for Capstone Marketing, 2000
What improvements have you seen in professional service marketing over the past few years?
RW: Almost nothing. I still think that both in law and CPA firms, partners and marketers are missing the point.
The positive things include more focus on things like industry specialisation, people beginning to come to market as focused specialists. There was a great reluctance to do that 10 years ago. Nobody wanted to limit their marketing. There is a greater recognition 10 years later that you have to commit yourself. It's much easier to market a specialist than a generalist.
We've also seen a lot more progress in people getting client feedback, yet the ridiculous mistake they're making is doing nothing with it. That is not neutral; it is absolutely disastrous. The worst thing in the world is to ask your client for feedback and then do nothing about it. It's like a slap in the face. That is what firms, in effect, are doing. In one sense you can say that getting client feedback is an improvement, but I don't actually believe that because I think that getting feedback without doing anything is stupid. It is, therefore, not an improvement.
I think firms and individuals are slowly beginning to treat clients with a bit of respect. Ten and 15 years ago there was more of the traditional problem of professionals, where their basic posture was, "We are the experts. You are the idiots in trouble. Let's help you save your bacon." This wasn't necessarily intended but what came out, a very pompous, patronising, condescending approach to market. I think everyone has gotten a bit more humble.
Do you think this is because the marketplace has become more competitive?
RW: Yes. It's not only competitive in price competition. I think clients are rebelling in the sense of who is in charge. You see a lot of CPA firms and law firms nowadays where the clients want weekly or monthly reporting of everything the service firm is up to on their behalf. In essence the client is saying, "We don't trust you with our money. We want to know everything you're doing."
Do you think the amount of trust the clients have in their CPAs and lawyers has decreased?
RW: It has decreased dramatically. This is the single issue around marketing and selling that all these lawyers and accountants still do not get, which is that marketing and selling is solely about trust. In other words, anybody who needs an accountant or a lawyer will go through two stages: first is a qualification stage, which is who is out there that's competent.
What the lawyers and accountants don't understand is that no matter what the issue is, I can always find 10 qualified people. Talking about qualifications is not marketing and selling. That's just getting to the game. Now comes the point: Once someone is qualified, now as a buyer I am in the position of saying, "Now my buying choice is to choose among qualified buyers." If they're all qualified then what I choose on has nothing to do with the logical, rational part. What I choose on among people who are equally qualified is "Whom do I trust?"
In a short time period, how can a CPA or a lawyer develop that sense of trust with a prospect?
RW: Let me give you a personal example. I had to hire a lawyer because my relative died and I had to probate her will. I'll leave out all the idiotic marketing the first few firms I called tried to do. I'll go straight to the point of the guy who was a genius.
I called a lawyer in Brooklyn because that's where my relative lived. The minute I started explaining my need he interrupted me and asked, "Do you know anything about what it takes to process a will in Brooklyn?" I had no idea. He said, "I think you're unwise in interviewing lawyers if you don't know what you're getting into, because you don't have the basis to interview people. If you want to give me your fax number I will fax you a three-page outline of what is involved in processing a will in Brooklyn."
The fax contained a lot of useful information, and the final paragraph contained contact information for all city, state and federal authorities that needed to be notified. I received all of this information before he was hired. Without being idealistic, I think most human beings' reactions would be to hire that guy. Notice that he did not sell or market at all. What he did was immediately say, "Let me be helpful to you."
The issue I have with people clinging to marketing is that even they don't get it. It's not just the accountants or the lawyers. Even the marketers don't get it. What works is not selling. What works is to just start helping people. They will want more.
I have been asked to look at proposals written by CPA firms and law firms. The one thing I look for is the thing I just referred to: Where in this proposal is any substantive help? Of course, there never is any. It's what I call prostitute selling. It's saying, "Pay me and I'll do it. It will be wonderful. It will be fabulous once you start paying, but I'm not going to show you anything until you start paying." The central issue here that people just don't understand is that you are not making a moral point that you should be nice to clients; it just doesn't work.
Even marketing directors are writing newsletters, brochures and proposals boasting about what the firm has -- and it just doesn't work. This leads you to the conclusion that you should stop marketing, stop selling and start helping. What works best is to figure out who you want to help and go help them. That works.
I always take a vote when I'm with a single firm or at an industry meeting or something and ask, "How many of you read every issue of the trade magazine of your main client?" Forget the other clients they have to serve, just their main client. Less than 5 percent raise their hands, whether they're accountants or lawyers. Again, I'm not a moralist, it's just pragmatics. How can you convince a client you're interested in his business and that you care and you can help when, in fact, you do not know what's going on in his business?
My point about why there hasn't been much progress in professional service marketing is that everybody is looking for some new, magic, innovative marketing pill that will mean they don't have to get on the real diet. There isn't a magic pill. It has nothing to do with the consequences of the Internet. It's got everything to do with the basics that you've always known you aren't doing.
I was giving a talk yesterday to a group of management consultants and they asked how to develop relationships with existing clients. The short answer is very simple: You give away time for free. You go and, for example, sit in on their internal meetings at no charge. There you are, sitting in your client's management meeting, listening to what they want to debate, what they're fighting over. The question is how good at selling do you have to be -- and the answer is not at all. If you're selling, you're a brain-dead idiot. It doesn't mean that selling doesn't work. It means that selling is the hard way to do it. When you do it right you need zero sales skills.
There is no marketing or selling tactic more likely to work to give you a return on investment than giving away that free day to existing clients.
Yet when you ask how many lawyers are doing it, the answer is less than 1 percent. In the accounting world it gets up to about 5 percent, but it's not higher than that. How many people are acting as if they care?
What other marketing mistakes are accountants and lawyers making?
RW: They still judge marketing by revenue instead of profits. In law firms and accounting firms you get credit for new revenue you bring in, regardless of whether it is profitable revenue. They still work on the principle of "if it moves, shoot it." That is not good marketing. It is running scared marketing. We are so insecure as people that we don't have the courage to pass on anything. Firms are always diverted from their strategy because they don't have guts.
Let's list some other obvious marketing mistakes. Law firms in particular still have reward systems that celebrate individualism. They preach a good game about wanting to have practice groups and team marketing, and they might even get teams together to make team marketing plans. But those good ideas never get executed because the reward system says, "Who brought it in?" The trouble with that is not only does it destroy teamwork but it's also like being paid only if you "do it." You never get paid for courting or romance. We only give you origination credit if you actually "did it." As a result, nobody does romance. Everybody is handing out business cards saying, "Do you want to do it?" There's no clever relationship marketing going on because the firms basically diminish and discount the value within the firm of a relationship -- even though they say they don't, their systems do.
If firms were to truly reward teams, the teams themselves would need to figure out the roles of the people who will develop relationships with clients and prospects and the ones who will contribute in technical ways.
RW: There are two points; the first point is blindly obvious. Go back to my need for a probate lawyer in Brooklyn. I don't know any probate lawyers in Brooklyn. What's the first thing I do that any buyer in the world does when he or she has a new need?
Ask for a referral.
RW: Yes. The key to understanding marketing is to understand buying. The first thing that every buyer in the world does is to ask a friend. In other words, client satisfaction is 90 percent of marketing. If you have a friend who says, "I used this person, she's fabulous, trust her," you can't go wrong. If, however, you get the reaction, "Oh, they were pretty good, they were competent, add them to your list," you now have to do proposals.
People preach a good game on client satisfaction, but they aren't living it. Therefore, the first thing that firms should be doing is rewarding those partners or individuals or teams who are gaining levels of client satisfaction above "OK." Anybody who leaves a client saying, "Wow, they were fabulous," just solved 90 percent of their marketing problem. The real punch line is that you don't get to "wow" with clients by having a client feedback system that you don't follow up.
How do you get lawyers and accountants to get the "wow" level on client satisfaction? You have to do something like an unconditional satisfaction guarantee. Now not necessarily that in particular, but you have to do something that tough, because it's only if it's that tough that people like you and me will say, "Shoot, I've given my client permission to not pay me if they're not satisfied. I had better call that guy." We already knew that stuff, but that's not the issue. The issue is what will actually get us to do it.
There has to be some consequence.
RW: There has to be a consequence if we only settle for OK. That's the first step. I think firms are missing the point completely with their actions. I think they intellectually understand it. I'm not insulting their intelligence. I'm insulting their guts. They don't have the guts to put in place a client satisfaction quality system with teeth. What they have in place is a client satisfaction system that checks to make sure that it's "OK." We deal with the disasters. That's not the issue. The question is, "Do you deal with it when the client satisfaction is only OK?" If it's not OK, then you have to deal with all the other marketing rubbish that takes three times as long. That's point number one, which is that firms need to get client satisfaction, and then where we started is that it applies to a whole team. Everybody on the team is held accountable for that client satisfaction.
The second point about teams is that even when you do get to say new client marketing stuff -- this shouldn't be too complex -- that if you're going to romance an industry sector or romance a client, then you need to include as part of the total package things like putting on a seminar, writing an article, doing some industry research.
Under the current regimes of most firms, if you write an article there isn't any credit in the firm's system. We only pay for cash brought in. Therefore, nobody wants to write the article. Everybody wants to go out there and bring in cash. All the things that lead up to winning the business are neglected. To go back to my earlier point, we never try to do romance. We try to go for one-night-stand quickies because there's no reward within the firm.
Now in a good firm, and some do exist, what you'd have, whether at the client level of the practice group level, is a marketing plan for the whole group in which you would assign roles. You'd turn to your tax nerd and say, "You're a genius. What we need you to do is write an article a month for the next year. Give us 12 great tax ideas that the rest of us can take out to our clients. We will pay you mightily for that if they work." You don't give anyone a free ride. If they don't work, you don't pay for them. But by doing this you provide the opportunity to contribute to a successful marketing effort through more than one means.
Do you think the person writing the articles should be compensated as much as the people bringing it in?
RW: Absolutely.
That's always a struggle -- how you evaluate the different types of marketing activities and determine if one is more important than the other.
RW: I believe that in Economics 101 price goes for scarcity. Price is determined by the relative relationship between supply and demand. The fact that you're brilliant is a completely irrelevant topic. The question is how many brilliant people are there relative to how many the clients want.
If you're the only person in town who can write that tax article, in other words, and you came up with something that no one else in the firm could have done, I'm going to pay you more than the guy who put on the seminar, because plenty of our partners could have done that. The real issue becomes paying for what is scarce or unique, because that is what price is all about.
What do you think about all the branding that is going on among professional service firms?
RW: I think it's all nonsense. I think it's a complete waste of money. Distinguish two things: brand recognition, which is that people know your name, and brand value, which means that people place a weight on the name and will actually pay more or use you more frequently because they value the brand. All this advertising junk they're doing will accomplish is to help brand recognition: more people will know who Richard J. Wood is.
But just knowing that Richard J. Wood exists gives me only a little something; I'll concede that, but it doesn't give me a lot. The real question is, "Does anybody value the stuff? Will anybody pay more for Richard J. Wood because there is a Richard J. Wood brand?" Here comes the question again. Your brand is not what you claim. Your brand is what you enforce.
Let me give you an example, Campbell's Soup. People like me go to the supermarket and, even though there is a no-name generic next to the Campbell's Soup, most of us take the Campbell's and pay a premium. They make great soup. So why do we do it? We do it because it's risk reduction. When I go to the Campbell's, 99.9 percent of the time it's what they said it was going to be. I actually rely on it and will pay for risk reduction. The trouble with the generic is that it may be fabulous or it may be terrible; I don't know.
Now, imagine Campbell's Soup is what they said it would be 65 percent of the time. Where does my end value go?
It goes down.
RW: Not only does it go down, I would have it go to zero. If Campbell's brand value is now that one time out of three I'm not going to get what they said it stood for, I'm not going to pay extra for them.
A law firm or accounting firm has brand value to the extent that every time I use that firm I get this thing. They always read my trade magazines. These partners have a brand. You can depend on it. They may be bad at other things and great at a bunch of things, but they read my trade magazines. Or they know how to deal with me. Or they may be pompous bastards but they're the most innovative people in town.
Look at the BCG (Boston Consulting Group) strategy. Their history was that they did not have a reputation for being real user friendly. They had (and have) a brand that says they are intellectual giants, and they are. You go to BCG, you will get creativity. BCG will not sustain that brand if half their partners aren't very creative. Your brand is what you enforce.
These marketing people are really ripping off the law firms and accounting firms by saying that you can create a brand by going out to the marketplace and lying, claiming to be something that, in fact, you're not. If you have something that is enforced in your firm, some characteristic that is common to all of us, client service or industry knowledge or intellectual creativity or "We supervise your work superbly, you can come to us and you'll get that," then I'm all for advertising. What I'm not for is what firms are doing, advertising without actually enforcing it.
What do you think CPA firms are doing better than law firms?
RW: They are just doing more. I don't think they're doing anything smarter. It's just that they know they need to market, so they're spending more money and partner time at it. The accountants do it half good, half bad. The lawyers are just deciding whether to do it.
That's interesting, because it seems that the law firms are hiring more marketing staff and paying them more money.
RW: They're hiring the wrong people who don't understand it. They're hiring ex-journalists. They're hiring people who literally have backgrounds in all the wrong things.
What skills should the marketers have that they don't have?
RW: Let's go back to my earlier example. What the marketing directors should be doing is designing the sort of booklet that I described receiving from the probate lawyer in Brooklyn. Don't design newsletters or brochures, but write up some things that will be immensely valuable to clients who have the sort of needs our clients have. Stuff that actually gives away ideas. Now that is something a marketing director could help with.
So you don't feel a firm needs a general firm brochure?
RW: You could convince me that there are some anal-retentive buyers out there who need a brochure for due diligence. So do you have to have one? OK. Spend about three nanoseconds and 10 cents. Then, get on to really serving clients.
To test the proposition at the beginning of our conversation, think about when you're a buyer. You've bought legal services, accounting services, doctor's services and nanny services. We've all bought a wide range of professional services. My challenge is, "In how many of those cases did the brochure play a part in your decision making?"
The fatal mistake of marketers is that they tend to make a distinction between clients and us. The secret is very simple. The clients are us. You want to know how clients buy, think of how you buy. It goes back to the biblical precept of deal with others as you wish to be dealt with, and here comes the ugly conclusion. That's so scarce that you will be completely differentiated in the marketplace because everyone else is thinking of the client as "other." As long as you think like that, which most marketing directors do, you will be missing the point.
What are your thoughts regarding the trend towards multi-disciplinary practices?
RW: Again, go back to when you're the buyer. Here's a quick example. My wife and I have done a lot of decorating in our house. Somebody comes to me and says, "I can take care of that project for you. It needs plumbing, electricity, glaziers and carpenters." Then this contractor says, "By the way, the best electrician in Toowoomba happens to be in my firm. The best carpenter in Toowoomba happens to be in my firm."
Saying you can do this project because all the best people of all the disciplines are in your firm actually destroys credibility rather than helps it. What clients want are prime contractors who can manage multi-disciplinary projects. Even without multi-disciplinary firms I can find a lawyer, an accountant, an economist, an engineer. Finding the specialists isn't the problem. The question is "Who credibly has the managerial skills to manage all these different kinds of people on one integrated project?"
To serve as the prime contractor you must have a deep understanding of the client's business, which immediately kicks out the lawyers because the lawyers are not credible as prime contractors except for very peculiar people. Lawyers are correctly perceived as fabulous at the technical sub-specialty but not good at dealing with things outside their technical sub-specialty.
There is a fabulous future for any firm that can bring to market truly integrated services, but that's not what firms are currently doing. They are just adding on specialties to an unmanaged firm.
What do you think is the future of consolidations in the accounting profession?
RW: I think it's a 100 percent cop out. All the things we've discussed, quality, efficiency, collaboration, I think those are the things that win. People say to me, "Richard, you can't be serious. You want me to tackle quality and efficiency and collaboration and caring about clients?" I say, "Yes," and they say to me, "Richard, you can't imagine how political that would be. You want me to change all my partners. I can't do that."
So they merge with another elephant so they'll be big, because big helps a little. Sure, big helps a little; it's still evading the point. Does big help you with quality? Does big help you with understanding and caring about clients? At some point you have to stop the evasion of the issue and start getting around to the stuff that clients pay money for. Clients will not pay you more just because you are bigger.
What do you think is the most effective marketing technique that a firm should use?
RW: An unconditional satisfaction guarantee.
What is the best piece of advice that you could offer to professional service marketers?
RW: Focus exclusively on existing clients. If you asked the question, "How many of you believe that existing clients are the best source of new business?" 90 percent of the people in the room will raise their hand. Yet when you ask marketing directors where they are spending their time -- they spend 100 percent of their time on new business.
I hear from firms that they want new clients. They want to be at bat more often.
RW: Again, it's wrong if they want to make money and have fun. First you start by making sure you are fabulous at managing client relationships. It's not a moral point. It just means that then any time you do bring in a new client the net present value of that client goes up through the roof because you are so good at building relationships. If you're bad or neglectful at building relationships, the net present value of every new client you bring in goes down because you're not very good at turning it into future cash. So my advice to a marketing director is that maybe it's not exclusively existing clients, but at least 80-20, 80 percent on existing clients. Teach your firm how to build relationships and grow business with existing clients, because it will take less time and that is the place you practice. If the question is, "Where do you learn how to build trust?" the answer is with the existing relationships.
