David Blair gives the next lot of instructions for building your portfolio career.

Following the instructions in Part 1 of building your portfolio career, David now goes into the specifics of what you need to do with your client(s) specifically. 

Understanding client value

This is the second article in a series aimed at helping you as an independent adviser to develop your business model. In this context, we define business model as understanding the value that you create for your clients, the way in which you create it and the value that you capture back in return.

Modern technology has enabled us to work flexibly and efficiently in ways that could not have been contemplated even ten years ago. The coronavirus pandemic has hastened the acceptance of remote working methods into the mainstream whilst simultaneously creating a demand for business advice among SMEs struggling to adapt to the new environment in which they are operating.

The opportunity for Independent Advisers

This creates a tremendous opportunity for us as independent advisers but if we are to thrive as individuals we need a robust framework within which to engage with our clients and a clear understanding of the value which we bring to them.

Fundamentally we need to understand the idea of value from the client’s perspective. That enables us to think about how we might group them and how we can start to build a value proposition for them.

Focus on client problems, not your skills

The first thing we have to do is stop thinking of ourselves as accountants. The knowledge, skills and resources that we have built over the years are essential tools, but they do not of themselves generate value for our customers. We value those assets because of the time we invested in acquiring in them – but that is not relevant to the client.

To quote from a famous study, people buy a drill not because they want to own a drill, but because they want to make a hole. Understanding that as the motivation means you can divide the people based on why they want to drill holes - for example builders or DIY enthusiasts. By grouping clients based on the problem they want to solve or the job they need doing we can begin to look deeper into crafting our offerings to help them.

Analyse the jobs which clients have

The traditional way of segmenting a client base might be to use such parameters as industry sector, geographic location, number of employees or turnover. That is certainly one approach and may be helpful, but it is of limited use in helping us to understand our clients’ needs and how we can use our skills to help them achieve their goals.

As a successful independent consultant in today’s competitive environment we need to appreciate that clients are not motivated by their industry sector, where they are located or how big their business is. Clients are motivated to call on us because they have to get something done or they have to solve a problem. 

We should segment our client base based on the outcomes they are trying to achieve, which is in turn most effectively indicated by the jobs they have to get done or the problems they have to solve. Those jobs might be functional (e.g. projecting a future cash position), but they will also  have aspects which touch on the emotional (how they want to feel about themselves) and social (how they want others, such as customers or colleagues, to feel about them).

The need that each segment has to get its job done or problem that it needs solved becomes the driver of the value proposition that we can develop for our clients. By building a deep understanding, not only of the jobs our clients need to do and their desired outcomes but also the barriers or frustrations that they experience, you can design a value proposition that is highly likely to be important to the customer. 

A clear approach

We must divide our clients into segments for which we design value. That involves understanding what is motivating them. To do that we need to understand the jobs they have to do, the problems they have to solve and the obstacles that they face.

The value of the work that we deliver, and therefore what the client is prepared to pay for it, is determined by the client. In the service environment which we operate that value can be highly subjective so we must be prepared to articulate it clearly. 

The value is not determined by the amount of time or effort that we expend in delivering it.

Summary

A client’s strategic goal is likely to be growing their business in order to achieve a valuable exit. They will value highly a proposition that helps them achieve those objectives. Focusing on those jobs has the potential to add value to our clients and to develop our own personal brand. 

If we are concerned only with relatively low value jobs (i.e. those on which the client places low value), such as preparing historic accounts or dealing only with “hygiene factors”, then we will be caught between a constant downward pressure on fees and upward pressure of costs.

That is not a good place from which to build your personal strategy.

David Blair

 

The views expressed are the author’s and not ICAEW’s.