Five Key Marketing Concepts Every CPA Should Know

Big Tax is spending enormous sums of money to attract new tax preparation customers, and it’s not just for the 1040 work. They want to sell those customers everything from software applications to credit monitoring services to loans. Certified Public Accountants and Enrolled Agents would be well served to fight back with marketing of their own.

A lifetime football fan, I was struck by the advertising spending by Intuit during the Super Bowl last February. As a career marketer, I could only appreciate the commitment Intuit is making to its brands. Intuit spent over $100 million on advertising last year, and it paid off: its total revenue of $2.6 billion was up 41% from 2021.

Intuit forced its way into the national consciousness. Good for them. That’s what effective advertising does; it changes the conversation. It’s clear to me that Intuit shook up many in the tax preparation and compliance business, and has accountants across the country rethinking their client retention and acquisition strategies.

It’s summer, and the 2022-23 tax season is over. Many will have forgotten who won the Super Bowl, and the seasonal spending by Big Tax is at a low point. But the wise tax professional will be using this period of relative quiet to ponder the future of the business generally, and their business specifically.

Let me get straight to my key point: you don’t have to be Intuit, or Block, a Big Four firm, or even in the Top 100 to do strategic thinking and planning. All you need is some motivation, Google, and a commitment to your future. You don’t need a marketing degree to be the master of your own destiny.

With this article, I’ll introduce some key concepts in marketing that may help you shape your thinking. To quote the irrepressible Yogi Berra, “If you don’t know where you’re going, you might not get there.” I hope this article helps you get where you want to be.

The Foundational Marketing Concepts for Tax Professionals

Concept One: The Ideal Customer

There is a ton of material on this concept; it’s a core concept in marketing, and not just in business schools. Advertisers and marketers devote tremendous resources and energy to defining their ideal customer or, in the parlance of tax pros, ideal client.

There are templates and how-tos and listicles devoted to this concept. A Google search will return hundreds of thousands of hits. At the highest level, it will come down to two things: your ideal client will have problems and pain points that you are built to solve, and they will also provide revenue streams that are richly profitable, sustainable, and enjoyable. Below those two overarching elements, there is much to be considered. How do you find them, communicate and engage with them, and, ultimately, form a long-lasting, mutually beneficial relationship with them?

A common mistake many make in business planning is to consider the companies they hope to work with. For accountants, that might be dentists or airline pilots. It might be the middle-tier firms and suppliers that form the basis of the industrial mix in your geographic region—for example, defense contractors in San Diego or venture capital firms in Silicon Valley.

But your ideal client is not a company; it’s a person. A company has revenues, employees, competitors, and specific threats and opportunities. But a person has hopes and dreams, a personality, and a style of decision-making. They occupy a spot in their company’s hierarchy. Your ideal client won’t be a corporation; it will be the CEO, the CFO, the Controller, or possibly the head of HR.

Whomever that person is, they will have one common trait with all your other ideal clients: they will truly value what you do, even who you are. There are lots of terms for this: you’ll “click”; they’ll “get you”, you’re “sympatico.” Almost always, the first sign of greeting between you and your ideal client will be a smile.

Even the most cursory review of your existing clientele will identify those clients you most enjoy working with. A great first task in identifying your ideal client is to write out a list of your favorite clients—it can be just one person—and search for commonalities. Start with the commercial aspects: what solutions do you provide for them? How important are you in the broad scheme of their career?

Then think about their demography. What’s their gender, age range, educational background, and income level? Then consider their personal life, their interests, hobbies, and enthusiasms. Ultimately, consider what you know of their value systems. I’ve always found a natural connection and an enjoyable relationship with like-minded people. Probably you do, too.

Let’s get back to the subject of pain points. This is absolutely critical; you’re not looking for new friends here, although that would be the best possible outcome of a new client relationship. There’s an old saying that I believe is hugely important for any professional: don’t make clients of your friends; make friends of your clients.

In addition to understanding and articulating your ideal client, you will need to communicate your empathy and competencies in solving their problems. For example, airline pilots share common problems. They have a mandatory retirement age and unique benefit packages. They often have side hustles, and their industry creates its own uncertainties. Professionals can and do build their specialities around empathizing with, and solving for, these specific issues.

Consider whose wants and needs best align with your core competencies. In that group, you will find your ideal clients.

Concept Two: The Concept of Market Segmentation

This means grouping prospective clients into groups or segments with common needs and interests. Out of the universe of potential clients in your market area, there will be some who perceive and appreciate your total value proposition. Inside that segment, you will find your ideal clients.

That segment that most resonates with your value proposition is your target market. Your target market will have common needs, and you can expect them to respond to your messages in a similar way. This targeting is the essence of good marketing. The analogy I’ve heard most often is using a rifle, not a shotgun. With a rifle, you aim at a specific target, and it’s an apt metaphor because it’s the most efficient use of marketing dollars.

Your target market can be defined by location, demographics, and, importantly, behavior. Remember, your ideal client is a person, not a company. However, finding that person often gets a lot easier if you know where they work.

Here’s an example of target marketing: a 40- to 60-year-old female dentist, whose practice is in the inner suburbs of your metro area, who makes $200,000 to $400,000 per year, has a practice with 3 to 4 employees, and is active on Facebook. There’s a lot to work with there if you’re crafting messages that will resonate. Perhaps more importantly, there are database marketing firms who can get you their contact information.

Concept Three: Total Addressable Market

Many people have the mistaken idea that they should target the largest possible total addressable market. Essentially, this is the maximum revenue opportunity for your professional services. For an accountant, this is typically a pretty useless number, since virtually every enterprise, from sole proprietorship to Fortune 100, needs to keep books and records and file tax returns.

For this concept, I’d recommend you think about getting smaller to get bigger. PayPal was one of the first unicorns of the internet boom. Founded in 1998 as an online payments firm to enable the growth of peer-to-peer commerce on eBay, PayPal first targeted the Beanie Baby market. At the time, it was estimated that the total addressable market for active buyers and sellers of Beanie Babies was 20,000 people. Once PayPal became the default payment method for that market, they were off and running. PayPal Holdings’ revenues in 2022 were over $27 billion.

Tax pros are constantly telling me that they would like to fire a bunch of their clients. These are the going-nowhere, numbers-in-boxes clients who make April such a slog. They say they want deeper relationships, multiple lines of revenues, and more interesting work. The lesson, it seems to me, is to apply ideal client and target market disciplines to your existing book of business.

And it also makes sense to shrink your total addressable market. TurboTax has created one of the great business title euphemisms of all time: tax expert. After all, the CPA and EA are also tax experts, but it’s the difference between a weekend co-ed softball league player and a major league pro. If a tax expert is good enough for your client, they are not good enough for you.

Because TurboTax has a different ideal client than you, they are no threat to you. They serve the McDonald’s customer; you seek the French Laundry foodie. McD has the happy meal; you deliver a memorable dining experience. They provide calories; you provide satisfaction.

Concept Four: Client Classification

In this concept, we pull it all together. Your existing book of business has a group of clients that you love to work with, who provide the bulk of your profits (as opposed to revenues), and with whom you have a warm relationship. You know their spouses, have been in their homes, have been to their parties.

Let’s classify that group as your A clients, and assume they are about 20% of your overall business. This is just an application of the Pareto Principle. The Italian sociologist and economist Vilfredo Pareto (1848 – 1923) noted that 80% of the land in Italy was owned by 20% of the people, and 20% of the plants in his garden produced 80% of the fruit, and extrapolated this observation in his academic work. It’s a bit of a mystery why this principle applies so commonly to so many systems; we can only assume that it’s something deeply embedded in the human condition.

Your B client list would include those who have the potential to be A clients but are not yet there. This is likely the most important target audience in your world and where the bulk of your marketing resources should be directed. The greatest impact on your productivity and profitability will almost certainly come from this group.

Your C clients will make up the bulk of your practice. They provide an important, often necessary, stream of revenue, but they have little potential, are essentially grounded in your hourly rate, and critically eat up the time you could be spending working with and developing A and B clients.

What do your A clients have in common? Write it down. How are they alike geographically, demographically, and behaviorally? More importantly, what common problems and pain points do they have, and how can you refine and develop your skills and solutions to serve them better?

Your A list is also your referral engine. I realize that referral engine may sound like “jumbo shrimp” to many tax professionals, who see actively soliciting referrals as a sales activity—and they want nothing to do with sales. With your A clients, there is no selling. They value you as much as you value them, and they would love to see you thrive. Get out of your own way, and let them know you’d appreciate any connections they can share.

CPA: Your B List Is Where Your Future Lives

That’s where a lot of people would stop. Instead, look long and hard at the B list; it’s where the real action is. What do they have in common with your A list, and how can you communicate your skills, solutions, and empathy to them?

Marketers, mentors, and business development experts will tell you that you need three ingredients to build a great business: the right people to talk to, a bond of trust with those people, and a great solution set for their problems. The vast majority of new advisors and brokers in any financial field fail because of the first two, but your B list is 100% comprised of the right people who trust you already. Consider educating them about how you solve their common problems and get ready for an explosion in your revenues.

Concept Five: Wallet Share

The tax professional is your client’s most trusted financial advisor, because your advice is grounded in objective reality, based on rules and best practices, is delivered reliably without error, and they never sell to persuade. Yet, despite all of that, and the fact they understand finance, data, and rational decision-making, they capture less than 10% of the client’s total spending on financial services.

This is a tragedy and a wasted opportunity. Use the concepts in this article to think about how you can best serve your client as a whole person, not just as a tax client. Help them make all their financial decisions, including the implementation of your tax strategies. Align yourself with the client’s best interests, and audit the integrity of the insurance and asset management professionals and products they are offered. You can be richly rewarded for this advice, and your clients will surely thank you for it.

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Dave O'Rourke

Dave is Financial Gravity’s defacto Communicator in Chief, and Chief Evangelical Officer. Dave brings his special written and verbal communication skills to the creation of a wide scope of educational and motivational collateral for the Financial Gravity family of companies, including videos, webinars, newsletters, marketing campaigns and professional mentoring.

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