How Accountants Lose Clients

With client retention the top issue for firms, we go looking for answers.
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By Rick Telberg
CPA Trendlines

If you want some real answers for how to avoid losing clients, just start asking CPAs how they’ve managed to pick up new clients.

That’s exactly what we’ve been doing lately. Some of the answers are startling. All of them are instructional. Most of the time, accountants can blame the CPA that their new clients were abandoned.

Mirella (no last names), an independent accountant and tax practitioner near Rochester, N.Y., puts it succinctly, “You will lose a client if you charge too much, do not answer their phone calls, do not get their work done on time and do not give them the personal service that they deserve.”

“You may lose a client if you make a mistake,” she adds. “But if you are honest about it and fix it, you may keep them if all the other things are in line.”

We like Howard's take on it, too. “There are all kinds of ways to lose a client,” he says. “However, my experience is that when I pick up a new client, the prior CPA repeatedly made one or more” of the following mistakes:

1. Failure to deliver the product, tax or accounting, in a timely manner.

2. Failure to respond to routine inquiries, e-mails or voice mails in a timely manner.

3. Failure to understand that the key to profitability is to maximize the lifetime value of a client and not in trying to squeeze the most fees out of an individual transaction.

Joshua, who calls himself “the chief numbers guy” at his own firm in the Los Angeles area, is still relatively new as his own practice owner.

But he says he’s been building his new business “by doing three simple things.”

1. Do what I say I'm going to do.

2. Charge what I say I'm going to charge.

3. Ensure that my client understands the value exchanged.

I think most people naturally understand the first and second, but Joshua calls No. 3 “the secret sauce.”

He tells the story of winning a client who had told him, “I just don't understand what that guy did to earn $700." In fact, Joshua is not much cheaper. He may even be more expensive than the accountant he replaced.

But, he explains, “The point is when you charge for a service, if a client doesn't perceive the value, there is no reason to come back.” If the incumbent practitioner did nothing to enhance the experience or the relationship, then any kind of fee can feel unjustified. And, that’s “all that's required to send someone shopping.”

The fact is switching costs are low for most clients, with the exception of audit clients. But overall, the answer seems to come down to setting expectations and then exceeding them. That’s “secret sauce.” Not much of a “secret,” really.