Advice on Weeding Out Bad Potential Clients

I just started taking on clients of my own this year and went full-time for myself in August. For me, rabbit holing and giving too much detail/spending too much time is something I struggle with when it comes to discussing with potential clients. I understand that there is a cost to client acquisition. However, I feel like I have room for improvement when it comes to figuring out who is sincerely interested in me helping them and who is just price shopping. Case in point, I spent 20 minutes yesterday discussing with a potential client. The phone call seemed to be going great when the mention of fees was brought up. She basically stated "can we come in on the low end of that range?" So I'm asking a few questions here:

1) When someone calls you specifically in regards to tax preparation, how do you weed out those who really want your help versus those who are just price shopping

2)Even if someone is genuinely interested in having you help them, how do you keep the conversation to a minimum without going into too much detail.

3)How do you handle the point of the conversation when it comes to discussing fees? I don't bill hourly because I find it silly, plus 4-5 years of working for firms and tracking every 6-15 minutes became agonizing after a while. I do charge more than the tax shop places around me (H&R Block, Liberty Tax, etc.) but feel my CPA license and experience bring a value to the table that those places don't.

Thanks!

1) When someone calls you specifically in regards to tax preparation, how do you weed out those who really want your help versus those who are just price shopping

I usually just ask what kind of return, individual, business, fiduciary and tell them what my starting fee is and go from there. You should get a good indication after that.

2)Even if someone is genuinely interested in having you help them, how do you keep the conversation to a minimum without going into too much detail.

My approach is to ask as much as possible before I make the appointment without giving out too much. I'd rather find out if they're a good fit beforehand and not waste an appointment that could take longer than a phone call. You have to keep your talking to a minimum though. Ask questions but don't divulge too much. If a good fit, make the appointment and get paid.

3)How do you handle the point of the conversation when it comes to discussing fees? I don't bill hourly because I find it silly, plus 4-5 years of working for firms and tracking every 6-15 minutes became agonizing after a while. I do charge more than the tax shop places around me (H&R Block, Liberty Tax, etc.) but feel my CPA license and experience bring a value to the table that those places don't.

I usually just go right into it and say, "based on what you're telling, you're looking at blah, blah, blah in fees." I tend to go on the higher end of fees to feel them out and see if they're price shopping. I can always drop the fee and look like a hero but it's hard to increase after the fact.

Don't make the mistake of giving out free information or you'll be bombarded with calls. I'll give you an example.

A few weeks ago a young girl made an appointment for what my manager thought was a tax appointment. Turned out she was looking for financial advice. I made the mistake of giving her fatherly advice since she couldn't afford my fee. I sent her on her way and told her to hire me when makes millions of dollars. Well two weeks later her father called o make an appointment as well. Not for taxes but for financial advice. This time I told my office manager to give him my fee. There was a long awkward pause on the phone but he made the appointment. That long pause told me he expected free advice since the word was out that I give free advice. He canceled the day before his appointment... Lol.

Weeding out prospects is more of an art that science IMHO! Basically I let them talk and based on that I ask specific questions and that generally gives me an idea of what they are looking for. This year I got a lot of people calling really to get some help filling out the new W4 form. I got many calls from folks who were DIY but got a IRS Notice or never received their refund.

I do NOT discuss any specific fees UNTIL I see their prior return. If they insist on an estimate or fees I already know that they are "fee" driven and no matter how good of a job I do, I will be always judged by my fees and that is not a client I want.

Then there are the bold ones who will tell you that they are looking for fee quotes from other preparers in the area, because they are price shopping. Those calls are easy to handle!

I have a rule that I will not discuss specifics with a prospect or let the call go on for more than 10 minutes.

Everytime I quoted a fee i found out they were holding back on what their previous return was and neglected to respond accurately about any changes, such as a huge early distribution from a 401k, selling of personal residence, selling inherited homes or stock, etc

Shoppers want a quick answer and won't physically deliver information because that means effort on their behalf. I did some advertising a few years ago that garnered a bunch of shoppers. If they don't deliver physical information (like a copy of last years return) they aren't really prospects. I give a broad range, tell them I'll give them a firm price once I see last years return. Use the process to evaluate them for being time clogging jerks.

Here's what I do...

I schedule a 30 minute "get comfortable" call with prospects. This call is just as much for me to learn about them as it is for them to learn about me. I almost always ask on this call what a prospect's income was last year and what it's projected to be this year, if the prospect did not already provide this info to me. This often allows me to limit my time investment as I do not take on lower income prospects who were not referred by a good client (and I might not even if they were referred by a good client). Yesterday I had a productive 15 minute call with a prospect but we both agreed he was not a good fit for my firm yet as his projected 2021 income was around $50k and this was a modest improvement for the prospect year-over-year. I politely and professionally put the seed in his ear to reestablish contact once that income gets to a certain level and I consider that the best "win" possible given the circumstances.

I keep track of everyone I talk to and do not purge my notes related to prospect calls. They're in a perm file. If a prospect calls me again 10 years from now, I can search for their name, read my notes and restart where we left off. I also leave notes if prospects go MIA, go radio silent, or were "weird" in some way. I recall one prospect was extremely secretive and won't tell me the approximate FMV of their real estate portfolio when I asked. Okay...I ended that call pretty quickly. I keep the notes related to these calls in a perm file so that if I do talk to the prospect again in a year or two, or ten, I'm already one step ahead and can assess more quickly if we're a good fit versus if I did not keep the notes.

I don't discuss my fees on a call, but I will give a wide window. I discuss how I estimate fees, and this process requires me to examine the most recently filed tax returns. Most prospects are okay with this, and I find that most who provide their returns for me to issue a quote have some level of commitment already.

I spend about 5-10 minutes on the call going into detail about who I am and how I operate. The value that I provide to my clients. I also like to dig into the prospect's tax situation and spend about 5-10 minutes "grilling" them. Then I like to open the floor to the prospect for general, high level questions. This allows them to get comfortable that I know what I'm talking about and will be able to provide value. General, high level only. I don't give actionable advice nor free consulting.

I have never been asked if we can "come in on the low end of that range". But if I was asked this by a prospect, I would convey that I strive to keep my clients' fees as low as possible. BUT, I have to bill what I'm worth, and that if cost if the primary concern, or only concern, we're probably not a good fit. Then I would go silent for as long as it takes and wait for them to say something so that I can gauge their response. I think that usually their response will tell you pretty clearly whether you should move forward with a quote or convey to them that you feel you're not a good fit at this time.

I have various approaches or techniques I have figured out to quickly know if the client is serious or simply shopping. First, I ask if they have worked with a CPA before--that then changes my line of subsequent questions. If they have historically self-prepared, I ask why they are only now seeking a CPA. Again, that leads to one of two roads with additional questions I ask. If it appears they have a genuine reason or desire to utilize a CPA, I then start making some basic but sufficiently detailed inquiries of their tax reporting--how are they paid, do they own any businesses, any investment/rental properties, any other investments, how many brokerage accounts, if they have brokerage accounts (always assume they're understating activity on investments), if they have made any gifts, etc. To me, it is naïve to believe no prospect will ever ask about fees, but those that are simply shopping will do it far sooner than those that are genuinely seeking your services and value. If it is one of the last questions, I find that a good sign but I simply state "my base fee is $xxx, and it quickly goes up from there based on a number of factors."

Above all, I make sure I lead the discussion rather than them asking ME things that are simply asinine and of no value. At end of discussion, I'll briefly open the floor to them but by that point, they either believe I know what I am doing based on the "grilling" I did, or they feel I will be too expensive. This can all be achieved in 15 minutes or less. Higher value clients will generally want a meeting, which I may be willing to do in informal environments such as Starbucks, Panera, etc., though COVID has certainly helped eliminate or reduce the frequency of them.

**Edited for spelling/punctuation errors**

+1 Cornerstone

Higher value clients will generally want a meeting, which I may be willing to do in informal environments such as Starbucks, Panera, etc., though COVID has certainly helped eliminate or reduce the frequency of them.

I agree, some of my better clients wanted an in person meeting in my office and they did bring with them copies of their past return. The focus was more on "tax issues" rather than what do you charge. Once we came to an agreement that they are willing to move forward I then discuss my fee structure and make sure they understand so that there is no false expectations.

Also I always try to find out why they are leaving their prior accountant. It tells a lot

So true! Immediate deal killer: He/she is charging me too much for what I know is an easy tax return.

I really love the wisdom in this thread so far.

Perhaps it was already mentioned, but I would like to place emphasis on not MIXING a "sales meet and greet" with a "tax advice consultation". They are two very different and separate things, and tax advice is never free.

A sales call should discuss needs, expectations, procedures, prices, etc. A wide range estimate is good. Within 5 minutes you will both know if you like each other. Price comes last.

I like to listen a lot and let them talk. If the conversation branches to how their aunt died while on their trip to Las Vegas 5 years ago and they start crying, I know that I won't be engaging.

If I'm unsure about them, I know my wide range estimate will be a high one, and if I don't like the prospect (or they are still crying), I can politely mention something like, "now that I understand your needs, I can save us time by telling you that I just don't have the bandwidth to take you on right now", and I wish them the best in their searches.

There are all kinds of polite ways to avoid giving tax advice when asked during a sales meeting, and we also handle this by asking them which they want (meet and greet - or - tax advice consultation) BEFORE they even talk to me.

NO ONE gets tax advice without an appointment, disclosing privacy policies, collecting information, likely an engagement agreement etc. So this will never happen on the first call.

Even if I'm answering my own phone, if they want tax advice, they have to go through some scheduling and in-processing.

So the "free advice seekers" are stopped in their tracks. They will just go back to their unresponsive CPA or turbo tax after you tell them anyway.

And the shoppers don't take too much time, because you are only discussing the items up there in my 3rd paragraph.

As far as advice is concerned, i now tell them that I can't give adequate advice unless I've reviewed their previous return and have been engaged to handle their taxes.

As far as advice is concerned, i now tell them that I can't give adequate advice unless I've reviewed their previous return and have been engaged to handle their taxes.

That is exactly what I tell them. No engagement no advice! Some folks have the audacity to call up and say, "hey you are a tax accountant right, let me ask you this....." What you sitting at a bar! you talking to me?

I've had people do that and they turned into good clients, more often than not. So, I'll throw them a very small bone but if they really start asking anything beyond fundamental tax knowledge questions, I say they need to engage and pay for my services, first.

Not going to lie, sometimes I am snarky when they end the call saying they're going to self prepare their taxes by responding with "best of luck...CLICK"