michael
THE 5 MINUTE FRACTIONAL CFO

097: Increase Service Quality To Decrease Marketing

Oct 04, 2024

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097: Increase Service Quality To Decrease Marketing

Oct 04, 2024

Not too long ago, I was sitting in a mastermind group and we were all sharing our goals for the upcoming year.  

The lists included everything you might expect:

βœ… Grow the team.
βœ… Maximize profits.
βœ… Increase revenue. 

But then, one of the members made a simple yet profound observation.

Entrepreneurs regularly set aspirations for growing their companies but rarely discuss goals for improving the effectiveness of their products or services.

He wasn't wrong. Growth does tend to take an outsized amount of the focus and attention for CEOs - and I see that among Fractional CFOs as well (myself included).

Sure, service quality isn't nearly as sexy as top-line growth. But providing better service has a TON of benefits, the least of which is that it actually removes significant time, energy, and stress from your marketing and sales efforts. And let's be honest, "marketing and sales" tends to be the archnemesis of most Fractional CFOs.  

Let's make some basic assumptions:

• Your revenue goal is $240,000 per year ($20,000 per month)
• You charge $4,000 per month for your CFO services
• 50% of the leads you get are qualified
• Your sales close rate is 50% 

Now, let's look at two different scenarios:

Scenario 1: 

In scenario 1, the average client sticks around for 6 months. That's not horrible - but it could be better. 

Under this scenario, you'd need about 10 clients per year to hit your $240,000 revenue goal.

$4,000 fee * 5 clients = $20,000/month

If the average client stays for 6 months, you'd need to acquire 10 new clients per year to maintain the $240,000 annual run rate.

Using the assumptions we made earlier, you'd need to generate 40 qualified leads and handle 20 sales calls per year to hit those numbers. 

Yikes.

Scenario 2:

In scenario 2, we've leveled up our service delivery, so our clients are happier and get more value! Now, they stick around for an average of 12 months. 

In this scenario, you only need to acquire 5 new clients annually to hit the $240,000 revenue goal.

Using the same assumptions from earlier, you'd only need to generate 20 qualified leads and handle 10 sales calls per year.  


Needing 20 leads is 10x better than needing 40 leads
Needing 10 sales calls is 10x better than needing 20 sales calls 

(No, not mathematically - but definitely psychologically!) 

OK, that's cool. We should put more effort into delivering better service to keep clients longer.

But where should we start...

New Client Onboarding

Hands down and without a doubt, the lowest-hanging fruit when it comes to extending the customer lifecycle is onboarding!

Most Fractional CFOs view onboarding as a means of getting access to accounting systems, reviewing tax records, and meeting the client's key team members. While those things are necessary and important, they aren't the most important part of onboarding—not by a longshot. 

Here's how I rank the top three priorities for onboarding in descending order:

  1. Establishing meaningful and clear personal and business goals and priorities for the owner.
  2. Getting to the "ah-ha moment" as fast as possible. (I define the ah-ha moment as when the client has a lightbulb moment where they're like, "Yes! THIS is why I hired a Fractional CFO!")
  3. Put together an initial set of forecasts and projections.

Over the past 8+ years of running my firm and working with hundreds of entrepreneurs, I have learned that if you can nail those 3 items during onboarding and you can accomplish them in under 30 days, the client is likely to stick around much, much longer.

Start by working on your onboarding if you're not hitting those outcomes in 30 days or less.

PS- I did a live training that covered premium onboarding strategies for my Inner Circle members back in July of 2024. The replay is available through December of 2024 if you want to check it out. You can sign up HERE to get your first month for just $1.  

The Monthly CFO Call

Your primary deliverable as a fractional CFO is the monthly call you hold for your clients. This is where you present your data, insights, and recommendations.

The problem that I see most Fractional CFOs make is that they aren't intentional enough about how they prepare for these all-important calls. 

In fact, the two biggest issues that I encounter from the firm owners that I coach are:

  1. They don't clearly connect the financial strategy to personal and business goals
  2. They wait until a few days prior to the call itself to start preparing. 

The for real real is that if you whiff on the monthly CFO calls more than once or twice a year, your clients aren't going to stick around very long.

You've got to invest some time in leveling up your game.

If you're not sure where to start:

• I recently wrote THIS blog article on how to manage your weeks so that you can be better prepared for the CFO call.

• I also conducted a 60-minute legit masterclass for my Inner Circle members on how to better prepare for CFO calls. That replay is available through January 2025 inside The Inner Circle.

Communications

The fastest way to piss off clients is by not responding to them in a timely manner.

It's an INSTANT signal to a client that their question or issue isn't important to you (and neither is their business). 

I know that many of us don't respond right away because we need time to research their question and find the answer.

But the client doesn't know that - they just know that they haven't gotten a response, and they assume it's because you don't care.

I've found the best way to prevent this is to respond to all emails within 1 business day.

Now let me be clear - this does not mean all questions are answered or all concerns addressed within 1 business day. It just means that all emails are acknowledged. I also find that it's a great best practice to set expectations on when they should expect to hear from me again. 

Your response might look something like this:

Hey Bill,

Thanks for reaching out. And great questions by the way!

I'm going to dig into this over the next couple of days. I should have an answer for you by Friday if that works for you. If not, please let me know when you need an answer by and I'll do my best to accommodate. 

Michael

9 times out of 10, this is all that your clients are looking for.

Side note:
I recently met with another CEO and told him about our 1 business day response policy.
 

He thought that was great, but then he asked an excellent question:

How do I ensure that my team meets that standard every time?

The truth is, I didn't have an answer. He told me that until we have a system in place to monitor response times then it's just a feel-good standard. 

I agree with him 100% and so my firm is evaluating ways to monitor and measure client response times. 

Takeaways

Now that Q4 is underway, it's almost time to start thinking about goals for 2025. Instead of only focusing on top-line growth, perhaps you should consider some goals that will help keep clients around a little bit longer. 

If you don't have client onboarding, CFO calls, and communications dialed in, pick one to focus on each quarter next year.

Growth is a heck of a lot easier and faster when clients stick around longer.

 

Whenever you'reΒ ready here's how I can help:

1. Join a community of 300+ Fractional CFOs HERE.

2. Grab your ticket to The 2025 CFO Accelerator LIVE HERE. Prices go up November 1. This is the lowest price (even lower than Black Friday!) that we'll offer.

3. Check out my new Daily Fire πŸ”₯ by texting "FIRE" to 1-469-515-8087

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