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Top 5 ways to convert tax return clients into retainer clients

· 7 minute read

· 7 minute read

If you have satisfied tax return clients, in many ways you’ve already taken a step towards recurring income. Most likely, they’ll come back next tax season and perhaps from time to time throughout the year as they make key decisions. But while this certainly adds a dose of predictability to your revenue stream, retainer clients take your income consistency to another level.

A retainer fee refers to money clients pay upfront to secure not just your services, but also your availability. The client gets to “jump the line,” so to speak, and you get guaranteed income. Even though a retainer can be a win-win, it can be a challenge to convert people and businesses who come to your accounting firm for their tax returns into consistent retainer clients. Here are the top 5 ways to help them make the transition, as well as the “why” and “how” of the retainer agreement system.

The importance of recurring revenue for tax and accounting firms

Many businesses shy away from retainers because, in some ways, it can limit the income potential of the business relationship. Tax and accounting firms may reason that the client will spend more if they pay for services a la carte, one at a time.

However, regardless of how good the economy is or the prospective upside of a business relationship, the old saying holds true: “A bird in the hand is better than two in the bush.” In other words, the guaranteed business has more value than that which may be more profitable but is less than certain. With a retainer, you have “a bird in hand,” money locked in for a specific time period.

For accounting professionals, a retainer may work best if it’s paid on a monthly or annual basis, similar to a subscription. The benefit is twofold:

  • Many businesses are accustomed to subscription-style payments for everything from electricity to the internet to their website hosting, so your fee can be conveniently added as an overhead line item.
  • You get predictable, periodic income.

With recurring revenue, you’re financially insulated against slow periods and economic slumps that can put a dent in your income stream. While there are very few “sure shots” in business, a retainer is the next best thing.

How to convert tax return clients into retainer clients

Converting tax return clients into those who pay a retainer may be easier than you think, but it does involve doing business differently. You have to shift your perspective to that of the client and use that knowledge to deliver the kind of value that justifies a retainer arrangement. Here are 5 steps to make it easier.

1. Get to know the business’s tax and accounting needs

It’s important to get a deep, intimate understanding of your client’s business, so you can know what they need and provide it. You can start by asking questions such as:

  • By which percentage would you like to boost your bottom line over the next fiscal year?
  • What are your biggest financial pain points?
  • Would you be willing to review your pricing structure to discover earnings opportunities?
  • Have you performed a strategic review of your COGS (cost of goods sold) in the last few months?

These kinds of questions can serve to both open windows into how their business works and underscore the value of your services, making them a great starting point for both parties.

2. Explain the benefits of having an accountant or accounting firm on retainer

Many business owners may have no idea how much benefit they can get from having an accountant or accounting firm on retainer, and you can use that to your advantage. For example, you can show them:

  • Processes you use to evaluate their overall financial picture
  • How you discover opportunities by dissecting specific elements of their finances, such as their debt-to-income ratios or how much their debt costs
  • Ways you can systematically restructure their debt, reducing their overall obligations
  • Deliverables, such as organized, straightforward presentations, complete with graphs, charts, and in-depth yet understandable analysis
  • How meetings will be run: short, to-the-point, and simple

3. Emphasize the true value of a retainer: Added tax and accounting services

As an accountant, you know nearly every business’s operation, large or small, is filled with inefficiencies and waste — most of which can be surfaced with a relatively quick look at their books. But if the business doesn’t understand that, this is an opportunity for you to underscore your value-add. You can use resources for large accounting firms and small accounting firms to support your insights. Here are some added tax and accounting services you can highlight:

  • Ongoing evaluation of their finances to discover opportunities for boosting profit margins and their bottom line
  • Financial advice when and how they need it, within preset limits you design together
  • Financial coaching. Many clients would like to improve their understanding of the following:
    • Basic tax laws
    • Financial terms
    • Investment principles and opportunities

If you’re planning to grow your accounting practice, we offer tools and customized coaching designed to enhance your firm’s advisory services and strengthen client relationships.

4. Build the retainer agreement together

Your retainer agreement should be more than a stock form you slap down in front of your client. Rather, it’s an interactive conversation where you further highlight your value-add, as well as set expectations. Some of the things you can talk about as you draft the agreement together include:

  • The kinds of tax and accounting services you will provide and how often
  • Any additional fees for extra financial services
  • When and how communication will happen, including the times of day and days of the week you’ll be available
  • Communication blackout times, if any

It’s important to be very thorough when discussing your services. For example, if you’ll be helping them restructure their debt but won’t be providing financial education, this should be made clear upfront.

5. Gather feedback to ensure you’re delivering value to your retainer clients

Assessing your relationship with your client should be done on an ongoing basis because applying feedback and making adjustments can enhance customer satisfaction. The techniques you use to solicit feedback may vary depending on what you’re comfortable with and the nature of your relationship, but you don’t have to resort to formulaic surveys. Options to improve client communication could include:

  • Saying, “I think we did some good work together when we made that adjustment last week. But I can’t help but wonder if I could have done things better. Could you just take a few minutes and give me some feedback?”
  • Using concrete numbers suggest there may be room for improvement. For instance, you could say, “Last quarter, we were able to drop your COGS by 8%, which was awesome. I think we can do even better, but how do you feel?”
  • Asking specific, relationship-focused questions, such as, “I hope you feel I’ve communicated effectively, but I’d love to know how you think I could do better.”

Convert more tax return clients into retainer clients with Thomson Reuters

With CS Professional Suite, you can enhance your value-add as an accounting professional. With automation, enhanced financial visibility, the ability to accept data from multiple kinds of accounting software, and much more, CS Professional Suite makes it easier to provide the kinds of services clients may be willing to pay a retainer for. Learn more by connecting with us today.

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