I was speaking with a group of accounting firm owners recently and we were debating the merits or otherwise of helping clients with apps. When I say apps what I’m talking about is software applications that those clients might use to run their business and typically connect into whatever the primary accounting system is. Sometimes people might refer to these as add-ons to the major cloud accounting applications, but they could be completely independent software applications too.
Where we got to was that we could see three different models for potentially helping clients with apps. I’m going to call these:
- The Pointer
- The Supporter
- The Implementer
Let me walk you through each in more detail.
Let’s assume that a business client asks you a question such as “Can you help me find a software app that does X?” Or perhaps it is “I have a problem with Y. Is there an app that can help me?” The response you give and the action you take will vary depending on which of the three models above you are following.
Under this model your response to the client question will be along the lines of: “Let me check on that for you and come back to you. I’m pretty sure I’ll be able to find a few options for you to consider.”
You do a bit of research and you give a list of three options back to the client with a link to the website of each and perhaps have a couple of comments, particularly if you have other clients already using any of the options. You might already have a register of the apps your clients are using so you can easily search it. And you’ve probably gone to the website of your client’s cloud accounting application (let’s say one of MYOB, Quick Books Online, Reckon One or Xero) and searched to see what apps fit the description.
I’m a Pointer when it comes to helping my clients. As an accounting firm coach and mentor I am often asked about software tools firms can use. I work at keeping up to date with what is available for accountants and am happy to point people to some options. I don’t get involved in anything beyond that but in many cases it has been enormously useful because I’ve saved my clients lots of time.
Under this model you are, at least in my view, unlikely to be charging a fee, but are strengthening your client relationships.
Under this model your response to the client question will be along the lines of: “Let me check on that for you and come back to you. I’m pretty sure I’ll be able to find a few options for you to consider. Would you also like me to help you then assess each of those options so you select the one that is going to meet your specific circumstances? I can quote you a fixed fee to do that for you.” When the client says yes please you do what the Pointer above would do but then take it further. You might already have some checklists you use to help in the evaluation of software and have one or two specialists in your firm who do this type of work. And you’ve probably got a mini project plan you share with your client to guide working together to select the right app for them.
Under this model you will be charging the client an agreed fee for an agreed scope of work.
Under this model your response to the client question will be along the lines of: “Let me check on that for you and come back to you. I’m pretty sure I’ll be able to find a few options for you to consider. Would you also like me to help you then assess each of those options so you select the one that is going to meet your specific circumstances? I can quote you a fixed fee to do that for you. And finally once you’ve made a selection we can assist you with he implementation. We can quote you a fixed fee for that too although we will need to have identified what application is being implemented before we do that.” When the client says yes you do all of what the Supporter above has done plus you then go into the next phase to set up and implement the application for the client. In many cases you may have implemented this product before and know some of the tips, tricks and traps to be aware of.
Under this model you will be charging the client an agreed fee for an agreed scope of work, although perhaps it will be in two parts – the evaluation then the implementation.
Clearly there is a different level of skills and experience needed for each of the three models. To be successful as a Supporter or Implementer you are going to need to invest in building those skills and getting that experience. In speaking with some firms they’ve voiced a view that they have doubts about clients’ willingness to pay a fee for the Supporter or Implementer to support these as viable business models. Certainly, I think to make them viable you need a minimum level of fees that gives you critical mass.
I’d be interested in more views on this. One person suggested to me that the minimum level of fees might need to be as high as $1m in annual fees. My initial thoughts are I think a lower number than this could be viable. For example let’s say you have 1.5 FTE headcount allocated to this with an employment cost of say $150k. Perhaps then you might argue that fees of three times this – $450k – would be enough. Perhaps it depends on whether you are adopting a marginal costing approach to this or not.
Some firms take that view with other services such as bookkeeping or even financial planning because these are offered for a range of other benefits to the firm (and the clients) which more than compensate for what might be seen as an otherwise unacceptable level of profitability. In many smaller firms you probably don’t have a big enough client base to achieve a critical mass of work in this area. Having said that, if you are employing tech savvy accountants who just love nothing more than playing with apps then you might not need a high level of fees.
What are you doing now or planning to do soon in terms of helping clients with software choices?