There is one, powerful force that can (and should) exist within your tax practice that has the capability to alter the trajectory of your entire business life.
This one idea is so powerful, in fact, that it could be the most valuable idea I could possibly give you.
Let’s take a look at what happens within a small CPA office that only really does seasonal tax return preparation work. Each year, our hypothetical practice has a certain number of people that walk through the door. For most practices, the number of people coming in doesn’t change much year to year. Some clients choose to change tax preparers, or they move away, etc. Some new faces come in, but generally not many since most tax preparers don’t do adequate marketing to generate new clients.
During the off season, this hypothetical office does the occasional return for somebody that’s on extension. Perhaps there are a tiny number of bookkeeping clients or payroll clients that bring in a few extra dollars, but neither of these things is a major revenue focus for the practitioner.
For this small tax office, tax season represents 80% or better of the entire year’s revenue. This typical practitioner doesn’t make the effort during the rest of the year to do much else, and they are content with the status quo.
Now of course, as a Tax Marketing Tips reader, I know that this isn’t you. If it was, you wouldn’t be inclined to read this sort of material.
What’s the little secret to transforming this ho-hum little tax prep office into a lean, mean revenue generating machine? Recurring revenue.
That’s the #1 secret to transforming your practice and your entire life. And when I say recurring revenue, I’m not talking about just $250 once per year for a 1040. Rather, I’m talking about that same client giving you $250 per quarter, or better yet, $250 per month.
One of the missions of my IDEAL Practice Profile™ series is to show practitioners what specific services they can offer their best clients in order to deliver maximum service value, thus maximizing revenue. The most critical component of this is to create regular, recurring revenue streams from these clients.
Some questions for you to think about as part of this process for your own practice:
What services can I bundle together that my best clients could all use?
How can I integrate my tax season client messages with off-season services?
What traits do my best clients have in common?
What value added services could I offer in my practice that I’m currently not?
How many different packages, at various service levels, can I offer to clients?
You can probably tell from these questions where I’m heading with this: They key to creating recurring revenue from your existing clients is to be of greater value to them, and offer them more services on a more frequent basis. These services then get bundled together into service packages that they pay an annual, quarterly, or even monthly fee for.
So where do these ideal clients come from? Basically, from all your other marketing. Each service that you choose to offer within your practice should have it’s own marketing plan for generating new clients. Your practice should, ideally, have multiple, well developed sales funnels for finding leads, nurturing them into prospects, and converting them into paying clients.
You should have a fully developed, year-round tax preparation marketing process, for example. At the exact same time, you should have a fully developed, year-round tax debt resolution marketing process. Using just these two services as examples, I hope that you can see how each marketing process actually feeds into the other service: Occasionally, tax prep clients will have a liability they can’t pay, and thus they need tax resolution assistance. On the flip side, almost all tax resolution cases require some tax prep work.
For these clients, no matter which side they entered from, you should be able to create a recurring revenue client. In almost all situations, there will be a fundamental, underlying issue that created the tax debt in the first place, and this issue can often be resolved through some sort of service package. The lack of quarterly estimated tax payments, lack of proper and regular tax planning, lack of bookkeeping and payroll service… These are all extremely common causes of tax debt situations that you can prevent on your client’s behalf through regular, recurring service work — all of which comes with a recurring fee.
If you’re failing to capitalize on this most powerful of revenue generation processes, I cannot encourage you enough to change that. Not only will you be providing superior service to your clients this way, but you’ll also smooth out any seasonal variations in your revenue — not to mention simply generating more revenue period.