RATING YOUR CLIENTS A TO D: WHY AND HOW PRESENTED BY SAM M. ALLRED, DIRECTOR AT UPSTREAM ACADEMY

OUR CHALLENGE FOR 60 MINUTES It’s impossible to give your best—or worst— clients the service they should receive if you haven’t taken the time to first classify your clients and then decide what those ratings mean. In this presentation, we’ll offer two proven processes for accurately rating all of your clients from A to D. Then, we’ll present a strategy you can use to determine how these classifications should affect the service each client receives.

PRESENTATION ROADMAP Email questions to sama@upstreamacademy.com Observations about the clients we serve The two best ways to rate your clients The best strategies with each client level Questions and answers Email questions to sama@upstreamacademy.com

 OBSERVATIONS ABOUT THE CLIENTS WE SERVE

OBSERVATION #1 Our firms can be no better than our clients allow us to be The only clients for whom we can provide A-level service for any length of time are A-level clients A firm can’t develop a reputation for exceptional service with D-level clients

OBSERVATION #2 Many in our profession feel they are morally and legally obligated to provide services to every client Most don’t believe they should have the right to serve only A-level clients Most spend way too much time with C- level and D-level clients

OBSERVATION #3 Every firm has some bad clients. Bad clients cost us a fortune and minimize our success. Bad clients live in Quadrant I and require all who serve them to become trapped in that energy-sapping quadrant.

OBSERVATION #4 Most firms struggle mightily to get rid of D-level clients. Serving D-level clients is extremely difficult for all members of the firm. Failure to hear complaints doesn’t mean the pain is not there.

OBSERVATION #5 Lots of firms talk about client acceptance policies as if they had them and were using them.  The reality is that for many firms, “client acceptance process” means filling out the right form after work for the new client has already begun.

OBSERVATION #6 The primary purpose of a client screening process is to detect as early as possible whether the prospective client is A-level or D-level. The only thing worse than pursuing a D-level client is landing one.

OBSERVATION #7 We tend to measure the success of business development efforts by the size of the client landed rather than the quality. The bigger the new client or engagement, the bigger the celebration.

OBSERVATION #8 We often put our best people on our worst clients/opportunities simply to keep these engagements from falling apart.

OBSERVATION #9 Most firms in our profession claim to give great client service. Firm leaders believe their service is what sets them apart from their competitors. The only reliable indicator of exceptional client service is the number of referrals you receive regularly from satisfied clients.

OBSERVATION #10 Many within our profession call themselves trusted advisors. In reality, too many are record-keeping historians and not forward thinking trusted advisors. We are often too reactive in our contacts with clients, responding primarily when they initiate contact.

 THE TWO BEST WAYS TO RATE YOUR CLIENTS

TAKING INVENTORY The objective of all high performance firms is to spend the bulk of their time serving great clients. Too often we find pockets of poor quality clients that are in the system and stuck there, with everyone living the strategy of hope that they will eventually change or leave.

A critical process to be developed in all firms is a systematic review of the firm’s clients and a means of either upgrading clients or culling them out of the firm altogether.

CLIENT CLASSIFICATION Your process should include an annual review of client performance and result in the classification of all firm clients into one of four categories: A, B, C, or D. This exercise should help everyone answer the question, “What does it take to be a great client?”

CLIENT CLASSIFICATION EXERCISES There are two exercises you can choose from to classify your clients into the four categories. Keep in mind that you may want to modify the exercise to fit your firm’s needs.

CLIENT CLASSIFICATION EXERCISE #1 The first potential way to classify your clients into one of four categories is to divide your partner/leadership group into three groups: Audit, Tax and Consulting. Give each group 30 minutes to identify the consistent characteristics of their best clients and their worst clients.

CLIENT CLASSIFICATION EXERCISE #1 Bring the three groups back together. Gather and compare the three lists of best client characteristics as well as the worst client characteristics. Use a data projector for everyone to see and compare the lists from each group.

CLIENT CLASSIFICATION EXERCISE #1 A-level clients are those who have more than 80% of the best client characteristics. B-level clients are those who have 60 – 80% of these characteristics. C-level clients are those who have 40 – 60% of these characteristics. D-level clients are those who have less than 40% of these characteristics.

CLIENT CLASSIFICATION EXERCISE #2 The second potential way to perform a client evaluation is to use specific performance factors. This process is similar in nature to the partner evaluation process.

A-LEVEL PERFORMANCE FACTORS Reputation Quality of Professional Staff Nature of Relationship Quality of Services Treatment of Firm Staff Fees and Payment

REPUTATION The client is viewed positively in the business community The client owners have a high level of integrity The client contributes to the community The client operates in an industry that is acceptable to the firm’s standards The client operates within the rules for tax and financial reporting

QUALITY OF PROFESSIONAL STAFF The client has a reputation for hiring quality professionals The professionals are efficient and effective with their assignments The client treats its employees fairly and with respect Client staff have a high level of integrity Client staff are timely and have realistic expectations for professional advisors

NATURE OF RELATIONSHIP The client treats the firm as its most trusted advisor The client allows its advisors time to research to help develop quality solutions The client is willing to brainstorm issues and to discuss them openly and honestly The client is fair in its dealings and doesn’t place unreasonable demands on the firm The client accepts and follows advice

QUALITY OF SERVICES The client work is interesting and challenging The client involves the firm in multiple services The client participates in planning to ensure the work can be completed on time and accurately The client is growing and involves the firm in additional services as the client grows

TREATMENT OF FIRM STAFF The client has a strong relationship with firm equity owners and treats these individuals with respect The client treats all of the firm’s staff who work on the engagement with respect Working conditions at the client are clean and safe The client is willing to help educate staff about the company business (within reason)

FEES AND PAYMENT The firm is able to bill at or above standard rates for services rendered The client trusts the billing arrangements with the firm and does not regularly question fees The client pays within 30 days of invoice The client is willing to discuss and accept changes in fee estimates The client expects to be billed for services rendered

CLIENT RATING SCALE Similar to our firm and partner rating system, consider using a 10 point scale for each of the performance categories. 1 or 2 – Client is very poor in this area 2 or 4 – Client is marginal in this area 5 or 6 – Client is good in this area 7 or 8 – Client is excellent in this area 9 or 10 – There are no better clients in this area

CLIENT RATING SCALE RESULTS 42 or above: A-level client 34 to 41: B-level client 25 to 33: C-level client Below 25: D-level client

 THE BEST STRATEGIES WITH EACH CLIENT LEVEL

STRATEGY FOR EACH CLIENT LEVEL A-level clients: Create and track a proactive monthly/bi-monthly contact plan Develop a written client service plan Schedule an annual/semi-annual meeting with the service team Ensure annual contact by a member of firm management

STRATEGY FOR EACH CLIENT LEVEL B-level clients: Create and track a proactive quarterly contact plan Develop a written client service plan Schedule a semi-annual meeting by service team with select clients Plan to upgrade certain B-level clients to A-level clients

STRATEGY FOR EACH CLIENT LEVEL C-level clients: Semi-annual proactive contact Develop written plan to move some C-level clients to B-level clients D-level clients: Develop written plan to transfer out of the firm (Not more than three years out)

TIMING OF ANNUAL REVIEW Consider a block of time between April 15 and August 31 Distribute client responsibility lists annually Establish non-negotiables for ranking Establish non-negotiables for serving A-level clients Establish non-negotiables for dealing with D-level clients

 QUESTIONS AND ANSWERS Email questions to sama@upstreamacademy.com

UPCOMING EVENTS MANAGEMENT PRESENTATIONS BESTPRACTICES CONFERENCE Playing to Partner Strengths: Examples That Make Sense November 14 & November 20, 2013 Moving From Historian to Trusted Advisor December 5 & December 17, 2013 BESTPRACTICES CONFERENCE October 22-23, 2013 – San Antonio, Texas 39

Thank You! sama@upstreamacademy.com