H&R Block needs sharper marketing, improved client retention and top-notch bank products for the upcoming season, according to the company's new CEO Alan Bennett. Bennett made his points in a letter that was mailed to shareholders this month. Shareholders also received a letter from chairman Richard Breeden, whose strategy led Thomas Bloch, son of the company's founder, to resign from the board of directors and issue a letter critical of the company, particularly its allegedly high fees. Breeden wrote that fee increases are largely driven by tax code complexity.
Concerning marketing, Bennett wrote, "We must leverage our strong brand with more focused and more customer compelling marketing to drive increased traffic in our retail offices." Block, he said, also needs to improve service levels to keep more customers. In terms of refund anticipation loans, the letter said Block has the opportunity to recapture market share in the first half of tax season because competitors have reduced access to loan funding, a problem Block does not face.
Marketing in 2010 had an impact, but ultimately not the major one desired in the area of digital tax preparation products. "Our marketing efforts this past tax season led to a 25-percent increase in our website visits, but we did not convert this growth into clients," Bennett wrote. He said the company is redesigning the site to make navigation easier and improve conversion rates.
Without directly responding to Bloch's criticism of the company's retail fees as being too high, Breeden's letter outlined their history and said the net average charge had increased by 71 percent since 2001. Breeden essentially rejected Bloch's point with "Growth in the NAC is a combination of increases in H&R Block's charges, and increasing complexity of returns as a result of tax code changes. There is almost always a good deal of the latter, so price increases are not solely the actions of the Company."
And he addressed turnover, without directly mentioning this summer's departure of CEO Russ Smyth and the company's CFO and chief legal counsel shortly below that. "However, personnel changes occur normally, and perhaps with even greater frequency in companies that are not performing at their best," the chairman commented.
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
