Cross-Selling: What is Your Firm

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Cross-Selling What is Your Firms Lifetime Value
to its Clients?

• Presented by
• Ronald J. Baker, Founder
• VeraSage Institute

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Value creation and capture
Clients Profit
Price
Costs
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Customer Existing Value Created Existing Revenue Yield Client Profit
XYZ 2,500 1,000 1,500




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Customer Potential Value Potential Revenue Value Gap
XYZ 5,000 2,500 2,500




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What are you really selling?
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Not jet engines.
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Not cement
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Charles Revson, Founder, Revlon
When it leaves the factory, its lipstick. But
when it crosses the counter in the department
store, its hope.
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Peter Drucker
The customer never buys a product. By definition
the customer buys the satisfaction of a want. He
buys value.
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What People Really Buy

• 1) Good Feelings
• 2) Solutions to problems or
• Expectations, according to Ted Levitt

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Intangible Value

• Specialist expertise/knowledge
• Unique social capital
• Brand/reputation
• Unique resultcreativity innovation
• Reducing risk
• Excellent experience
• Make the customer look good
• Relationship
• What else?

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Seven Purchase Risks

• Performance RiskWill not perform function
  purchased for
• Financial RiskMonetary loss if product fails
  (services higher risk than products)
• Time and Loss RiskCustomers time due to failure
  (AOG)
• Opportunity RiskRisk of choosing one product
  over another (IBM)

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Seven Purchase Risks

• Psychological/Social RiskPurchase will not fit
  customers self-concept. Restaurants, cars,
  movies, hairstylists, cosmetic surgery, etc.
• Physical RiskChance the purchase will cause
  physical harm (medical care, Michelin tire ads)

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Bakers Law

• Bad customers drive out good customers

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Customer Segmentation by Value
Price Buyers
Value Buyers
High
Pain of Price
Convenience Buyers
Relationship Buyers
Low
Low
High
Value of Differentiation
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Loyalization

• Is loyalty dead?
• AICPA says It cost eleven times more to acquire
  a customer as to keep an old one
• 5 change in customer retention can swing profits
  25-100 (Bain Company, Inc.)

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Rewarding Customers Loyalization

• Already have trust confidence
• Access to information
• Lower marketing costs
• Marginal work more profitable
• Customer acceptable of staff
• Customer values your services more

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Telling Fact

• Top CPA firms generate 25-40 of new business
  from sales to existing customers
• We believe you can achieve 50-80

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Why Existing Customers Are More Profitable

• Acquisition Cost
• Base Profit
• Per-Customer Revenue Growth
• Operating Costs
• Referrals
• Price Premium

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Net Promoter Score (NPS)

• Typical company loses half customers lt 3 years
• The Ultimate Question How likely is it that you
  would recommend this company to a friend or
  colleague?
• Dell had highest NPS
• www.netpromoter.com

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3 Types of Customers, 1-10 Scale

• Promoters (P) loyal enthusiasts (9-10)
• Passives satisfied but unenthusiastic, easily
  wooed by competition (7-8)
• Detractors (D) unhappy customers trapped in a
  bad relationship (0-6)
• P D NPS

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Why CPAs Lose Customers
My Accountant just doesnt treat me right
Ignore them
Fail to cooperate
Let partner contact lapse
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Why CPAs Lose Customers
Dont keep them informed
Assume they are technicians
Use as training ground for new team members
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Why People Select CPAs
Interpersonal skills
Aggressiveness
Interest in the customer
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Why People Select CPAs
Ability to explain procedures in terms the
customer can understand
Willingness to give advice
Perceived honesty
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Client RelationshipAccountants Point of View

• Mathematically correct
• Properly reviewed
• Within time budget
• Profitable

80 Technical
20 Emotional
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Client RelationshipClients Point of View
20 Technical

• Reliability
• Responsiveness
• Assurance
• Empathy
• Tangibles

80 Emotional
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What is Beyond TQS?
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What is Beyond TQS?

• If you charge for stuff, commodity business
• If you charge for tangible things, goods business
• If you charge for activities you execute, service
  business
• If you charge for the time customers spend with
  you, experience business
• If you charge for the demonstrated outcome the
  customer achieves, transformation business

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Thank You!
Versage website/blog www.verasage.com
ron_at_verasage.com Phone [phone] Twitter
_at_ronaldbaker