Getting Back to the Basics and It’s Paying Off Big Time

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For this month’s success story we are featuring Jim Keen out of Phoenix, AZ. The story of how Jim was introduced to NCI is an interesting one. He got to see just how well the NCI marketing program can work when a firm he was working for brought us in to diversify their client base in the wake of 9/11. He worked his way up to partner and eventually bought out the write-up and tax portion of the practice that had been developed with the NCI model. Fast forward eleven years and Jim is still running that firm and looking for ways to grow it and make up business lost to the recession in 2008. He decided to go back to the well and contact NCI to see about installing a new Plan 2 program for him at the end of 2013. His program has been going strong these past two years and his practice is closing in on $700,000 in annual revenues for 2015. Enjoy the interview and learn from the experience of an accounting professional who has 13 years’ experience with the NCI marketing program.

Please tell me about your accounting background and what led you into owning your current practice.

I graduated from Arizona State with a degree in accounting and I didn’t know exactly what I wanted to do. I ended up owning my own business, a swimming pool store, for about five years. I was working at a pool store to pay my way through college and when I graduated I had the opportunity to take over a struggling store with no money down and I went for it. So I did not actually get into accounting until I was almost 30. At that point I got a temporary job with a finance company that did auto pay loans. Around 2002 that company was downsizing and the controller for that company was being downsized too and he decided to buy an accounting practice. He asked me to work with him through the tax season because I’d worked at H&R Block for all of one year. So in 2002, what I thought would be a four month assignment ended up lasting the next 13 years and beyond. That’s how I ended up in public practice as of the 2002 tax season.

How did you first get started with NCI?

In 2002, I start what I think is going to be a temporary position. It ended up carrying throughout 2002 and by the end of that year the CPA I was working for decided that he wanted to diversify the firm. This was right after 9/11 and the focus of the firm was on construction so he wanted to diversify based on those recent events. So he was the one that brought NCI in initially to diversify the client base. He ended up investing in the Plan 3 marketing program from NCI that includes not just the marketing but also help with processing the monthly write-up clients. He bought that program and we got started in December of 2002. At that time we were doing around $150,000 in billings and probably 80% of that was in construction. In 2003 we signed on 100 new accounts and we had one CSR signing up new clients for two to three years. That was my first exposure to the NCI marketing program. I became a partner in the firm at the end of 2004. We ended up hiring a new CSR in 2006 and my partner sold the write-up and tax portion of the practice to me at the beginning of 2007.

When you purchased the write-up practice in 2007 how much business was it doing at that time?

The practice was doing $440,000 worth of write-up and tax work annually when I bought it in 2007 and about 99% of that was developed through the NCI model.

Why did you decide to buy the write-up and tax portion of the practice?

My partner and I had split up handling the clients based on our personalities and who we worked better with. We both handled write-up clients during that time. I always felt more comfortable handling the clients derived from the NCI model as opposed to doing the traditional CPA work like full disclosure compilations and reviews and that kind of thing, while my partner preferred that work. That is why we ended up splitting the practice the way we did. I think part of the reason I gravitate towards that kind of work is because when I was running my pool store I was that type of client. For my accounting needs back then I used Comprehensive Business Solutions. So I understood that type of work and it just made sense to me.

That is a great perspective to have when servicing the small business client. You had been in their shoes and had a sense of what they are dealing with and what is important to them. So you ended up doing the NCI marketing program again after you bought the practice, tell me about that experience.

I bought my former partner out in 2007 and we had a CSR, appointment setters and bookkeepers in place. In 2008 the economy went south and in Phoenix it really went south. Our initial CSR ended up leaving in 2009 and as a result we didn’t do much in the way of marketing for new clients for about two years. In 2011 we hired our old CSR back and for about two years we had a marketing presence but we weren’t strictly running the NCI program. We didn’t have any appointment setters at that point and we had hired a company to develop leads for our CSR. We went along like that for about two years and did okay but not great. At the end of 2013, my current partner and I decided that we needed to have a fresh beginning. We needed a new CSR and we wanted to go back to the basics of the NCI marketing program. I wanted NCI to help us hire and train a new CSR and new appointment setters and just put a fresh face on everything. So we went forward with another marketing program and we got started around the same time of year as the first time around, which was mid-December in 2013.

What was the size of your practice when you undertook the second program?

At that time we had $470,000 in revenue. Pete Borrelli came out to install our program and he was the same recruiter and trainer who had installed the program for the company I worked for in 2002. I wanted to work with Pete again and was very happy to find out he was still with NCI 11 years later. So Pete came out and he is just a pro at what he does. He knows exactly what he’s doing. Our original intention was to hire at least four appointment setters and two CSRs initially. We did end up hiring the four appointment setters however we only ended up with one strong CSR candidate. During the training week for the new CSR Greg, Pete and Greg brought back a check from the first appointment they went on. Then they brought back a check from the second appointment. Then they brought back a third check before Pete left on Friday. The following week Greg brought in another check that was a follow up from an appointment during the training week. The NCI Plan 2 marketing program is a good sized investment so it was nice to see it start to payoff so quickly. In that first year Greg brought in 72 new clients for the firm.

Very nice, so ultimately you decided to go with just Greg as your sole CSR?

Yes, we already had a base of business which was a luxury. We didn’t need to add 10 clients a month. Five to eight new clients a month is about the maximum we can handle anyway. If we had two CSRs and added 12 clients in one month, we’d probably struggle to install all 12 of them. The processing should receive just as much consideration as increasing revenue. Increasing revenue is great but you need to be able to process the work efficiently and consistently not to mention getting new clients installed quickly.

Absolutely, that is why we developed our processing training in the first place, it is so crucial and it becomes even more essential when you are bringing on eight new clients a month! Going into the program in 2013 you had already seen what is was capable of back in 2002. Despite having seen it work previously, what was your biggest concern going into the program?

My biggest concern going into the program was whether we were going to hire the right CSR or not. I figured the appointment setters would come and go and I knew we would get the work done. I had a similar conversation with Todd when I was deciding to do the program and kind of going back and forth on whether I’d do it or not. Todd said something to me that I latched on to. He said, “You’re hiring NCI to hire the right CSR for you.” I knew we could have all the other bases covered but I needed someone to hire the right CSR for the firm. If the CSR could sign up clients, we could handle the rest. Greg, the CSR that Pete helped hire, is still here and we’re still marketing. We had as many as six appointment setters at once and now we are down to three. We bought dialing software on a recommendation from Todd. Since implementing that software we’ve been able to dial and reach more business owners per day.

What has been the most difficult aspect running the program for you?

The most difficult thing about the program in our experience is the appointment setters. When I think of the practice, it’s the thing I think is most under-performing. I looked back at the numbers for the first year in the program and we spent something like $54,000 on the appointment setters. We got some good clients from it and we are now reaping the benefits of having signed those clients. Going forward, if there is one thing I think we have to constantly improve on is the appointment setting and there is no magic solution. The best people we’ve had are the ones who were really good appointment setters when they first walked through the door. We went back and forth on whether we could train and coach people up who were struggling but I think it’s more a matter of finding the right person to begin with.

We’ve put some new systems in place to give the appointment setters a bonus that pays per presentation. If they scheduled three appointments that lead to three presentations being given in a single week we’d double their pay for the remainder of that week. We wanted to reward them based on presentations made because we knew if we could make the presentation we’d have a decent shot at getting the client at some point. So the reward was not just for setting any appointment but for setting good quality appointments where a presentation takes place. I once cut a check for an appointment setter that was $1,100 for 20 hours of work but that week of work lead to five or six new clients. This was a great motivator for some of our appointment setters but it was confusing to track so we moved away from it. Now we follow the standard NCI method of compensating appointment setters but we also give a $25 bonus for each appointment they set that leads to a presentation. If they set two or more appointments in a day and those result in presentations, their bonuses increase to $35 per presentation. We reward appointment setters for quality appointments because they don’t have any control over how well our CSR Greg does his job. Plus, a lot of appointments that lead to presentations don’t necessarily become sales right away but they could over time so we want to reward our appointment setters for establishing those opportunities.

We changed Greg’s compensation a little bit as well. We all felt better about the compensation after making this change. I wanted our CSR to be motivated on a month in and month out basis. So as of about 90 days ago we now pay Greg 15% of the first year’s monthly write-up revenue per client. That residual ends for each client after they have been with the firm for 12 months. Greg gets those residual payments when each monthly payment comes in. He still gets his standard first month’s commission but also 15% of the monthly fee over the next 11 months.

That is interesting, we normally advise against rewarding appointment setters for just setting an appointment because that can lead to them pushing too hard for the appointment. It can also lead to a lot of phantom appointments that never materialize. You added the caveat that a presentation needs to take place to earn the reward which still ties it to not just the number of appointments but also the quality. We do encourage some creative tweaking of the program, within reason, since everyone works a little differently and responds to different incentives. What type of growth has the program generated overall for your firm since starting it in 2013?

In 2013 our revenue was $469,000 and for 2015 we’re already at $675,000. By the end of this year we’ll probably be close to $700,000 but probably not over that amount. The revenue I can attribute to the NCI clients we’ve signed through the program is about $370,000 and we’ve brought on 115 new clients.

What advice would you have for someone considering investing in an NCI Plan 2 or Plan 3 marketing program?

I’m totally sold on the program. We’ve been through it twice and I completely endorse the program. Patience is key. It helps if you already have an existing practice to lean on, it makes it much easier to do. If you want to add $300,000+ in new revenue you can do that with the NCI model. I’ve never purchased a practice so I don’t know how that might compare organically growing your practice. It’s worked for us and it has cost us less than $300,000 to do it. It takes time so use some patience, it’s an investment that will pay off but like any investment it will set you back at first. The way my partner and I look at our firm is that it was worth $469,000 before we fired up the NCI program and now it is worth almost $700,000. We’ve added several hundred thousand in revenue but we’ve also increased the worth of our practice.

Do you have any additional advice for someone currently running the marketing program?

I would say to follow the program and keep with it. Again it comes back to patience. Back in 2008 I was kind of happy that our CSR left and we weren’t marketing anymore. The economic climate was completely different than it is now. I’m not sure I would do that again. If I could go back to 2008 I would want to still have a marketing presence knowing that we would not fall back as much as we did in 2008 originally.

With a recession, or issues in the economy or anything related the best possible plan of attack is to proactively market. The alternative is to give in to fear and sit on your hands and that doesn’t help anyone.

You’ll just go backwards. When I bought my partner out we had $440,000 in revenue and we were up to $580,000 by the end of 2008. When we brought our CSR back we were down around $340,000. So we had taken a significant step back.

Every firm has a rate of attrition. So even without other economic factors you are always at least up against attrition and actively marketing helps tremendously with attrition and maintaining what you have and then goes beyond that to help you grow. What is the largest client you’ve been able to sign through the program?

The largest monthly client is $400 a month. Factoring tax return fees the largest client is probably about $7,000. I will be real honest with you, I just updated our liability insurance and our largest client represents less than 2% of our revenue and I hope that never changes. In 2008 and 2009 we had three clients that represented about 20% of our revenue. All three of those clients are now gone and I couldn’t be happier about that. I would rather have a client that pays $150 a month and is an S-Corp. and we do a corporate return, a personal return and maybe some payroll totaling $3,000 to $4,000 per year. That is perfect for us. When you are talking about increased fees you are doing it on one of two levels. For one there would have to be a tremendous amount of transaction volume, if that is the case it usually leads to a much more complex company and balance sheet. Any time there is someone between you and the owner of a company, and that person could be a bookkeeper or a controller, you’ll always have more liability in that company. There are more possibilities to be held liable for something you might not have even done. So anytime we can deal directly with the owner, that’s our preference and you can generally do that with smaller companies.

That makes sense, the small business market is the target market for the NCI program for several reasons. You touched on many of those reasons in your response. They tend to be easier to work with, they generate less work, losing a few of them won’t ruin your business etc. To wrap up can you just sum up your feelings on NCI and our marketing programs?

Jim,Mike, Greg
Jim,Mike, Greg

I fully endorse the NCI model. As I was talking with my current partner Mike, I think you have to know yourself. I always felt that we needed to hire a CSR to bring in business. He and I could do it but trying to deal with appointment setters, while getting the work done and meeting with new and prospective clients is overwhelming. There is more of an investment involved with using a salesperson obviously but I think for us that was the only option. There really was no option because we had tried to bring in new clients on our own and we weren’t very successful at all. Quite honestly, if we had three tax returns on our desks that needed to get done, they were getting done before we returned a phone call to a potential new client. For us, hiring a CSR was paramount. Reengaging with NCI and back to the basics that we had strayed from was good and Pete was a complete pro both times that I worked with him.

Thank you Jim, we really appreciate the kind words and you taking the time to do this interview. Very happy to hear of your success and to be able to share that with our readers. Good luck to you, Greg, Mike and the rest of your team as you continue to grow your business.


Chris Clark – Executive Editor, NCN Executive Editor, New Client News and Client Support Services

Chris is the oldest son of NCI CEO and founder, Bruce Clark. He graduated with a Bachelor’s degree from Loyola Marymount University in Los Angeles, CA in 2005. He has worked for New Clients since April 2006 filling a variety of roles including Senior Account Executive, client support specialist, executive editor of and contributor to the NCI newsletter, New Client News and appointment setter evaluator. Chris also helped Bruce edit his two books, NCI Effect which came out in 2011 and Beyond the NCI Effect which came out in June 2015.