Three Client Discovery Questions Turn Payroll into a $1M Annual Revenue Stream
Michael Ly leads Reconciled, a firm that provides industry-leading virtual bookkeeping, accounting, and People Advisory services for entrepreneurs across the US.
Even though Reconciled has an innovative approach to service delivery, Michael acknowledges that prior to launching People Advisory, they were significantly undervaluing their payroll services, breaking-even at best.
Read on to find out how Reconciled created a new business line focused on people operations advising, and is on-track to earn an extra $1M in annual revenue. How? By asking new clients three simple discovery questions.
People Advisory? Tell Me More.
People Advisory is a consultative service in which accountants pair their financial expertise with people operations to guide clients on building a great place to work.
By putting people at the heart of your advice, you can help your clients and their teams with advice on payroll, benefits, and people operations that they need now.
The Goal: Create a $1M a Year People Advisory Practice to Meet Client Needs
“I really believe the Reconciled sales team will get People Advisory to a $1M a year practice. And I wouldn’t be surprised if it happens by the end of this year.”
This is a bold statement from Michael, so why is he so sure of the potential of People Advisory Services?
“Our clients were asking us HR questions pre-Covid. The pandemic has just increased the need.”
As we emerge from the pandemic, we are experiencing the greatest shift the workforce has seen for several generations and clients need people-oriented support more than ever before. The problem was, Reconciled’s business model wasn’t keeping up with the opportunity, and they were significantly undervaluing their payroll services, breaking-even at best.
Payroll was a low-margin, task-based service at Reconciled. They offered it as part of bookkeeping services, and recommended Gusto as the preferred payroll partner. Payroll was described in a very generic way in proposals and even though the firm provided a lot of value to clients, they weren’t articulating this. And they weren’t fully capturing the value: money was being left on the table.
The Response: Reposition Payroll
Michael was keen to reposition Reconciled from a firm that could support clients with their bookkeeping and payroll compliance to one that could advise clients around their most valuable resource—their people—and help with growing their business.
To acquire new clients, Reconciled employs a sales team that calls small businesses who might be a good fit. This means getting the initial sales call right is paramount. So how could Reconciled pitch the firm’s People Advisory offering without lengthening that initial call?
Michael and his team added three short-but-sweet discovery questions to the sales call that dug deeper into clients’ people-related needs.
1. How many employees do you currently have?
2. Where do you see your people count in the next 12–24 months?
If the client has plans to grow, ask…
3. Do you have anyone advising you on that growth?
A simple “Yes” or “No”. Almost all clients answer “No” because small businesses tend not to have HR advisors. This means when Reconciled follows up with prospective clients, they can say, “You said you have growth plans but no advisor; we have a People Advisory Package to present to you.”
The Approach: Staff, Package, Price, and Launch the New Services
Gusto’s People Advisory Accelerator Program gave Michael the frameworks, tools, and confidence the firm needed to:
- Identify key people to staff People Advisory services
- Define People Advisory service packages
- Price the service
- And then launch it
Hear More from Michael
Getting Key People Involved
To launch a People Advisory practice, Michael understood that assembling the right team was the most important thing. Specifically, the team needed client-management and customer-facing skills. Michael got Sean Alberti, New Business Acquisition Manager at Reconciled, involved from the outset. Michael also called on Laura Pillsbury, CEO at Reconciled’s partner HR business Humnly. Recognizing his clients’ need for excellent HR guidance, Michael co-founded Humnly with Laura to provide easily accessible HR solutions for small business owners. Laura and Sean worked together to define the tactics behind rolling out a People Advisory practice, while Michael focused on the vision.
Defining the Packages
Accelerator provides a template of People Advisory Service Packages across three tiers of service, each including a list of suggested offerings. Sean used these templates to inventory which payroll-related services Reconciled was already providing, and which they were not. “We really benefited from seeing it all listed out. It showed us the amount of value clients are getting from us, and what we’re giving away.”
The team used this inventory to help decide which items of the predefined Packages they would offer immediately and what they could offer in future. They also used the inventory to work out which services Reconciled would deliver and which would be handled by Humnly.
Pricing the Services
Before Accelerator, Michael says he was significantly under-pricing payroll services. “We weren’t taking into account the amount of effort, time and complexity involved.” Payroll services were priced exclusively on the software costs of running payroll: how many employees did the client have and how often did they want Reconciled to administer payroll using the software?
Now, Reconciled’s tiered Packages start at $1,000 per month, with the top end being $5,000 to $10,000 per month.
Getting the Word Out to Clients
“The new discovery questions are working well, and we haven’t received any real objections. If anything, clients are excited and want to learn more.”
The team has tailored the predefined services Packages provided in Accelerator Program to fit with Reconciled’s overall offering. They have used Practice Ignition’s People Advisory proposal and engagement letter and again, customized them to their needs.
Using the Practice Ignition templates is a sure-fire way to ensure both the client and the firm are clear on the deliverables. It puts the entire engagement on a strong foundation and makes a great first impression.
The Outcome: Closing the First People Advisory Deal in Just a Few Weeks
Reconciled’s first People Advisory client was a big win and they got there in a matter of weeks after taking Accelerator.
Accelerator has helped the team standardize their payroll deliverables and identify where they can provide more value, such as analyzing People Planning KPIs using the Gusto dashboard. The program has also given them a template to build their People Advisory webpage: a cornerstone of articulating the value Reconciled provides.
“Before Accelerator, we were providing a lot of line items, but we weren’t articulating that to ourselves or to our clients. Now, we can raise our prices because we can clearly describe what we’re doing and the value we’re providing to clients.”
In short, it’s given them a new vocabulary, which means they can position Reconciled as a cut above the competition. That’s why Michael believes he’ll have a $1m People Advisory practice by the end of the year.
The Time is Now
In a time of heightened awareness around physical, emotional, and mental wellbeing, small business employers need the help of a People Advisor to create a modern workplace that attracts and retains high performing talent. Through reimagining your payroll practice you have the opportunity to meet the needs of clients head-on while also realizing important opportunities for your own team and firm.
Gusto’s People Advisory Accelerator Program provides the training and tools needed for firm leaders to develop People Advisory packages, and to staff, price, and sell them so that you can drive recurring revenue at your firm. In addition to teaching best practices, the program provides 25+ turnkey tools and templates so that you can implement what you’re learning, immediately. You’ll even earn 4 CPE credits in the process.
You and your team can build your foundation on people operations best practices through becoming People Advisor Certified, and earn 5 CPE credits. Learning the fundamentals of payroll, benefits, and people operations provides the knowledge and confidence to deliver a consistently high-value service.
By launching your People Advisory practice you’ll join a community of 2,000+ Certified People Advisors who are a part of the positive change the accounting profession and economy needs now.