify your firm’s A-B-C-D clients.  “A” clients are your most valuable clients and “D” clients are your least valuable clients, those to consider firing or transitioning out of your firm. Criteria to consider include:

  • Annual revenue
  • Payment history
  • Growth potential
  • Referral history and potential
  • Profitability/realization
  • Job risk/complexity
  • Timing of the work
  • Satisfaction/enjoyment working with the client

Typical “D” Clients:

  • Can’t attract and retain quality staff
  • Have a weak upper management team
  • Demonstrate low commitment to technology
  • Have unreasonable expectations
  • Show little willingness to follow advice
  • Have poor teamwork and commitment
  • Pay late
  • Abuse your people
  • Are poor record keepers
  • Always need their work yesterday
  • Continually put your firm at risk

Once you have established the appropriate criteria for your A-B-C-D rankings, you should then develop a system for putting these criteria to use in your practice.  Have each partner rate their clients and review this information at a partner meeting or retreat.  Set strategies and deadlines to move “C” and “D” clients up or out.  Determine those CPA firms to whom you could to refer these clients.

The same criteria should be used when evaluating new business opportunities to ensure that you don’t bring on any more “D” clients.

Experience shows us that firms who regularly engage in this “hold ‘em or fold ‘em” process are more profitable, more focused, and have happier employees.

Contact me when you are ready to improve your client base, or 858.737.4762.