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WHERE ARE WE GOING AND HOW DO WE GET THERE?

Setting Objectives In A Mercurial World

            It would seem to be a given that no strategic plan – nor any marketing plan – can be developed without a clear view of objectives. After all, if you don't know where you're going, how do you know how to get there?

              The problem is that too many objectives are flawed by being unrealistic, unachievable, or just plain wishful thinking. Too often, the programs that stem from the stated objectives bear no relationship to the objectives themselves. And strategic and marketing plans, remember, are really the same thing, simply because you can’t have a strategic plan except in terms of the market you serve.

              Absent clear goals, efforts to develop a practice become random, diverse and expensive. But with clearly delineated objectives, strategic plans and marketing programs become relevant and focused. They offer a test against which all activities are measured. If a firm activity doesn't ultimately serve to meet a specific objective, it's usually wasteful, inept, and not cost-effective. Setting objectives, then, even for the smallest firms, is not an abstract exercise.

            At the same time, it's important to recognize that objectives are a context and a direction, rather than a finite measure. They are not cast in concrete -- they are dynamic. Circumstances change, and if the objectives aren't able to be responsive to change, they become unattainable and unrealistic.

             In setting objectives, the primary consideration is your vision of the nature of your practice. What kind of firm do you want to be? How do you mean the firm to serve the personal and professional needs of you and your partners (and not to be overlooked, your staff)? How do you mean to be perceived by your clientele? And most significantly, how do you mean to serve the needs of your marketplace?

 Setting Firm Objectives

             In defining firm or practice objectives, two specific elements are paramount…

        Market. There are three aspects of a market that must be considered -- its needs, its size, and its location -- and all three must be viewed carefully in formulating objectives. What are the parameters of the market's needs – and opportunities -- that you're prepared to serve effectively? Where is the market going, and are you in tune with it? How large a market can you realistically serve? What geographical limitations are realistic?

 

With these two elements defined, consider, then …

 

        Size. Businesses rarely grow substantially by accident. It's almost invariably a conscious decision by its partners or owners, who then take steps to implement that decision. However, some accounting and law firms, fully cognizant of the implications of growing, may feel that they want to limit or define their growth. But it should be recognized that in order to plan to contain growth, or to grow larger, determining size must be a conscious decision.

        Profitability. Profitability, of course, is as much a function of margins as it is of volume, and so it's useful to know your costs as precisely as possible -- a particularly difficult task in a professional firm. It becomes, as well, a function of the kind of service you're offering, and the kind of market you want to reach.

 

        Time Frame. The ability of a firm to meet its objectives must be defined within a realistic time frame.

 

        Pricing. Pricing is as important an element of defining a practice as is advertising or promotion. Pricing affects revenues and profitability, but it also affects positioning. For example, do you charge less and go for volume, or do you charge more and go for a more affluent clientele. What are your prices based on? Costs? Competition? Custom? Value added? In today's competitive climate, pricing has become a tool of marketing. As in other forms of marketing, pricing is often set by competition, where it had once been relatively arbitrary.

 

        Share of market. When a firm is in a rapidly growing market, or functioning in an era of rapid growth, share of market is not primarily significant. Growth will come with the market. But when that market or industry slows its growth, and competition for existing business is the only possibility for growth, then share of market is crucial. If the only way to grow is to capture your competitor's clients, then obviously, your share of market grows as your competitor's diminishes.

 

        Service concept. As a professional service, your relations with your clients dictate that they are served personally. But even within that function, there are degrees and options. A firm may decide to give impersonal service to each client, particularly those not on retainer, or it may decide to devote a considerable amount of time and effort to client relations. It may be a 9-to-5 operation, or it may express a willingness to function around the clock. The service option is the firm's, but it should be made a specific choice.

 

        Skills and staffing. The decision to add or develop staff and skills is a function of both the firm’s partners’ own vision, and the needs of the marketplace. The decision should be a specific element of defining objectives. There's always the danger, too, of successfully achieving marketing objectives too soon, and thereby outrunning your ability to serve a new or growing clientele. It makes little sense to do a successful job of increasing your tax or audit business if you can't find a sufficient number of tax or audit specialists to serve your new clientele.

 

Consider, as well, those elements that are beyond individual control. One can't control, for example, the national economy, which can throw the best formulated objectives awry. An accounting or legal practice can be enhanced or diminished by a new law or regulation, or a new FASB change. Opportunities for professionals are generated or obliterated regularly. This is why objectives are never more than guidelines that serve to define a course of action, whether in marketing or otherwise.

 Formulating Marketing Objectives

             If the marketing program is to succeed, marketing objectives must stem from, and serve, firm objectives. They must support and further the firm’s objectives, and are in a sense the guide to the instruments that fulfill the firm’s objectives. Examples of marketing objectives, in this context, are …

        To change the structure of the clientele and the nature of the firm

 

        To get new clients, or to strengthen relationships with existing clients

 

        To sell new services to existing clients, as well as to new clients

 

        To introduce a new service or enter a new market for a specific service

 

        To broaden a geographic base

 

        To change a perception of a firm by its market

 

           Within these goals, the key elements to consider in setting marketing objectives are:

        Publics. The target audience must be clearly defined. But it must be defined in the context of both the market’s needs and opportunities, and the service offered, or planned to be offered. In any market there are several publics. There are existing clients, whose needs for service must be constantly addressed, as must be their needs for new services. There are the prospective clients, who constitute as many publics as there are services you can perform for them. Your firm may serve one public with corporate services, another in the same market group with financial services, and a third in the same market with personal financial services. The three groups may be contiguous, but each may still be separate and distinct.

 

Defining a target audience is a function of determining those universal characteristics of the target group to which your services are most profitably addressed. The universal characteristics must include the ability to reach them in a uniform and economical way.

 

        Client Perception. How do you want to be perceived by your clientele? It should be remembered that marketing alone cannot develop images -- a perception that belies reality. No marketing program can convey an image of high service at low cost if, in fact, you are not delivering high service at low cost. The acoustics of the marketplace are extraordinary, and what you are speaks so loudly that people can't hear what you say you are.

 

        Time Frame. A practical and realistic time frame in which to achieve specific goals is essential to establishing marketing objectives. Marketing must be given a reasonable time to work. Unreasonable expectations, in terms of both results and time frame, are a clear danger. In professional services, it can be a long way from when the brochure or direct mail piece goes out, or the release is printed or the ad is run, and when the contract with a new client is signed.

 

        Revenues and Return on Investment. Presumably, the objective is to increase revenues by increasing the clientele or the services to existing clients. But at what cost? In designing a marketing program, the cost of achieving a revenues goal -- the return on investment -- is a primary factor.

 

Merely to set an arbitrary figure or percentage increase, without asking pertinent questions about what must be spent to achieve that goal, is insufficient. Nor is the expenditure in marketing dollars alone a gauge of expected performance. The increased revenue, presumably from increased volume, must be serviced. Will new staff have to be added? How much will new staff add to overhead, in both salaries and support costs -- space, secretarial and clerical help, support services, and so forth?  

It should be noted, however, that diminished effort results in losing impact. There is no sustaining recollection by the market, no matter how effective the original marketing campaign may have been. Other competitors move in, and the value of the earlier efforts are lost.

 

At the beginning of a marketing campaign, the return on the investment is smaller. But if the investment and the effort are sustained, the penetration of the effort for the same dollar improves, and so the return on investment is greater.

 

        Budget. There are a number of techniques for determining budgets. But it should be remembered that in budgeting, effectiveness -- and therefore return on investment -- will increase as the marketing program gains in penetration.

 

        Share of Market. If share of market is a significant element in your growth or competitive picture, then it must be generally quantified, and marketing plans must reflect the competitive values in your efforts.

 

The Final Test

 The final test of the efficacy of objectives must consider…

 

        How realistic are the objectives? Can they be achieved? Is the market really there for what you want to offer? Can the firm really deliver what it plans to market?

 

        Does the firm really understand the cost of meeting those objectives, in terms of staff? Dollars available? Professional staff time? Risk of failing in any particular marketing effort or activity?

 

        Has the firm realistically assessed its commitment to its strategic plan, and to marketing, in terms of supporting the creative effort, the staff, and the program?

 

              Not facing these realities, and not understanding what's involved in moving into the marketing arena, can be wasteful and expensive.

             When the firm’s objectives are clear, then there can be a clear view of the marketing program itself. Only then can there be valid assessment of the marketing mix -- those several tools of marketing that together, move the program forward, and of the blueprint to accomplish it. And only then is a strategic plan valid.

 

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