Focus Strategies for the Accounting Industry
Two focus strategies for the accounting industry include narrow service line and customer segmentation.
The narrow service line involves practices providing a very narrow service line, and often only one service. These narrow service lines could be insolvency, international tax, research and development, forensic accounting, etc. An example of a narrow service line is Ferrier Hodgson which specialises in corporate recovery, corporate advisory, forensic accounting and forensic IT. Ferrier Hodgson is now one of the largest specialist corporate turnaround and insolvency management firms in the Asia Pacific and has over $100m revenue. The advantage of the narrow service line focus is it enables a practice to become a specialist and know more about their specific service than their competitors and become the best in that narrow field.
Customer segmentation involves servicing a particular customer segment only. The possible customer segments are unlimited and include doctors and dentists, high net worth individuals and families, artists, and the racing industry, etc. An example of this is McMasters who are accountants, solicitors and financial planners. They have built a practice with 60 personnel servicing doctors, dentists and high net worth clients comprising a highly profitable and very specific client base. As a doctor operating your own practice it makes sense to use an accountant who specialises in medical practices versus one that is your suburban general practice servicing all and sundry. Naturally doctors really understand the benefits of dealing with a specialist versus a general practitioner – they themselves make referrals to specialists in their own work on a routine basis.
An example of successful customer segmentation in operation is Lowensteins Arts Management. They have built their reputation as specialists in the visual arts and other creative areas including performing artists, writers, academics, journalists, actors, dancers, models, theatrical producers and filmmakers, musicians, craftspeople, glass artists, and ceramicists. The combined client base of both Melbourne and Sydney is close to 3000 artists from various disciplines.
H & R Block has a 45-year track record of successful customer segmentation. They predominantly focus on salary and wages returns and in a 4-month trading period each year lodge over 800,000 tax returns in Australia.