Monday, December 6, 2010

How to Make Your Professional Services Firm Rich

One that got overlooked by WikiLeaks...

Rackem, Sokem, and Sulese LLP
666 Griedisgud Way
New York, NY  10002


To:  All Partners and Associates
Re:  Proper Target Client Acquisition

It has come to our attention that Y/Y revenue growth is running below target.  Finance's most recent analysis show that the root cause is the unacceptably low acquisition rates of Class A vs. Class B clients.  Specifically, Class A clients constitute a mere 35.34% of our revenue base, well below the target of 55% called out by this year's budget plan.

In case it has escaped your notice, in order to retain clients in the current recessionary climate, over the last year alone, we have been forced to reduce hourly rates by a net average -10.2%.  Therefore, it is imperative that we find ways to increase actual billable hours.  And the method decided upon at this year's  Strategic Planning Review meeting was to focus more on Class A profile client acquisition and reduce the amount of Class B profile clients.

As a reminder, the Class B client profile is as follows and is to be avoided:
  • Provides Complete and Timely Information - By doing this, Class B clients reduce or eliminate the amount of time Associates spend chasing information.  Phone tag, multiple calls, or multiple visits enable us to increase the number of Billing Units (BU).  Because BUs are in six minute minimum increments, multiple contacts allow us to significantly increase billable hours.  In-house data shows that each incomplete information request results in 2.3 additional contacts or 4 BUs.
  • Provides Prompt and Timely Approvals - In addition to eliminating chase time, Class B clients who do this also eliminate the potential for additional billable hours solving problems with their customers caused by the late approvals.
  • Provides Reliable Follow Up on Action Items - Reliable follow up means action items get closed resulting in a lean open work docket, rather than the more desirable situation (for us) of having a large open docket that can lead to subsequent confusion thus creating opportunities for unnecessary problem resolution, all involving billable hours.  Reliable follow up also means that a Class B client rarely ends up with missed deadlines and subsequent crisis mode, thus eliminating the potential to charge premium rates.
  • Batches Work - By batching work, Class B clients minimize the number of interruptions that stretch out billable internal time.  Industry studies show that for analytical work, such as the type we engage in, it takes 20 minutes (3BUs!) to get back into the flow or work following an interruption.
  • Plan and Schedule - The worst.  Class B clients engaged in these work habits tend to be the most efficient in terms of time usage as they tend to exhibit all of the undesirable traits listed above.  As you may recall, there was even discussion at the last partner's meeting to reclassify any client or prospect exhibiting this trait as Class C.
All Rackem, Sokem, and Suhlese Partners and Associates are to take immediate steps to ensure that we focus on Class A client acquisition.  Unless we can increase the number of clients who are disorganized, with poor follow up skills, and who confuse frantic activity for effective action, we will not hit our financial targets for the year.  Needless to say, this could have a negative on all of our year end bonuses.

I.M. Suhlese
Managing Partner


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