An Emerging Canadian Trailblazer, Part III

Feb 14

Back in August and October 2010 I posted an email from Ken Morrison Provision Accounting Group in Richmond, British Columbia.Last December, Nate Morrison of Provision sent me an email update on the firm's progress making the transition from hourly billing to Value Pricing, and getting rid of timesheets.He also told me a story that is full of lessons, and has graciously permitted me to publish it [names and other information have been changed].

Hi Ron,Ken Morrison, the senior partner of my firm, Provision Accounting Group, has contacted you with a couple emails in the past on our transition from the billable hour to value based fixed pricing. So I figured that I would send you an update with some of our recent progress.We have completely eliminated the timesheets and are therefore setting up all of our new clients with fixed price agreements and transitioning the majority of our current clients as well.As a result we are now realizing that we totally suck at defining scope and discovering the expectations and values of our customers. While we are improving by leaps and bounds, I am beginning to realize that every time we learn something new it leads to a host of other issues that need to be sorted out.This transition is certainly not easy but it is a hell of a lot more fun than relying on timesheets. So, on to a specific story.Over that last few months, I have been getting the vibe from one of my clients that there are certain aspects of our relationship that he is not satisfied with. This client happens to be an lawyer and a generally good guy, which means that he is an ideal client for us.I happened to be on a short business trip with my two partners, Ken Morrison and Garth Drummond, so I figured that I would table the issues with this client to them and see what we could come up with.We realized that there really wasn't that much for us to discuss at the moment because we didn't have enough information, basically we did not have a good idea of what his expectations were.We were real pleased with ourselves when we came up the "brilliant" idea to develop a client questionnaire and apply it to our current customers like this lawyer and our potential customers.Then we got back to the office and realized that you guys were way ahead of us when Ken pulled out The Firm of the Future and found the client questionnaire example from Dan Morris' CPA firm.So, at my very next meeting with this lawyer I brought out our new questionnaire and had one of the most productive meetings with a customer that I have ever had. I found out that his most important service issues were: good personal relationship, response time, specific/detailed instructions and aggressive tax planning.He was extremely pleased with the first two, relationship and response time, but was not happy with the second two. By giving him this platform he was able to tell me how happy he was with some issues, but the issues he was unhappy with were making him consider changing accounting firms.In that very same meeting, now that I was aware of his expectations and values, I was able to completely turn the tide on instructions and tax planning. He left the meeting saying that he was extremely happy with our discussion and that our relationship was 10 times stronger as a result of this one meeting. He will now likely be a excellent referral source and a long term customer.What amazes me about this situation is that once we figured out the source of the problem and I knew what he was looking for, it was so simple to turn him into a completely satisfied customer.By quoting fixed prices ahead of time, we are forced to spend more time and effort understanding what our customers are looking for and as a result we are able to give far superior service. It makes so much sense.That was absolutely a high satisfaction day for me. Keep up the good work spreading the word.Nate Morrison

What a fantastic story, and for us it illustrates many lessons that emerge among firms that transition from hourly billing and timesheets:

It changes the way we work, because it completely changes what we focus on.
Investments in customer relationship increase dramatically, even though it's not efficient (it is highly efficacious).
Relationships are never static—they are either getting stronger or dying.
Focusing on the customer makes the firm become obsessed with value, not efficiency.
Customer expectations need to be discovered upfront, which makes it easier to exceed them.
Every customer has a criteria they use to judge the success of their professional firm—we need to know what the criteria is, otherwise it's like taking a class and not knowing how the professor will grade you.
Once you do the above with every customer, pricing for value becomes much easier.

Nate then wrote to me again:

Hi Ron,The Morris + D'Angelo client questionnaire has been a real game changer for us, I am tempted to contact Dan directly to pick his brain a bit or even travel to San Jose to check out his operation because, based on his website, it appears very similar to ours. If he would be comfortable with that.I have also just finished reading a Verasage blog post from November 28, 2007 "Warning: For Advanced Pricers Only" about a story from [VeraSage Senior Fellow] Daryl Golemb on his "emotional capacity and worth." Another real significant change in thinking and perspective.The work you guys have put into the Verasage Institute has totally changed the way we are doing business and has made all three of us and our staff happier.On a side note, we are currently in the pricing process for the work on a potential sale of a client's business that we would have likely given a way for a few thousand dollars in the past and we have just tabled an offer of approximately $30,000 to the client.Thanks again!Nate

Thanks Nate, you've given us another HSD!