We all recall and cringe at the famous fast food chain mantra ‘do you want fries with that?’ The frustration often conjured by the notion of ‘up-selling’ belies the real problem – one of perception. A feeling that you’re being sold something that you don’t want or need,or is of little or no intrinsic value, is uncomfortable.
This is no less the case for professional advisory firms. Clients who don’t understand the value of additional services offered equate them with the ubiquitous ‘set of free steak knives’ – they’ll take them as long as they’re free. How then do (the collective) ‘we’ as professional services firms help clients understand the value of services provided over and above those instructed or sought?
The ‘carrot and stick’ approach is most often used: the ‘stick’ deployed where clients are advised that they must do such and such, or else so and so will happen. However, this approach does little to engender client ‘buy-in’ to the rationale for the additional work or services. A far more enduring approach is ‘the carrot’ – to emphasise the upside and highlight the anticipated benefits.
“OK,” you say, “that’s obvious.” However, in our recent experience it is not quite so obvious as one might expect. The reason for this appears to stem from directors of some companies wanting what is cheap and expedient, as opposed to what is in their best interests. Consider this brief example.
A client approaches their accountant for year-end financial statements and tax return work. That work is diligently performed and the accountant makes suggestions for business improvement. With a small amount of extra work, it is put to the client that there could be ‘significant gains available to the business’. However, those services are declined by the client on two bases – the first being cost and the second being the time required of the client (not the accountant) to devote to the provision of additional information/assistance.
The Courts have looked unfavourably on directors who, when faced with the opportunity of better understanding their company’s affairs, chose the expedient route. In the 2011 case against Centro directors and executives – Australian Securities and Investments Commission v Healey (2011) – Justice Middleton held that directors must “take a diligent and intelligent interest in the information available to him” and to “apply an enquiring mind to [their] responsibilities”.
Acting on advice is the second stage – seeking quality advice is paramount.
