Jody Padar becomes our first returning guest to discuss how to become a Radical CPA.
It’s all in her new book, “Radical CPA,” and there are 4 tenets to becoming one yourself.
In this episode of the Growing Your Firm Podcast, David Cristello and Jody Padar discuss:
- The 4 tenets that define a radical CPA and the “new firm”
- How to incorporate customer experience into your workflow
- Why pricing is so fundamental to a radical CPA
What is a “Radical CPA” & How Do You Become One?
Jody Padar is our first second-time-around guest on the podcast. (Here’s her first interview we did with her). She’s recently written a book, “Radical CPA,” Her publishers and Jody decided on the term ‘radical’ sprawled on the cover for two reasons — #1 There is something disruptive in this book. If you pick up a copy, you’ll find many exercises in the back of the book that will shift your mindset and tactics literally overnight. #2 Everyone wants to be part of a ‘radical’ movement. Jody wanted to create a new community.
There are 4 tenets to becoming a radical CPA:
- CLOUD === this technology is the core of becoming a CPA of ‘today’ and not ‘yesterday
- SOCIAL === this deals with social media. This helps with how you connect with others and your clients
- VALUE === sell on value and not time
- PROCESS/EXPERIENCE === how do you create the ultimate customer experience? how do you delight the customer?
How to Incorporate Your Customer Experience into the Process:
When you go to Starbucks and pay more than you should for coffee…are you buying it for the coffee?
When you plan the perfect birthday party for your child…are you doing it for the actual birthday?
Or — are you doing these things for the experience. Something that makes you feel something. Today, everyone wants to create an experience for their customers. We interact with customers different than we used to.
We need to have more ‘design’ in our firms around the customer experience. Too long have accountants solely looked inwards at themselves and thought “how can I be more efficient?” That’s not a customer-experience mindset. That’s a bottom-line profit thought.
We had on Ed Kless recently, and he recommended first start calling your clients, customers. Client means “someone who leans.” The word “customer” comes from the old tradition that it was ‘customary’ for visitors to purchase goods in towns they visited. Make it a ‘custom’ for your customers to happily do business with you.
How do you start doing this in your CPA firm?
Here’s what to do:
Take one process you do every day. Make it a customer-need process such as updating their books, etc. Go through the entire process and attach your customer’s emotions to it.
Where in the process could you delight the customer? Where does a customer get frustrated or have a ‘frown?’ Sometimes you have to talk to them first to get this information. Sometimes it’s something simple such as sending a two sentence email letting them know you’re working on it.
You don’t need to necessarily change any technical step of the process. You may have a limitation on software, etc. That’s okay. You want to find those spots that would really upgrade the customer experience and do those things. They don’t have to take a long time. Perhaps, you only need to change the communication around the process with your client.
DAVID’S TIP: This is basically a mindset shift, not as much tactical. You must commit to wanting to improve your firm at any cost. Even if it’s just small, incremental improvements over time. Try out different things. The world is moving and changing fast. Many CPA firms struggle because they are 5 years behind the newest technology or processes. Today, technology and new ideas are arriving so fast, you’re more than likely already behind the curve. It doesn’t mean you failed. But, you do want to look back in 5 years and know you made an effort to improve.
Starting on Value Pricing (Tenet #3):
Value pricing is one of the most talked about topics on the Growing Your Firm Podcast. Ron Baker is the most well-known speaker on the subject in the CPA field.
A big question that causes stumbles is “when do I actually start implementing it?” The easy answer is with the next new client that walks in the door. Funny enough, Jody sees many firms who have a value pricing model, but they just don’t call it that.
They bill their clients the same amount each year, even as they get faster. That’s a good start, but there are ways to get better.
First, at least start with charging upfront and not after-the-fact. Jody actually backed into value pricing as she needed money to pay her employees. So, she charged for services first before doing them. That saved her.
The accounts receivable portion of time-billing should already cause you to look into value pricing as it’s such a waste of time and resources.
A main point Jody stresses for new value billers === Never go out of scope. Just because you quote an all-inclusive package, you still need a scope on that package. If you’re unsure about a scope, then bill in phases. You won’t get to pre-charge, but you can take a deposit.
Clients don’t like when they think a tax return with cost $1,000 and you ship a $3,000 invoice. It bombards them. Not to mention, you end up writing off part of the bill which defeats the point of time-billing.
Not to mention – as your team gets more efficient, you get punished under time-billing. If you don’t adapt based on better efficiency, you’ll need more and more clients to stay afloat and grow.
In today’s CPA world, there are many plays you can add value, you just need to find them.
How Jody Wants to Impact the CPA World
With her new book, “Radical CPA”, Jody hopes to really shift this industry. She has around 5 years of content accumulation packed into her book. Her main message is to help CPA firms ‘update’ themselves.
Before cloud technology, we were very limited in how much value we can provide a client because we had to focus on the work and getting it done. Those tables have turned.
Cloud technology today allows us to get more done in less time. That’s when you pile on advisory and other technical services. Now, you have the time to really help clients rather than simply doing grunt work.
Jody herself charges a fixed price + a value add-on. She scopes the project for a fixed price. Then, provides options to the customer that are value-adds. These can be highly profitable and Jody’s seen the effectiveness of it.
A good first step to learn more about all this is pick up a copy of her book, “Radical CPA.”
If you’ve read the book, leave a comment below with your thoughts!