1. Cross-Selling: What is Your Firm’s Lifetime Value to its Clients? Presented by Ronald J. Baker, Founder VeraSage Institute

2. Value creation and capture Valuecaptured Valuecreated Price Client’s Profit Costs

5. What are you really selling? What are your customers really buying?

6. Not jet engines. Flying time BUT

7. Not cement But On-time delivery

8. “When it leaves the factory, it’s lipstick. But when it crosses the counter in the department store, it’s hope.” Charles Revson, Founder, Revlon

9. “The customer never buys a product. By definition the customer buys the satisfaction of a want. He buys value.” Peter Drucker

11. What People Really Buy 1) Good Feelings 2) Solutions to problems; or Expectations, according to Ted Levitt

13. Intangible Value Specialist expertise/knowledge Unique social capital Brand/reputation Unique result––creativity & innovation Reducing risk Excellent experience Make the customer “look good” Relationship What else?

14. Seven Purchase Risks  Performance Risk–Will not perform function purchased for  Financial Risk–Monetary loss if product fails (services higher risk than products)  Time and Loss Risk–Customer’s time due to failure (AOG)  Opportunity Risk–Risk of choosing one product over another (IBM)

15. Seven Purchase Risks  Psychological/Social Risk–Purchase will not fit customer’s self-concept. Restaurants, cars, movies, hairstylists, cosmetic surgery, etc.  Physical Risk–Chance the purchase will cause physical harm (medical care, Michelin tire ads)

16. Baker’s Law Bad customers drive out good customers

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

19. 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.)

20. 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

21. Telling Fact Top CPA firms generate 25-40% of new business from sales to existing customers We believe you can achieve 50- 80%

22. Why Existing Customers Are More Profitable Acquisition Cost Base Profit Per-Customer Revenue Growth Operating Costs Referrals Price Premium

25. Net Promoter Score (NPS) Typical company loses half customers < 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

26. 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

27. Why CPAs Lose Customers “My Accountant just doesn’t treat me right” Ignore them Fail to cooperate Let partner contact lapse

28. Why CPAs Lose Customers Don’t keep them informed Assume they are technicians Use as training ground for new team members

29. Why People Select CPAs Interpersonal skills Aggressiveness Interest in the customer

30. Why People Select CPAs Ability to explain procedures in terms the customer can understand Willingness to give advice Perceived honesty

31. Client Relationship: Accountant’s Point of View 80% Technical 20% Emotional Mathematically correct Properly reviewed Within time budget Profitable

32. Client Relationship: Client’s Point of View 20% Technical 80% Emotional Reliability Responsiveness Assurance Empathy Tangibles

33. What is Beyond TQS?

34. 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

35. Thank You! ron@verasage.com Phone: (707) 769-0965Twitter @ronaldbaker Versage website/blog www.verasage.com