As lockdown ends and economic recovery gathers pace, the argument for transforming into a digital firm is irresistible. Here’s how to make the shift
In a recent eight-part In Practice series, Farnell Clarke co-founder Will Farnell explained how to transition to a digital firm, with practical steps for how to get there, backed up with examples from his own experience, including what went wrong as well as what went right.
For links to each of the eight articles, go to the end of this summary, but if you haven’t read them yet, take this whistle-stop tour.
For most people, change is scary. For practice owners, the idea of reinventing how the business works can induce an understandable fear of the possible consequences. Many an owner has decided to sit tight and hope prospects will improve rather than risk losing the lot by turning a traditional practice into a digital firm. Yet the writing on the wall has been clear for some time: accountancy is not immune to technology’s power to reshape industries, and in a digital age, a digital firm is the only viable future.
The pandemic has been a trigger for organisational change. Forced to switch to remote working, many firms have found that tech-dependent home-working has worked perfectly well. What’s more, pitched into a full-blown economic crisis, many clients have turned repeatedly to them for advice on how to survive – and recover from – the pandemic. That need for business advisory offers the digital firm a big opportunity.
Scope creep, a failure to charge clients for adding value, and time-based billing all contribute to the traditional firm’s equally traditional flawed pricing model, and makes scaling the business up impossible.
Start your firm’s digital journey by segmenting your customers to create average fee metrics, then be prepared to reprice the entire client base to eliminate any chronic undercharging. Pricing based on outputs (ie meeting specific client needs) rather than inputs (billable hours) is the foundation not just for sustainable revenue but a client relationship that is long term and deep.
Will you lose all your clients as a result? No, particularly if you offer those facing the biggest hikes sweeteners such as temporary ‘loyalty discounts’ to ease the transition. Clients care primarily about what they get, not what it takes you to supply it, and client-centric pricing offers them what they want in a form they are comfortable with.
Tech for tech’s sake is pointless, but when it enhances client service it is priceless. Client expectations across the board have changed as a result of successful tech disruptors offering better customer experience. While OK service may have been acceptable 20 years ago, good service is now the bare minimum. The most effective way to improve client satisfaction (in effect, a client rating for services delivered) is to expand the number of touchpoints.
Delivering consistently good service, let alone excellent service, depends on getting your processes right. And that means owning the whole financial data chain. You need to tell your client what bookkeeping system to use because you’re the expert here. If they can’t supply the input in the right tech form for the top-quality output you offer, then they probably need to pay extra. And if the client does adopt your recommended process, then your part of the bargain is that high-quality service at a fixed price.
You may consider bookkeeping to be below the accountant’s pay grade, a task of such low value that it can’t be delivered profitably. A cloud-based bookkeeping service – the one that you’ve directed your client to – changes the game. It’s a means to an end, letting you automatically tap into that client-entered data, capture the key information and send it to your client at whatever frequency you have agreed – daily is perfectly reasonable. It gives the client business-critical data they would not normally have and enables you to multiply those all-important touchpoints.
As technology commoditises compliance, eating into what may be the bread and butter for many firms, advisory becomes ever more important. Most firms already do advisory, but reactively and often without charging for it. A digital firm will use its regular client touchpoints to understand the client’s pain points and then offer (and charge for) advice on how to dissolve them. That advice will be based on the best possible information from the bookkeeping system you have mandated.
Once you’ve got pricing right, built the tech stack, set up efficient processes, and developed an advisory offer, you have created an environment that will stop current clients leaving through the back door as you onboard new ones through the front. The marketing key in generating leads and engagement is to articulate the firm’s vision and values – what you do and why you do it – which is central to the client experience. Once you have done that, your firm has a personality and a credible message. Without that, your marketing is going nowhere.
The culture of most firms will have grown organically and even chaotically, and will be a patchwork of sometimes contradictory values and beliefs. Aligning the culture with the firm’s brand may be a long-term operation that rocks the retention boat, but it is essential if the message you are projecting is to be taken seriously and to flourish.
For a fully explained rundown of how and why you should build a digital firm, read Will Farnell’s eight-step guide: