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Shifting Mindsets: From Client Filtering to Revenue Replacement



In accounting firms, the concept of client filtering often sparks a debate, especially when it touches on the sensitive issue of parting ways with revenue-generating clients.  


This concern is valid in a profession where client retention is traditionally equated with firm stability and success. However, I propose a shift in perspective: moving from the notion of client filtering to a strategy of revenue replacement.  


This approach isn’t about reducing client numbers (although that might happen) but about enhancing the quality of client relationships. It focuses on replacing less suitable clients with those who are a better fit, thus aligning with the firm's growth objectives and positively impacting employee morale, process efficiency, and overall capacity. 


Understanding the need for change 

At its core, client filtering is about identifying and working with clients who are the right fit for the firm. The right clients are those whose needs align with the firm's expertise, values and strategic plan. 


However, the term 'client filtering' can inadvertently signal a negative connotation—the idea of 'firing' clients, which can be unsettling. 


Shifting the Conversation: Revenue Replacement 

The concept of revenue replacement is a more constructive approach. It's not about getting rid of clients; it's about strategically replacing wrong-fit clients with right-fit clients. This shift in perspective is crucial for several reasons: 


  • Alignment with growth goals. Right-fit clients contribute more significantly to the firm's long-term growth. They are more likely to engage the firm for a broader range of services and refer other high-quality clients. 

  • Enhanced employee morale and retention. Employees are more engaged and satisfied when working with clients that match their expertise and interests. This alignment reduces burnout and turnover, fostering a more stable and motivated workforce. 

  • Streamlined processes and increased capacity. Working with the right clients allows firms to streamline their processes. This efficiency leads to better service delivery, increased capacity for high-value work and the ability to scale operations effectively. 

Implementing revenue replacement 

So, how do you get started replacing revenue with right-fit clients? Here’s your action plan: 


  1. Assess your client portfolio. If you haven’t identified your ideal client, evaluate the current client base. Identify clients who are not the right fit—those who demand excessive resources without commensurate returns, don’t pay their invoices, are rude to your staff or don’t align with the firm's strategic direction. These are the clients you want to replace. 

  1. Develop your ideal client profiles. Clearly define the characteristics of a perfect client. Consider factors like industry, size, growth potential, coachability and the type of services they require. 

  1. Create a transition plan. Develop a strategy for transitioning away from wrong-fit clients. This might involve referring them to other firms better suited to their needs. You don’t have to eliminate every wrong-fit client at once—you can take a phased approach. However, you likely need to offload some wrong-fit clients to create the capacity to serve right-fit ones. 

  1. Focus on business development. Intensify efforts to attract right-fit clients. Tailor marketing and networking strategies to reach these target clients. Remember, business development isn’t just about bringing in new clients. It can also include offering additional services to existing clients. For example, client accounting services, advisory services, strategic planning, etc. 

  1. Train your team. Equip your team with the skills and knowledge to identify and nurture relationships with ideal clients. This is a team effort, even if you have a designated business development department. 

  1. Monitor and adjust. Regularly review client relationships and business growth. Be prepared to make adjustments as the firm evolves. 

The shift from client filtering to revenue replacement isn’t just a change in terminology; it's a strategic realignment of how your firm approaches client relationships. By attracting and retaining clients who are the right fit, you can achieve sustainable growth, enhance employee morale and optimize your operations. This approach is a win-win for your firm, employees, and clients.

 

Do you want to connect with other Managing Partners in the accounting profession to improve performance and grow your firm? 

The Boomer Managing Partner Circle is a peer group of Managing Partners from successful and growing firms. Apply now to gain a network of trusted peers to call on as you shape your firm for the future.  


 

Jim Boomer, CEO of Boomer Consulting, Inc., is an expert on managing technology within an accounting firm. He serves as the director of the Boomer Technology Circles, The Advisor Circle and the CIO Circle. He also acts as a strategic planning and technology consultant and firm adviser to CPA firms across the country. Accounting Today called him a “thought leader who can help accountants create next-generation firms.” Jim is a prolific writer with a monthly column in The CPA Practice Advisor and has been published in a number of industry publications including Accounting Today, Accounting Web, the International Group of Accounting Firms and several state society publications.

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