It’s still summer and now is a good time to contact clients that need or might need additional services. Here is a rule I’ve developed and followed that originally appeared in my "Marketing Tax Services" book. This column has an updated version.
The 1/20th Rule: Target a meeting with 1/20th of your tax preparation clients each year. This is an opportunity to help your clients and elevate your services beyond the preparation of their tax return. This rule simply means that you perform additional services for 5% (1/20th) of your tax preparation clients a year. I don’t think this presents too high of a target to reach for.
Here’s how this works:
- Call selected clients after tax season (or for this time of year, during the summer) and ask them to meet with you for a consultation on an issue they expressed concern or interest in.
- In order to have 5% of your clients meet with you, you will have to call much more than that percent. I usually need to call three or four people for each one that I meet with, so I contact about 15% to 20% of my tax clients.
- Your success will depend on how much you listened to your clients or what you noticed when their return was prepared. The calls should be directed toward issues they expressed concern about or that you raised for them to think about.
- To get the meeting, call a client and tell them you are reviewing their financial situation and feel they could be helped by a high-value, low-cost consultation to review their asset allocation and goals and make sure they match up, or for a fiscal fitness check-up, or a consultation on a retirement plan, a business plan if they expressed an interest in starting a business, or anything else they might have shown an interest in. Mention a fixed amount for the hour-and-a-half consultative meeting.
- Draw from eligible clients, which excludes school-age children or clients in nursing homes, and possibly someone just filing for bankruptcy. Actually, the bankrupt client might really need your help in rehabilitating their credit standing and adjusting their spending habits. If they are a long-time client, you could do this on a pro bono basis; there is nothing wrong with helping someone for free every once in a while. However, the object of the 1/20th rule is to generate income while also providing high-value-added services to clients.
- To find out how they might need added help, tell them what services are available when they provide you with their tax information. Additionally, engage your clients and be interested in them. Find out what their long-term, and not just financial, goals are. I also try to get them to talk about what they do at their job and perhaps their employer’s situation.
- What I usually do is send them some follow-up info after tax season ends, or I call them to flush out their concerns and give them some “free” advice. This call is not meant to make a sale but to give them some information they could use or think about. I find this adds to my relationship and extends my expertise beyond the tax return I do for them.
- Even if you call someone who cannot or doesn’t want to use these extra services, they will become more aware of your capabilities, and your image will be enhanced by this. I have also received referrals from some of the clients I spoke to who did not engage me for the extra work, but because they know we did it, they referred us to someone who needed it. Some of these clients asked me about the services a few years later.
Think about what you are doing. If you have 200 tax clients, you will be calling about 30 or 40 of them to tell them, one on one, about specialized services you perform. You should get added engagements from 10 of them, and the other 20 or 30 of your clients you spoke with will find out about your expertise in added areas that might affect them. You will also be finding out during these calls what they have been involved in during the year that you might be able to work on now, rather than when you prepare their return (during your busiest period of the year). That would relieve some of your workload compression.
The 1/20th rule is a goal to reach for. You can extend it or contract it as it suits your workload. I found that having a goal of added services for 5% of my tax clients is not onerous, generates added revenue with really no added costs, and in some cases provides a life-altering benefit to the clients. A byproduct is identifying some work that can be pushed away from tax season into the end of October or November.
This 1/20th rule is an explanation of something that has worked for me and a suggestion for you to try it. If you make a few calls and find it doesn’t work for you, then chuck this idea. However, if you get good results, then roll it out. You are in a business, and this could be a very low-cost, low-effort way to generate added services and revenues.
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