Suggest new strategies that Ron could implement regarding the people and promotion p's of the services marketing mix.
CASE 1 -393 Ron Brown Accounting Pty Ltd: managing a professional services organisation Dawn Birch, University of Southern Queensland Rochelle Lake was driving to her parents' home for dinner. She had quite a lot on her mind. Rochelle worked as a trainee accountant and office manager in her father's accounting practice. In recent times, she had become increasingly concerned about how the client base at the practice was being managed, and, more importantly, about her father's declining health. She intended to raise her concerns with her parents over dinner and suggest that her father rethink how he was managing the business. In recent times, changes to taxation, superannuateon legislation and the global financial markets have placed increasing pressure on the accounting sector, and in particular on smaller accounting practices. In addition, the unique characteristics of services, including the highly intangible nature of the service offering and fluctuating demand across the financial year, create significant challenges for the effective management of the accounting firm. Ron Brown Accounting Pty Lid is a small accounting firm with branches in two Queensland locations. The main office is located in a large regional centre in south-eastern Queensland and the other branch is located in a rural town in central Queensland. The firm was established by Ron Brown (CPA) in 1995 and now employs four full-time and two casual staff members, with four being employed in the main office and two being employed in the branch office. The manager, Ron Brown, spends one week each fortnight in the central office and the other week in the branch office. The core services provided by the firm are taxation and management accounting services. The firm has a client base of 800 clients and revenues of about A$600 000 per annum. The client base comprises approximately 150 businesses, including companies, trusts and partnerships, and 650 pay-as-you-go (PAYG) wage earners Half of the business clients are companies and trusts, and as these are the firm's most-profitable and rewarding clients, Rochelle believes that Ron should consider revising his business client portfolio to focus more on them and less on partnerships. Moreover, Rochelle has noticed that some accounting services appear to be more profitable than others, and she has wondered if the firm should reconsider the mix of services included in its product portfolio. The firm seeks to provide value for money by offering sound and practical advice on financial matters, and reducing the tax payable with safe and legal taxation- minimisation strategies. Accuracy, timeliness and the assurance of confidentialityPart #4 Cases Case 1: Ron Brown Accounting Pty Ltd are critical to client satisfaction. In particular, business clients want their accounting firm to understand their business and be personally interested in and committed to minimise their taxation liability and pay the minimum possible accounting fee for 394 to their success. Unlike PAYG clients, who only visit the firm once each year to get that service. In recent times, the global financial crisis has also impacted on some their taxation return processed, business clients are serviced on an ongoing basis clients' business activity and wealth, and thus their capacity and/or willingness to pay throughout the year. Hence, developing close relationships with business clients that are based on trust and goodwill is central to the success of the accounting firm. their accounting fees. The quality of service provided by the firm depends upon the effective Most clients either visit the main office or the branch office for appointments. Both offices are conveniently located in central business districts and have adequate performance of employees and equipment. Ron makes every attempt to hire good parking facilities. Traditionally, accounting services have been conducted in face- staff, provide adequate equipment and computing technology, and make use of the best accounting software packages that he can afford. One of the purported benefits to-face service encounters. with clients bringing their books and paperwork to the of the computerisation of accounting records is that the amount of paperwork has accountant to prepare taxation returns and conduct other accounting services. been significantly reduced. While Ron is aware of the need to pursue a paperless work However. as some clients find it difficult to leave their enterprise during the day, Ron visits these clients at their premises. Ron finds that he is often able to provide better environment. he and many of his staff are finding the change difficult. Ron is also service when he visits the client's business, as he is able to access more detail on experiencing difficulty attracting good staff at a time when there is a severe shortage their business operations and transactions. and gain a better understanding of how of qualified accountants, and when the best graduates are not interested in working the business is performing and the direction it is taking. Thus. he is able to provide for smaller firms. Unfortunately, Ron is too busy to provide his staff with adequate better and more specific financial and accounting advice. The main disadvantage training and supervision, and frequently finds that he needs to check and correct of Ron visiting his client's premises is the time involved and cost of travel. but to their work. Sometimes, Ron wonders if it would be quicker to just do it himself. some extent these are offset because the job can be completed after that visit with One of the key issues facing the accounting firm is the need to manage fluctuating greater accuracy, and there is less need for follow-up. Furthermore. the cost of tr demand. Demand is cyclical, with the busiest period for accounting firms occurring is added to the client's fee. and most clients are prepared to pay for the convenience at the end of each GST quarter (October. January, April and June) when the BAS of not having to leave their business. However, in recent times. Rochelle has noticed need to be completed. Another busy period for the accounting firm occurs at the that her father has become increasingly fatigued following these long trips to visit end of the financial year, when both businesses and PAYG employees complete their clients. and she is concerned about the impact the visits are having on his health. annual tax returns. The increasing computerisation of accounting records and the advent of more Some of Ron's clients can be difficult to please, and some are not prepared to pay advanced telecommunications means that much of the work that was traditionally for the high levels of service they demand. In recent times, Ron has had to deal with conducted in a face-to-face interview by accounting firms can now be conducted at a number of unhappy clients who are concerned that their work is taking too long arm's-length through electronic means of communications. Using these technologies, to complete and are afraid that they will have to pay a fine because their company clients can fax or email their accounting records to the office. where taxation returns has not met the statutory deadlines. One business client has threatened to switch and quarterly business activity statements (BAS) are prepared and electronically to another accountant because a mistake was made in his return. resulting in him lodged with the tax office. Any issues requiring clarification can be made over the having to pay more tax than he needed to. Despite Ron preparing an amendment telephone or via email. But while electronic channels allow faster service, some of for the taxation office. this client is still unhappy that the mistake had been made. Ron's clients have limited computing skills and experience difficulties operating Ron worries about these delays and mistakes and his inability to deliver the level of in an electronic environment. Managing their financial affairs is very important to service quality he would like to deliver if only he was not so busy. Over the years, Ron has developed close relationships with some of his clients, most clients, and thus some prefer to transact with the accounting firm face to face. However, Ron is keen to investigate the possibilities of servicing more clients through many of whom he now considers to be friends as well. While meeting clients face to arm's-length electronic means rather than meeting with all clients face to face. face allows the firm to develop closer relationships with them, it is also more time- Accounting services are charged out at an hourly rate. Since the introduction of consuming. However, most business clients want to be highly involved in the decision the Australian Goods and Services Tax (GST) in 2000. many business clients have not making and financial affairs of their businesses. and as a rule, prefer a face-to-face been prepared to pay the accounting firm to complete their quarterly BAS. preferring discussion with their accountant. Unfortunately during busy periods, some clients to do these themselves. Unfortunately. many clients miscalculate their GST, which wait in a small, cluttered area near the reception desk, as appointments frequently then requires additional work by the accountant to lodge an amendment. As Ron has run over time. Indeed, one of the firm's business clients recently complained that on an agricultural degree and was raised on a farm. many of the firm's clients are farmers his last visit he had to wait over thirty minutes to see Ron. Angrily, he had pointed or employed in the agricultural sector. Hence, factors that impact on the agricultural out to Ron that 'time is money, and I'm too busy to be sitting around here waiting to sector. such as drought and fluctuating commodity and fuel prices. also indirectly see you'. affect the cash flow of the firm, as clients are less able to pay their accounting fees on Rochelle knew that things had to change. The firm was facing a number of issues time. Furthermore, for many clients, accounting services are an unwanted product and her father's health seemed to be deteriorating. However, she was not sure what that they feel are forced upon them by the government. The goal for many clients is direction the firm should take. She wondered how the firm could more effectively manage the fluctuations in demand. Should they continue with their current client portfolio or should they change the portfolio? Is the firm offering the most profitablePart #4 Cases and rewarding mix of services? Should they employ more staff, given the difficulty they had experienced with staff in recent times? Could they be more efficient and 396 effective in how they transact with clients? As Rochelle drove into the driveway of her parents' house, she knew some critical decisions needed to be made
