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									         ASPEN LAW & BUSINESS




          R EPRINTED F ROM
                 J UNE 2001
                 V OLUME 4
                    I SSUE 6            The CPA’s definitive resource for firm management and administration




Maximizing Your Return on
Relationship Investments
Using CRM to achieve results

                                                                                                ratchet up revenues generated from

B
         asic business principles dictate that   through professional associations, to name
         investment should be made in            a few. Firm marketing departments take         relationship development activities.
         those assets that promise the           an active role in relationship development
                                                 through marketing campaigns, staging               Internal information about people,
greatest return. An accounting firm’s
                                                 client events and gatherings, newsletters      companies, relationships, experience
most valuable assets are its professionals
                                                 development and other targeted activities.     and expertise represents competitive
and the relationships they forge with
                                                                                                intelligence that can be used to differ-
clients and prospects. After all, the                 However, relationship development         entiate your firm from the competition,
accountant’s role as the most trusted advi-      activities should not be confused with
sor is the source of all revenue generation.                                                    source new revenue opportunities and
                                                 relationship management activities, just       enhance client service. A cultural recog-
    It follows that to generate the greatest     as asset development cannot be confused        nition of this fact, coupled with a strate-
possible revenues in this highly competi-        with asset management. Unless the activ-       gy to leverage this competitive intelli-
tive era, smart firms will focus with laser-     ities that a firm undertakes to develop and    gence, are prerequisite to maximizing
like attention on their client and prospect      maintain its client relationships are being    your return on relationship investments.
relationships and invest wisely in them.         managed and harnessed for competitive
These relationships must be targeted             advantage, the return on investment for            To succeed in your relationship man-
with an established client relationship          those activities will not be fully realized.   agement strategy, technology is essential.
management (CRM) program in the                                                                 Most firms currently don’t possess the
                                                     For instance, a professional may sit on    tools necessary to facilitate relationship
firm. CRM is more than just fostering            the board of a charitable organization
new prospects, it is making these rela-                                                         management-oriented business practices.
                                                 and, as a result, develop new relation-        Information about people, companies,
tionships work to the firm’s advantage.          ships. If this professional has sharpened
For the most part, clients don’t find pro-                                                      relationships, experience, and expertise is
                                                 rainmaking skills, he or she can win over
fessionals in the yellow pages. They seek                                                       maintained in a vast assortment of dis-
                                                 some of those new relationships as clients.
referrals from friends, business associ-                                                        connected silos, from individual contact
ates, colleagues or relatives. If the rela-          However, a relationship manage-            managers, Microsoft Excel spreadsheets,
tionships aren’t established, prospects will     ment approach to new business devel-           Access files, and marketing databases to
have no way of finding you, or you them.         opment implies a cultural and techno-          time and billing systems, HR applica-
                                                 logical strategy aimed at maximizing the       tions, and other enterprise systems.
Relationship Development vs.                     return on business development                 Indeed, much of this internal competitive
Relationship Management                          efforts—not simply achieving a return.         intelligence is stored tacitly, in the heads
    Accounting firms invest in relation-         A relationship management strategy is          of individual professionals. But without
ships in a myriad of ways. Professionals         necessary because a firm must recognize        a centralized system to aggregate this
prospect for new clients through active          that collectively, who it knows and what       intelligence, manage it, and deliver it to
participation in the community, through          it knows constitute valuable firm assets.      professionals when, where, and how they
their existing client relationships, and         If leveraged properly, these assets will       need it, it has little practical value.
                       This article is being reprinted with permission from Aspen Law & Business,
            1185 Avenue of the Americas, New York, NY 10036. For subscription information, call (800) 638-8437
Illustrating the Benefits of                  strategy for responding. Had this             nal cultures conducive to relationship man-
a Relationship                                occurred, there is no doubt that the firm     agement, until recently the penetration of
Management Strategy                           would have won the business.                  infrastructure-supporting CRM software
    The difficulties of effectively man-                                                    into the accounting space has been dispro-
                                                  A relationship management strategy
aging relationships without a central-                                                      portionately low. The reason is simple:
                                              provides numerous real, definable benefits.   Most CRM software providers design their
ized solution become evident in the fol-
                                              Among the most obvious, it enables profes-    offerings for traditional Fortune 1000 cor-
lowing war story, which occurred
                                              sionals to leverage who and what they         porations—organizations that market
recently at a Midwest accounting firm.
                                              know for business development purposes.       physical products (or simple services),
A CPA firm had recently acquired a
                                              It will also help alleviate painful, embar-   which are sold by dedicated sales forces
multidisciplinary practice in the execu-
                                              rassing situations. Figure A displays how a   using predictable, repetitive sales cycles.
tive staffing industry. As it happened,
the CPA firm also provided staffing ser-      CRM program helps answer the key ques-        These companies also employ call centers
vices internally. Shortly after the acqui-    tions of: Who else do we know at the client   and support centers to field customer
sition, a prospective client contacted a      company? Who else in the firm knows the       inquiries and provide customer support.
partner at the CPA firm, seeking help         client/prospect? What other engagement        Moreover, security and privacy concerns
finding a chief financial officer for the     have we done in this industry?                are virtually nonexistent at traditional cor-
company. The partner and his team                                                           porations, as no fiduciary relationship
assembled a staffing proposal and sched-      Not All Relationship Management               between customer and salesperson exists.
uled a presentation at the client’s office.   Solutions Are Alike
                                                  Because of the value it delivers, CRM          In contrast, the “product” that account-
    Meanwhile, unbeknownst to the part-       software is one of the most rapidly           ing firms sell is the experience and exper-
ner, the staffing firm had also received a    expanding sectors in the business-to-busi-    tise of the professional. “Sales” are achieved
request for proposal (RFP) in connection      ness software marketplace. According to       when professionals, themselves, success-
with the same client’s staffing needs. That   the technology research and analyst firm,     fully leverage relationships to find new
firm undertook a separate effort to put       The Gartner Group, the market has             engagements within existing clients and to
together a proposal and also scheduled a      grown from $830 million in 1997 to $3.7       obtain referrals for new business develop-
meeting to make a presentation.               billion in 2000. CRM developers, from         ment. For successful implementation with-
                                              Siebel and Onyx on the high end to Act        in an accounting firm, the CRM solution
    Each firm had quoted different fees                                                     must have a client relationship manage-
for the services. The client was              and Goldmine on the low end, are per-
                                              haps the best known of literally hundreds     ment focus. It should be capable of captur-
impressed with both presentations and                                                       ing, aggregating, and delivering informa-
narrowed down the field of contenders         of vendors vying for this lucrative space.
                                                                                            tion about the complex Web work of
to the two firms. However, when the               Even though accounting firms have         relationships that operate at the sacred cen-
client found out that the CPA firm and        increasingly committed to building inter-     ter of accounting firms.
executive search firms were affiliated,
the client became angered and chose not
to give either firm its business. The lack                                          Figure A
of communication and disparity in pric-
ing killed the deal.
    How could this scenario have played
out had this firm implemented a rela-
tionship management strategy? It might
have turned out like this: The lead part-
ners from both firms would have done
some quick due diligence using their
CRM software. By entering the client’s
name, the system would have revealed
who else within the firm was acquainted
with the client, the nature of their rela-
tionship, along with other valuable
information such as history of the client,
billing information etc. Each partner
would have instantly been made aware
of the potential conflict. They could
have consolidated and coordinated their

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    CRM solutions possessing a profes-         management culture, however, it also          CRM vendors must incorporate wire-
sional services firm focus do exist. One       can be an impediment if it is difficult to    less devices and other platforms into
example is Interface Software’s Inter-         use. Professionals don’t care where the       their strategies. Accordingly, the CRM
Action. Jim Butler, a partner at Jeffer        data comes from. When they think of a         solution chosen should complement the
Mangels Butler & Marmaro in Los                client, they don’t think of accounting        firm’s knowledge management strate-
Angeles, CA, says that InterAction has         software or contact software. They’re         gy and be able to deliver critical rela-
been critical in helping him forge strategic   concerned with the things they need to        tionship information to these systems.
relationships and leverage those ties.         know about that client.
Knowing that subtly connected informa-                                                       Stepping Up to the Challenge
tion can often lead to enormous revenue            Knowledge management systems
                                               increasingly are becoming important               Mainstream Fortune 1000 companies
generation, Butler relies on his CRM solu-
                                               for the delivery of mission critical infor-   have long embraced the strategy of rela-
tion to help sift out opportunity. “On a
                                               mation to users in a user-friendly envi-      tionship management to maximize their
basic level, whenever I have a meeting,
                                               ronment. Accounting firms can give            returns from customers. Doing so was nec-
the first thing I do is understand how long
                                               professionals access to information they      essary as market globalization and industry
I have known this person, where we met,
                                               need via portal products, Intranets,          consolidation created intense competition.
the nature of the relationship, and
whether it’s personal or business.             Extranets, and even devices that pro-             The accounting industry now faces
    “Beyond that, whenever I travel, I         fessionals are already comfortable using,     similar pressures, and must step up to
can see who else I know in the same city,      such as Palm Pilots and Blackberries.         the challenge. Firms must respond
in order to arrange a meeting. I regular-      (A Blackberry is a wireless device that       strategically and aggressively, or suffer
ly look for clients who might benefit          looks like a pager, capable of sending        the consequences. To thrive in the new
from a particular idea or who ought to         and receiving emails via its wireless         economy, firms need to be smarter about
be introduced to whom. We believe in           modem. Blackberries are growing in            how they create and leverage relation-
trying to make deals happen and help-          popularity and are increasingly becom-        ships in order to garner the greatest pos-
ing our clients achieve their goals.”          ing standard issue at many profession-        sible return. Instilling a culture com-
                                               al services firms because of their ability    mitted to relationship management and
Anytime, Anywhere,                             to keep professionals in touch.) These        supported by relationship management
Knowledge Delivery                             devices increase in value to the profes-      technology is one of the most important
    CRM is an enabling technology to           sional when other information, such as        moves firms can make to achieve and
firms that have embraced a relationship        relationship data, can also be accessed.      maintain a leadership position.




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