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September ’19

Ideas for the journey to better every day.

September ’19

It’s all about the data

By Darren Root, CEO

I was watching a story on the news recently about a high-end retailer and their efforts to capture in-store customer behavior data. The retailer used the data to improve the customer experience by recommending relevant products based on those behaviors.

Here’s how the story went: Ceiling mounted video cameras scan customers as they walk in the store and quickly identify them using facial recognition technology. Additional cameras are positioned in each of the various departments. As the now-identified customer makes his/her way to the different areas of the store, the cameras capture the types and brands of items in which the customer shows interest. For example, if the customer walks into the Louis Vuitton boutique inside the store, the cameras see that the customer admires various Louis Vuitton items. 

In this scenario (while it might sound a bit creepy), the on-premise data captured by store cameras are especially powerful when consolidated with other captured data, such as the customer’s online browsing history. With all this data, the retailer can market specific items of interest to customers in micro-targeted social media, direct mail and email campaigns. 

This is just one use case from a single retailer. You know as well as I do that data has become one of the most valuable assets for today’s marketers. Companies like Amazon, Facebook, Google and Apple are capturing incredible amounts of data on each and every one of us. This article isn’t intended to bemoan the vast amounts of data collected on just about everyone, but rather to ask the question as accounting firms, “What are we missing in our own practices?”

If data is really that valuable (and it apparently is), what opportunities are we missing by not paying attention to all the data that passes through our firms? I believe there is a difference between capturing data to enhance the client experience inside an organization and capturing data to sell to others without the consent or complete awareness of the client. I’m definitely not advocating the latter.

Consider for a moment the uncaptured data in our heads about our clients that serves no applied purpose. Things like:

  • Does this client have a retirement plan or a buy/sell agreement? 
  • Does the client use QuickBooks Online, Zoom, Slack or other helpful technologies?
  • Is the client set up as an LLC or Corporation?
  • What interest rate is the client paying on business loans?

I would bet that there are at least 100 data points like these…if not more. If you were to capture these data points, could you use them to more effectively serve your clients? Assume for a moment one of the data points you collect is interest rates on business loans. When rates adjust, could you leverage this data to help your clients make decisions? Let’s look at another example: What if you tracked the technology solutions used by your clients (i.e. QuickBooks Desktop, Zoom, Slack, etc.)? Could you use this data to move your clients into the technology model your firm advocates?

Data is the bridge to advisory services inside an accounting firm, and data is the key to unlocking proactive advisory services for our clients. In order to be more proactive as a firm, you must have information that drives your recommendations. The biggest challenge I hear from practitioners today is wondering when they are going to find the time to capture this data?

There is a paradigm shift required for firms to be more effective at providing advisory services. Advisory services can either be a reaction to a client’s question, or it can be proactive based on the right set of collected data. The paradigm shift is moving from reactive to proactive and to an active data collection model. With this in mind, I think the more appropriate question is, “How can you not find time to collect the data?”

Data has clearly become one of the most valuable business assets today. You don’t need surveillance cameras or facial recognition algorithms to collect data on your clients. All you need is to make data collection one of the highest priorities in your firm.

All my best,

Have you heard our Better Every Day podcast yet? Subscribe on iTunes or listen from our website at rootworks.com/podcast for a deeper dive on the topics discussed in this column.

Change is hard and necessary

 By Anna, Education Team

Summer break has ended, and many of us are dealing with getting kids back to school, working towards the last two major tax deadlines of the year and the final planned changes of the year. November and December are popular times for a firm to make their last major changes. These changes could include software, or it could simply be process and procedure changes. If you have any of these on your list of things to do, we have a few recommendations to ensure a smooth transition. The first of these is simple, but it needs to be repeated: Remember that change is necessary and change is hard! There will be an adjustment period and it WILL take longer to get the job done regardless of any assurances you may have received.

  • If staff will perceive the change as negative, don’t try to convince them otherwise. Instead, tackle the negativity head on and present the facts, acknowledge that it isn’t going to be pleasant, and be available and present for questions and conversation.
  • Designate someone in the firm to manage the change–give them the time they need away from their day-to-day tasks to ensure the change is managed and staff are trained.
  • Evaluate the firm from a high level. Who will be affected? Create key considerations, ask a small set of staff in different areas how they will be affected, and don’t assume.
  • Document the change. How will the process/procedure change, who’s involved and what components will be affected?
  • Document review processes (if needed). If software is changing, chances are a conversion was involved…so document, document, document the areas that need to be reviewed. You do need to review a conversion at a granular level. If you need an example, even if it’s not a payroll process, search for the ADP FAQ in Online Learning.

Managing change is difficult, but it doesn’t have to be consuming. If you have access to a Rootworks coach, use our expertise to help manage your change. We can help create a plan and help you communicate with staff and/or clients based on what type of change you are planning. As NYT best-selling author Louise Penny once wrote: “If you aren’t growing and evolving, you’re standing still, and the rest of the world is surging ahead.”

Challenge/response verification is no longer optional

By Chris Dickens, IT

On August 30, the Wall Street Journal reported that a group of sophisticated scammers successfully used AI-driven voice impersonation to steal over $200,000 from a U.K. company. If you attended one of our Firm Retreats in Indianapolis in 2018, we discussed the possibility of this type of crime, right off the heels of the announcement and release of Google Duplex. Duplex is an AI-driven technology, a computer-generated voice that sounds human, and is designed to interact with other humans through Google Assistant. In its launch, Google demonstrated the ability for it to make reservations on your behalf, with the recipient of the phone call having no idea that they were talking to a computer. During those Firm Retreats, we discussed the possibility of this type of technology being used in a malicious way, and how to mitigate risk.

Now is the time to go Jason Bourne, 007-style spy techniques here, and implement a challenge/response process, both internally and with key clients, as a mechanism to validate large transactions. Here’s how it works. 

CEO: “I need you to transfer $25,000 into the following account as soon as possible.”

Employee: “No problem, I just need you to answer the following challenge question: ‘Where are you traveling to next week?’”

CEO: “Nicaragua.” 

A challenge/response is a question/answer that only parties that have discussed the verification would know. It can also be a PIN or a passcode. My recommendation is that it’s a question with a purposefully incorrect answer. Even if a cybercriminal has access to, or is is aware of, the CEO’s schedule and answered affirmatively of the CEO’s actual plans, the criminal’s answer is still an incorrect answer to the challenge. In the example above, this CEO would never have any reason to travel to Nicaragua. 

In the discussion at our Firm Retreats, one member told a story of a client who does travel quite a bit, so when they received a call from this client that had all the red flags of a potentially malicious request, he challenged his client to answer a question that only he would know. Here’s basically how the conversation went:

Client: “I’m getting ready to get on a train in France and will be out of contact for a few hours. Please transfer $XX,000 dollars to the following vendor ASAP.” 

RW Member: “Sure, I can do that. Just answer me this one question: Where did we meet?”

Client: “I’m in a hurry, why are you asking?”

RW Member: “I apologize, just humor me here. Where did we meet?”

Client: “We met at so-and-so’s wedding 20 years ago. Why??”

RW Member: “Thank you. I just needed to verify that it’s actually you I’m talking to.”

AI-driven cybercrime will only continue to grow in its use, as the ability to con people by impersonating the voice of someone they know will become easier as the technology becomes more widely adopted. Set up these types of challenges/responses for large transactions now, so that you’re not doing so reactively after a cybertheft. 

When it comes to marketing, you need to diversify

By Chris, Marketing Team

When building a marketing communications plan, no single medium will do the job effectively. Use a combination of targeted media to deliver repeated messaging to the right audience. Consider a mix of traditional email, direct mail, social media and targeted advertising to give your clients and prospects increased opportunities to receive your message. This will also give your communications a synergistic effect. You can expand marketing efforts with general awareness touchpoints, such as distributing printed copies of your firm’s newsletter or magazine. Members can consider Advantage and In The Loop magazines and include a handwritten note to add a personal touch. 

Now is the ideal time to map out your marketing goals and put them into an action plan. Start by segmenting your desired client/prospect communications and the channels you will use to deploy your message. This offers a sound foundation as you build out a long-term marketing program.

Last Firm Retreat of the summer!

There are about 20 spots left in our September 23-24 Firm Retreat.If you’ve not had a chance to register, we’d love to see you in Indy!

Register under Learn / Events at rootworks.com. This event is open to members of all membership levels.

Upcoming Webinars for September and October

September 19 – Summer Technology Webinar. Rootworks will educate participants on new software and improvements to existing software. Participants will learn how these technologies and processes can support their business model, improve relationships with clients, and elevate their service levels. We’ll announce the specific topic very soon.

September 25 – Staff Training: A Better Reason to Come to Work:  Your Firm’s Mission, Vision and Values. What are you doing…really?  Whether you’re a firm owner or a staff member, ignoring that question can lead to the kind of workweek that leaves you watching the clock and counting down the days until retirement. There’s a better reason to come to work each day than a paycheck, and a more fulfilling way to spend your 40 hours than just surviving in the space between vacation days.

October 1 – Member Led: Using the First Time Penalty Abatement. This webinar will cover an overview of how and when to use the first time penalty abatement including the IRS rules, types of penalties covered, and how and when to request. This class will be taught by Ed Hoynes, CPA, EA, USTCP. Ed is admitted to practice before the United States Tax Court. He is one of only 122 non-attorney tax professionals admitted to the Tax Court since 2000. Ed and his firm are long-time Rootworks members.

October 2 – Staff Training: Proposable Best Practices. Proposable is sales proposal software. It allows you to create, deliver and manage sales proposals from a central location. The system is designed to promote consistency in each document, whether it be from service to service or client to client year over year. Learn how to navigate Proposable and set up your firm’s proposals to allow you to be as consistent as possible. We will use Rootworks-provided templates as a starting point.

October 17 – Fall Planning Webinar. Planning webinars are time spent working on your business. Use each session as a checkpoint throughout the year. Take time away from day-to-day work to celebrate accomplishments, think through projects and issues, and plan out your future objectives.

October 18 – Staff Training: Onvio Practice Management. If your firm is considering implementing, beginning the implementation, or looking into implement Onvio for Time & Billing or Project or Task Management, this session is for you.  This session will cover the Rootworks Best Practices for setting up Services, Activities, Projects and Tasks, as well as many other items that are part of these applications.

October 23 – Staff Training: Tax Products: Creation and Communication. Rootworks advocates turning your services into products; in other words, ‘productizing’ your services to create standard product offerings that you market, sell and of course deliver. Productizing tax services into products can be a natural progression of turning your services into products following the Rootworks model. In this staff training, we will introduce the idea of having tax products in your firm. What they are, what the benefits are to the firm and to your clients, as well as communicating your strategy internally and externally.

October 30 – Fall Cybersecurity Webinar. We’ll continue our conversation on cybersecurity and keep firms apprised of new threats that we are seeing and what they can be doing to help keep themselves safer.

Register at rootworks.com under Learn / Events.


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