Competitive Bids Eat Margin – How to Claw It Back!

Biding for major accountancy services means battling competitors.

Without the need to instil investor confidence via a Big4 brand, less flamboyant services can attract a lot more competition.

Clients want cost containment, reductions and premium services.

But with no discernible difference between bidder’s ability to deliver, price remains the target.

Existing client relationships may get you to final negotiations, but there’s no escaping ‘more-for-less’ expectations.

So what’s your strategy to counter future margin erosion?

1. Differentiate to provide services so valuable that price is not the main concern.

2. Significantly increase client revenues to maintain net profit levels.

3. Increase team productivity.

Because differentiation is covered in prior posts, let’s explore productivity and scaling.

Significantly increasing client revenue to maintain net profits is not a simple path with high levels of execution risks.

Baring existing clients, finding significant levels of new business means winning it away from competitors.

In such battles discounts and bundling are inevitable, with new service volumes increasing team costs at skinner margins.

So, is improving team productivity any easier?

The largest service delivery cost is probably the team, and with most teams already working at, or near capacity, it’s not about squeezing more effort.

Therefore winning significant new revenue, rather than replacing revenue, requires more headcount without efficiency gains.

In recent years, new productivity tools became available, yet uptake by professional services sectors is still marginal and lagging well behind other industries.

Some examples of the confidence in these new tools are:

• KPMG USA/Europe recently started offering ConnectNow process/productivity services to their business clients.

• ProcessStreet case study showcases a 6 person law firm in Austin improving case load capacity to double their industry average by ditching the humble Excel management sheet.

• OneTeam Services development of a services delivery platform for partners of larger accountancy firms to improve team productivity, client retention and ability to win more major client services revenue.

A window exists for fast movers to gain a competitive edge before the rest are forced to play catch-up at some future point.

It would be prudent to evaluate extending your firms capacity and capabilities now, while significant competitive upsides remain.

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Have a great week.


OneTeam Services

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