HR Block 2005 Annual Report Download - page 12

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H&R Block
from our tax loan products, such as Refund
Anticipation Checks and Refund Anticipation
Loans, and our digital tax products. At the same
time, a weaker than expected finish to the tax season,
increases in stock-based and other compensation
expenses, as well as nonrecurring, one-time items
associated with our Peace of Mind product impacted
our margins. We have a keen internal focus on
managing controllable expenses and expect to
absorb the cost of future investments within our
current operating margins.
How do you differentiate H&R Block in an
increasingly competitive environment?
We differentiate H&R Block by being our
clients’ advocate, helping them with both their tax
and financial situations. We work on behalf of our
clients to ensure they receive every tax credit and
benefit they are entitled to. We help them take
action to improve their tax and financial situation
by giving each client a personalized H&R Block
Advantage Report that offers specific information
addressing their unique situation. We show our
clients how to take advantage of the many government
benefits programs available, and in some cases, we
also distribute the program applications.
H&R Block helps our clients manage the financial
issues in their lives by providing useful products
and services that help them reach their goals. For
example, we provide a convenient and easy savings
tool with our Express IRA product. Clients can use
part or all of their tax refund to open an IRA right
in our office. We help our clients develop a long-term
approach to their financial security that can fund
their children’s education or provide a secure
retirement. And should our tax clients be interested
in buying a home or refinancing their current home,
we can help them obtain a mortgage that best fits
their needs, while also helping them take advantage
of the tax benefits that home ownership offers.
Do tax clients believe tax products and services
are appropriately priced?
It’s important that our clients continue to see
a strong linkage between price and value for our
tax products and services. We believe we are
increasing value for our clients by enhancing the
advice and service we provide. In addition, we began
carefully reviewing our pricing strategy in 2004 to
ensure that our prices were appropriately aligned
with the complexity of the client’s tax situation and
the value the client received. This review resulted in
a mixture of price increases and decreases for our
tax products and services.
Because we value our clients’ opinions and want
to maintain a superior price/value proposition, we
conducted two surveys this year and last, asking
clients, “Do you feel that you received a good value
for the price you paid?” The clients giving us the
highest rating possible increased 7.7 percent in
2004 and 11.9 percent in 2005, clearly indicating
that our clients not only perceive a high price-to-
value linkage, but believe they are increasingly
receiving more value for their money.
How do your online and software products fit
into the larger, retail tax strategy?
By offering digital tax products, we extend the
H&R Block brand to those taxpayers who prefer to
do their own returns. Our blended channel approach
enables these clients, whether using our online or
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