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Cross-Selling: What is Your Firm’s Lifetime Value to its Clients?

Cross-Selling: What is Your Firm’s Lifetime Value to its Clients?. Presented by Ronald J. Baker, Founder VeraSage Institute. Value creation and capture. Value created. Value captured. Client’s Profit. Price. Costs. What are your customers really buying?.

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Cross-Selling: What is Your Firm’s Lifetime Value to its Clients?

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  1. Cross-Selling: What is Your Firm’s Lifetime Value to its Clients? Presented by Ronald J. Baker, Founder VeraSage Institute

  2. Value creation and capture Value created Value captured Client’s Profit Price Costs

  3. What are your customers really buying? What are you really selling?

  4. BUT Flying time Not jet engines.

  5. But On-time delivery Not cement

  6. Charles Revson, Founder, Revlon “When it leaves the factory, it’s lipstick. But when it crosses the counter in the department store, it’s hope.”

  7. Peter Drucker “The customer never buys a product. By definition the customer buys the satisfaction of a want. He buys value.”

  8. What People Really Buy 1) Good Feelings 2) Solutions to problems; or Expectations, according to Ted Levitt

  9. Intangible Value Specialist expertise/knowledge Unique social capital Brand/reputation Unique result––creativity & innovation Reducing risk Excellent experience Make the customer “look good” Relationship What else?

  10. Seven Purchase Risks Performance Risk–Will not perform function purchased for Financial Risk–Monetary loss if product fails (services higher risk than products) Time and Loss Risk–Customer’s time due to failure (AOG) Opportunity Risk–Risk of choosing one product over another (IBM)

  11. Seven Purchase Risks Psychological/Social Risk–Purchase will not fit customer’s self-concept. Restaurants, cars, movies, hairstylists, cosmetic surgery, etc. Physical Risk–Chance the purchase will cause physical harm (medical care, Michelin tire ads)

  12. Baker’s Law Bad customers drive out good customers

  13. Customer Segmentation by Value Value Buyers Price Buyers High Pain of Price Convenience Buyers Relationship Buyers Low Low High Value of Differentiation

  14. Loyalization • Is loyalty dead? • AICPA says: It cost eleven times more to acquire a customer as to keep an old one • 5% change in customer retention can swing profits 25%-100% (Bain & Company, Inc.)

  15. Rewarding Customers– Loyalization • Already have trust & confidence • Access to information • Lower marketing costs • Marginal work more profitable • Customer acceptable of staff • Customer values your services more

  16. Telling Fact Top CPA firms generate 25-40% of new business from sales to existing customers We believe you can achieve 50-80%

  17. Why Existing Customers Are More Profitable • Acquisition Cost • Base Profit • Per-Customer Revenue Growth • Operating Costs • Referrals • Price Premium

  18. Net Promoter Score (NPS) Typical company loses half customers < 3 years The Ultimate Question: How likely is it that you would recommend this company to a friend or colleague? Dell had highest NPS www.netpromoter.com

  19. 3 Types of Customers, 1-10 Scale Promoters (P) = loyal enthusiasts (9-10) Passives = satisfied but unenthusiastic, easily wooed by competition (7-8) Detractors (D) = unhappy customers trapped in a bad relationship (0-6) P –– D = NPS

  20. Why CPAs Lose Customers “My Accountant just doesn’t treat me right” Ignore them Fail to cooperate Let partner contact lapse

  21. Why CPAs Lose Customers Don’t keep them informed Assume they are technicians Use as training ground for new team members

  22. Why People Select CPAs Interpersonal skills Aggressiveness Interest in the customer

  23. Why People Select CPAs Ability to explain procedures in terms the customer can understand Willingness to give advice Perceived honesty

  24. Client Relationship:Accountant’s Point of View • Mathematically correct • Properly reviewed • Within time budget • Profitable 80% Technical 20% Emotional

  25. Client Relationship:Client’s Point of View 20% Technical • Reliability • Responsiveness • Assurance • Empathy • Tangibles 80% Emotional

  26. What is Beyond TQS?

  27. What is Beyond TQS? • If you charge for stuff, commodity business • If you charge for tangible things, goods business • If you charge for activities you execute, service business • If you charge for the time customers spend with you, experience business • If you charge for the demonstrated outcome the customer achieves, transformation business

  28. Thank You! Versage website/blog www.verasage.com ron@verasage.com Phone: (707) 769-0965 Twitter @ronaldbaker

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