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Business Development in Professional Businesses

post # 298 — February 1, 2007 — a Client Relations post

Here’s another email question I received. (By the way, I LOVE receiving them — it ensures that I blog about real-world topics of interest to at least ONE person!!):

Things seemed to have shifted since you wrote Managing the Professional Service Firm.

In that book, you described a world where it was the partner who was tasked with developing business. Today, in many professional firms, including the Big-4 accounting firms, it is dedicated Business Development Managers(BDM) who work hand-in-hand with the partners. I am curious to better understand how such a relationship works.

I currently work at a large IT manufacturer which, over the years, developed a services arm. Dedicated business development people (and even departments) are a lot more common in my industry, but over the years, a lot of people who came up through our services area have found their way into this type of positions at the Big 4 (and seem to have succeeded well.)

My current role at the IT firm services group involves developing and maintaining key relationships with six major accounts and setting the strategy or direction in how we work with them. While there are various sales representatives and specialists across the country working with various contacts, it my responsibility to see we all march in one direction and that we are providing solutions to these customers in a uniform or consistent fashion. The interesting, and sometimes challenging, aspect is that none of these folks report to me, but instead to the local company operations.

Are things now similar in Big-4 accounting firms?

In most professions, things have changed significantly since I wrote my 1993 book. Many professions (not just large accounting firms) have made significant transitions in getting organized for marketing, selling and business development, with marketing departments being established with significant roles, responsibilities and budgets. The teaming you describe is now a lot more common than it was in 1993.

However, I must report that it really is firm-specific, and can easily wax and wane. When the Big-4 accounting firms had large consulting practices, they successfully made a big transition to hiring dedicated salespeople who worked, as you say, hand-in-hand with the partners. In addition to people hired for sales activities, there was a sensible investment in marketing support, so that the firm could efficiently keep the partners informed (in real time) on industry trends affecting their clients. This teaming made it easier for partners to research their clients, prepare sensible proposals when needed, keep up to date, and allowed for wise allocation of tasks between specialists.

This teaming could and did work in some firms. However, when the regulatory environment changed (post Enron) and many firms sold off their consulting businesses, their commitment to marketing and sales teaming between the remaining audit and tax professionals and the marketing professionals sometimes was weakened. Some firms cut back their commitment to marketing and the use of marketing professionals.

The situation has also been “muddied” in the current climate. Many large accounting firms in the post-Sarbanes-Oxley environment have more demand for their services than they can handle. Marketing is now less about looking for new clients than it is about ensuring that key major clients are happy. This is EXACTLY the role you say you are now performing in your IT firm: co-ordinating activities for major accounts without having “formal” powers.

By the way, the same should be true in other professions like law firms, although there is still the common mistake that marketing professionals are more often used to hunt for new clients, rather than help in nurturing existing relationships. What you say you do in your current It firm is very sensible and important, but it is less common in some other professions.

You will obviously know that the role you currently play can be either very fulfilling or a nightmare: it depends on whether the firm you join is serious about (a) cross boundary coordination; (b) investing in client relationships and (c) teaming between partners and marketing professionals. As always, culture and seriousness of intent is crucial.

My advice is to tread cautiously. Some firms are serious about all three of these things (cross-boundary coordination, investing in relationships and teaming with marketing professionals.) When they are serious, it’s working very well. However, some other firms are only pretending. And guess who wins when the firm is only pretending? It isn’t the marketing professional.


Edward Gabrielse said:

The Association for Accounting Marketing, http://www.accountingmarketing.org, can give you a comprehensive look at the roles that 500 marketing professionals in accounting play in the mid sized to big four firms across the country.

posted on February 1, 2007

Kobus Muller said:

We are a small accounting ( eight staff) firm We intend paying staff a commission on all new clients they intreduce to the firm. Have you seen that this is working

posted on February 2, 2007

David (Maister) said:

Commissions can be a strong incentive, but I am nervous aabout formula approaches. You need to make sure eveyone understands that extra revenue does not automatically mean extra profitability. There is good new business and bad new business. There are on-strategy clients andoff-strategy clients. Will you be ready with a (formula) commission system to explain to a staff member why you don’t want to take on the client they just found? Will they think you are being contradictory?

I think it’s better to be clear that (as a matter of judgment) you will help them in learning how to dvelop business and they will particpate) and they will share in the rewards of sussess. If you manage the process it can work, but if you try o make it a self-controling robot (“Wind up the commission formula and turn it loose”) it will turn into a Farnkenstein’s monster.

posted on February 2, 2007

Francine McKenna said:

I agree with everything David has said. The Big 4 have difficulty answering the question – Is it new revenue from existing clients or new revenue from new clients or some combination that I want? It’s a portfolio approach that also addresses risk management and cost benefit questions. However, since most of the Partners in these firms have never worked anywhere else, they have difficulty understanding the experience and approaches that a sales professional from, say, SAP or Oracle or Cisco would bring to the table. But they will hire them (and frustrate them)anyway, now that they are keen to grow consulting practices again.

I would add that it’s especially difficult for the Big 4 audit firms to address boundary conflicts. The audit firms went back to being mainly locally managed after the selling off the consulting arms a few years ago (local Managing Partners own local headquartered companies…) so client relationship processes are locally organized. I think the Big 4 will always find a way to make more money, but more often from existing clients (their audit clients) than from new ones. That’s because their strengths lie (and their structure lends itself more to) maintaining client relationships than new business development and marketing

I’ve written about the pull back on new business development at KPMG specifically, as a result of the deferred prosecution agreement they are under due to the tax practice transgressions:

“Too Few to Fail” or Something More?


posted on February 3, 2007

Roma Ahuja said:

A very relevant blog about defining work space for the role of Business Development in Professional Businesses.

Business Development is an opportunity identifying role and building on relationships( external interface) to meet the broader goals of Professional Organisations.

Hence, Business Development enhances brand equity

posted on February 11, 2007

Tom Nixon said:

Hi David, I run a small (12 person) website development agency and we’re trying to find a marketing formula to generate a consistent stream of qualified new client opportunities. We have great client retention, but the nature of our business is that clients come to us with an initial large project but only relatively minor work thereafter, so there’s a real pressure to get new clients on board to keep our sales up. After reading your book we are keen on the idea of speaking at client industry events, but the cost of these slots makes it a very risky strategy. Should we just go for it or are there other things we can try?

posted on February 20, 2007