Being short-sighted can cost you a client and your reputation
My landlord and I were both having a glass of wine on my back deck a couple of weeks ago. It was a BEAUTIFUL, sunny day in Portland and he (my landlord, who is fair-skinned) was having challenges keeping the sun out of his eyes because the deck umbrella had a mind of its own. It went where IT wanted to go, regardless of our best efforts.
I, for my part, am a Sun Worshiper, so I thoroughly enjoyed every minute of the sun’s rays….especially given the LONG winter we’ve had here in the Pacific Northwest.
We were talking about taxes and how my parter and I were surprised, having recently moved to Portland, that income tax is assessed on ALL income, no matter where in the world it is earned. For example, both my partner and I have employment outside the State of Oregon but because we live here, we must pay taxes on all of our income.
This was not a small surprise, thankyouverymuch.
The conversation led to my landlord (his name is Michael) relating to me a story that reveals how short-sighted entrepreneurs can be, rather than looking at the lifetime value of a client.
He was looking for an accountant. My next-door neighbor recommended one in Lake Oswego, an affluent suburb of Portland.
Michael secured an initial appointment with the accountant, who, for an hour-and-a-half counseled him about how high the taxes were in Portland and that the first thing Michael needed to do was move himself and his business out of the City of Portland.
It was a lot to digest, so after the consultation he went home.
Several days later, Michael received a bill in the mail for $250. Shocked, he called the accountant’s office to ask why he’d been charged for a free consultation. There must be some mistake.
“Only the first 1/2 hour is free. After 30 minutes have elapsed, you are billed at our regular rate.”
“What? Why wasn’t I informed? Besides, it was you who kept me that long in the office.”
Round and round they went, and — completely disgusted and fed up — my landlord eventually sent them the $250.
What an unfortunate experience. Caught up with demanding this one-time $250, it obviously didn’t cross the accountant’s mind to calculate the lifetime value of this client. Additionally, didn’t he realize this was a referral? Landing him as a client was practically in the bag!
I’m not saying that a professional should give away their expertise. In fact, some folks are of the opinion that you should never (or very rarely, at most) give free consultations.
But, clearly mistake #1 was lack of clarity about what was free and what carried a fee. Have you similarly run into problems because you were wishy-washy, unclear, or didn’t even know your own policies with regard to fee versus free?
Even if in this instance it had been Michael who had been mistaken, this accountant lost a potential client-for-life (including any referrals my landlord might’ve sent him) by failing to look at the larger picture. By making Michael wrong and subsequently losing his business, the accountant made mistake #2.
Not only will my landlord think twice about listening to my neighbor in terms of who she refers, but she herself will probably be reluctant to send referrals to this accountant again.
Oops. Mistake #3: tarnishing the reputation of the source of the referral.
Had Michael actually told me the name of this accountant (as most people who have bad experiences with service providers usually do), even more damage would have resulted from his short-sighted Ego-driven behavior.
As it happened, Michael merely cautioned: “Don’t do your taxes with anyone in Lake Oswego!”
Where in your business have you inadvertently made similar short-sighted mistakes?
When you choose to be concerned about the dollars and not the pennies, you’ll naturally seek to honor and add value to your referral partners, to your clients, and to your potential clients.
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flickr image by Chris Halderman, Attribution No-Derivs 2.0 Generic Creative Commons license
Great article! But that shouldn’t necessarily come as surprise to you, as almost all federal benefit programs and outside income are taxed in most states. In fact, i think you may be hard pressed to find a state in which outside income is not taxed. But most states don’t have income taxes at all, so the issue is uncommon to them.
Hi Morgan, I won’t be surprised again! Actually, I think the surprise was that I didn’t know and was caught unaware of Oregon tax law. Thanks much for taking the time to comment.