February 3, 2020

IN OUR OPINION, PERSPECTIVE #102— February 3, 2020

(A Continuing Series for Leading CPA Firms)

“STANDING OUT” THROUGH A DISTINCTIVE CLIENT SERVICE PLAN

“Standing out” through distinctive client service requires an understanding that each client has a different set of needs. In Our Opinion, while it requires organizational discipline, this is best accomplished at small and midsized CPA firms by developing a Distinctive Client Service Plan that tailors services to match client needs and expectations.

Imagine your Managing Partner sending a letter to clients similar to that presented below:

“All professional service providers and their clients continually grapple with the problem of defining quality service.

Some attempts involve the use of vague terms, with an assurance of personal attention, commitment, and hands-on involvement—descriptions that are general to all clients, but specific to none.

Other definitions focus on handling negative situations, such as correcting errors, resolving problems, or explaining difficulties. These can be small consolation if clients can expect that these situations are likely to occur.

To demonstrate that all CPA firms are not the same, we point to our distinctive service, which helps us stand apart in serving owners, operators, and managers of mid-market companies. One specific distinction is an approach that is simple in concept but significant in its implications for both clients and professionals. We ask our clients to participate in developing a Client Service Plan with our account partner and key members of our engagement team.

The Client Service Plan is an opportunity for you, the client, and the engagement team to define standards of performance for various aspects of service. Once established, these standards serve as precise indicators of the advice, information, and communication about your business and the work that you expect from our firm.

Our approach to quality service is not limited to developing the Distinctive Client Service Plan. At appropriate times during the year, we will ask you to evaluate whether your engagement team is meeting your expectations as reflected in the standards we have jointly developed. We will also meet with you, at least annually, to review your Client Service Plan to consider whether any revisions to those standards are warranted.

Our approach to quality service provides significant benefits to our clients. Specifically, the Client Service Plan offers you an opportunity to:

   Indicate what aspects of service are most important to you and how you would like to be served.

   Establish performance standards with key members of the client service team.

   Evaluate and provide feedback on the performance of the client service team.

Most importantly, our approach and the Distinctive Client Service Plan provide a common framework for determining that you are being well-served. Through this process, we establish clear indications about what is expected and what will be delivered, with little chance of misunderstanding”.

Very truly yours,

Joe Smith, CPA

Managing Partner

September 1, 2019

The Distinctive Client Service Plan is an opportunity for the client and your firm’s client service team to collaboratively define expected standards of performance for the various aspects of service that your firm will provide. Once established, the standards will serve as precise indicators of the advice, information, and communication you will receive from the engagement team throughout your business relationship. Presented below are the key elements of a Client Service Plan:

Step 1: Determine Key Service Criteria

You start your plan by determining client expectations & identifying the service criteria most importatn to the client company. This helps establish a common framework for ensuring that the client’s need are met.

Common Service Criteria:

• Scheduling service deadlines
• Committing to fee estimates
• Generating ideas for management
• Communicating with management and the Audit Committee

Step 2: Set Performance Standards

Next, standards for performance on important service criteria are defined. These standards serve as benchmarks for the client to evaluate your engagement team on such factors as service quality, responsiveness, timeliness and the usefulness of your guidance.

Sample Performance Standards:

• Audit report delivered by deadline
• Partner participates in two quarterly strategic planning meetings during year
• Value added insight provided
• Monthly audit status reports submitted to Audit Committee by first of the month
• Tax returns issued prior to internal deadline

Step 3: Evaluate Results and Provide Feedback

At appropriate times during the year, you will meet to evaluate whether the engagement team is exceeding expectations as reflected in the mutually established performance standards. This approach represents a significant step forward in solving the challenge of defining quality service, and showing that you are proud to offer it to clients. Upon the conclusion of the service cycle. The client service partner, and perhaps the Managing Partner of the firm, meets with senior management at the client to evaluate actual performance, what went right and what went wrong, and how the firm can do better next year.

IN CONCLUSION

Over the years, we have observed that a number of firms have attempted to adopt Distinctive Client Service Plans but have been unable to sustain the effort as it:

• Requires significant discipline and accountability within the firm and many small and midsized CPA firms are unable to keep their “foot on the pedal”, and
• Raises the bar and puts a firm’s “money where its mouth is” when it comes to client service.

Having said that, we believe that a midsized CPA firm achieves significant rewards (long term, fruitful client relationships that are financially attractive) if it makes Distinctive Client Service Plans a part of its DNA.

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Dom Esposito, CPA, is the CEO of ESPOSITO CEO2CEO, LLC — a boutique advisory firm consulting to leading CPA and other professional services firms on strategy, succession planning and mergers, acquisitions and integration. Dom, voted as one of the most influential people in the profession for two consecutive years by Accounting Today, authored a book, published by www.CPATrendlines.com., entitled “8 Steps to Great” which is a primer for CEOs, managing partners and other senior partners. In Our Opinion, is a continuing series of perspectives for leading CPA firms where Dom shares insights, experiences and wisdom with firm leaders who want to “run with the big dogs” and develop their firms into sustainable brands. Dom welcomes questions and can be contacted at either desposito@espositoceo2ceo.com or 203.292.3277.