Accountants know all too well that tax prep services have become commoditized, with intense pricing pressure and clients who aren’t firm-loyal. Is it possible to turn around the trend and differentiate your tax prep services?

“Absolutely,” says Jody Padar, CEO/principal of Chicago-based public accounting firm New Vision CPA Group and author of The Radical CPA: New Rules for the Future-Ready Firm.

In addition, her approach to tackling this problem is the same approach that helps firms to offer more out of their trusted advisor status and to be ready for changes shaping business clients and their accounting firms.

“CPAs have traditionally been trusted advisors for the last 100 years,” Padar says. “We just haven’t had as much opportunity to really help because we were so busy doing the actual accounting and tax work.”

Padar says new methods of offering services, providing services and pricing services afford accounting firms the opportunity and capacity to stall commoditization and develop more valued advisory relationships with clients. She illustrates these methods through an example of how a traditional firm might handle a tax return, compared with how her firm typically handles them.

A traditional firm might only see a client at tax time, when the client brings in a tangled mess of financial materials. As a result, “the firm charges the client $2,000 to put together essentially a set of books good enough to do the tax return,” Padar says.

The client puts their copy of the return in a drawer and doesn’t think about the accountant again until next February. Meanwhile, the firm has its staff working 12 hours a day starting in January to handle the compressed workload.

At Padar’s firm, she says, someone seeking a business tax return in February or March will likely hear, “We don’t do returns only. If you want to come into our practice, you have to at least connect with us four times a year.”

A service package for those meetings and a tax return might sell for $6,000, and more frequent meetings with the client enable much of the work needed for preparing a return to be done by year end. “The client likes us because they’re talking to us all year,” Padar says. “I don’t need any additional work [in February or March]. But if I can get you into my firm and I can talk to you four times a year and get to a place where we’re doing year-end tax planning, then your return becomes a slam dunk in February, because the books are already reconciled. The return takes us an hour during our busiest time.”

As Padar has outlined in her Radical CPA book, successful accounting practices are embracing four “Radical” values that transform firms so that they are no longer too busy doing the accounting work to be a trusted advisor. These values are:

  • Technology/using the cloud
  • Communication/becoming a “social” business
  • Pricing/offering value
  • Process/altering workflows to provide a better client experience

Technology/using the cloud: A major requirement of future-ready firms is they develop a business model that layers on cloud-based technology to allow the firm to scale and be more profitable.

“Think about what you’re selling, who you’re servicing, and build a new model around that, and then use tools to implement that,” says Padar. “Firms try to insert new tools into the old process, and then they’ll say it doesn’t work. Of course it doesn’t work, because the model is broken. You’re not selling what people want; you’re selling a compliance document and then putting this tool on top of it, and nobody wants to buy it because you did the wrong thing.”

Future-ready firms also groom clients to use cloud technology themselves. “We’re a 100 percent cloud firm, so if you’re not working with us in the cloud, you’re not working with us,” Padar says. Allowing a client to continue using a desktop version of QuickBooks really does the client no favors, since the accounting firm can’t provide the full value of its service and expertise without real-time and continual access to financial data enabled by cloud technology.

“Traditional firms look at technology as a cost of doing business; they don’t look at it as part of the process,” says Padar. “What should happen is you should treat technology as being part of the productized service you sell, and then you sell the productized service as a whole.”

Communication/becoming a “social” business: Padar has developed a strong brand for her firm using online blogging and social media. “I don’t go to chamber of commerce meetings,” she says. “Because of all I’ve written and because of my brand I’ve developed online, prospects just walk in the door.”

Also as a result of her brand development, “People know who I am, and they already know what I stand for, so as soon as they call or walk in, it’s not ‘Tell me about your rates,’ it’s ‘How are we going to work with you?’ and that’s what being an online social business does.”

The next generation of business owners, especially, wants to be able to connect whenever and wherever, so using Twitter, Facebook and email to connect with prospects and clients provides them value.

Pricing/offering value: As explained in the examples above, future-ready firms focus the client on the value you provide rather than a one-time service you perform. “People pay for reports they don’t understand and they put them in a drawer...and then CPAs wonder why nobody wants to pay for services,” says Padar. “They’re not paying for reports, they’re paying for value.”

In the same way that Starbucks has customers willing to pay $4 and $5 for a coffee drink, accountants can resist commoditization of their services by focusing on the value and experience you offer clients. “Really, aside from accounting and tax, what we end up selling is peace of mind, but that’s what most accountants don’t know how to sell.”

Process/altering workflows to provide a better client experience. Future-ready firms examine every step of the process of providing a service to clients, and they streamline or automate as much as possible so the accountants can focus on becoming “that trusted advisor on steroids,” Padar says. “If you can call your client because you see something happening in real time, the value is exponentially better than someone who’s looking at a report that’s weeks old.”

Reprinted with permission from Next-Level Accountants: Your guide to growing a firm of trusted advisors.

Mary Ellen Biery

Mary Ellen Biery is a research specialist at Sageworks.