Many advisors do a great job of finding and landing new clients. But competitive pressure on prices means the bottom-line can sometimes suffer. It makes some advisors client-rich and profit-poor. Here are three ways great practitioners ensure each of their clients is profitable.
1. Re-evaluate your workflow regularly
Take a step back. Look at your workflow with fresh eyes. As if this is the first time you’ve seen it. Where are the bottle necks? At what points does work slow down? What pressure points create client frustration? What parts of the flow are causing pain for your staff?
For instance, do your staff spend time chasing clients for receipts and financial statements? How long does bill payment take? How easy is it to share documents with clients when they make a request? Are clients frustrated by the amount of time they spend administering their employee payroll?
All of these pinch-points are opportunities. They are great chances to improve your efficiency, save money and make the client experience awesome.
Apps like Hubdoc, TSheets, Bill.com and Sharefile can automate much of your workflow. Invoices get paid faster. Documents don’t get lost. Client and staff time is not wasted. Hard closes happen more quickly. And all of that means savings—and increased revenue from more satisfied clients.
2. Adopt value-based pricing
Cost-based pricing theoretically ensures you make a profit. But in a competitive market it may not always be possible to set rates as high as you need. And that's a problem. You still want to offer stellar service. Your business overhead hasn't changed. If you can't raise prices, profit can suffer.
The solution is to transition to value-based pricing. And that requires a mindset shift. For both you and the client. It means taking the focus off the minute-by-minute accounting and moving onto a broader view of the value you deliver to your client's business. Look to demonstrate that you provide more value than you charge. It will make clients more receptive to fair pricing.
Demonstrating your value means creating outstanding client experiences. Drill deep to fully understand their business and their issues. And provide innovative solutions to the things that keep them awake at night.
When you set the right price based on value, you build in margins to cover your overhead. Those margins enable you to spend the necessary time to go the extra mile for your clients. It is table stakes for maintaining profitability.
3. Upsell to higher margin services
Great practitioners look for every chance to more deeply understand their client’s business issues. The more concerns they identify, the more help they can provide.
Use monthly reports, annual reviews and every client interaction to explore your client’s needs. Look for things you didn’t identify as needs originally. Explore what needs have changed since you last talked. Each of the pain points you unearth is an opportunity to offer a new solution.
By most estimates, it’s 6-10 times easier to sell to a current client than to go out and find a new one. That makes this cross-selling a great way to inexpensively increase revenue. And putting out less effort than landing a new client means greater profit.
The best part is the more solutions you provide, the more clients will appreciate you. You’ll come to be seen a trusted advisor. Someone who wows them with insights and great experiences.
Great practitioners understand the value of making each client profitable. They look for efficiencies in their practice. They transition to value-based pricing. And they up-sell to current clients. Combining these strategies reduces expenses. It frees up more time. And builds a strong bottom-line.