H&R Block is giving $1,000 to 1,000 of its clients every day. Jackson-Hewitt is paying its clients with a $50 American Express card. Liberty Tax offers a $50 cash payment to use its services, along with cash incentives for referring others to them and a “Refund Advance” of up to $750.

How does a small, independent tax preparer compete with these cash payments?  The short answer is that you can’t.  Not in the form of competing cash offers, at least. Few small firms can afford to give up that much revenue each year.

Ultimately, these cash payments must come from the clients themselves in the form of higher fees, a fact that many taxpayers do not understand or even care about.  Nor is there an easy way to present that message to the clients; they want cash, and they want it quickly.

Instead, the key to competing against cash giveaways is to do more of what small companies do well – exemplary service to a client base that you already know well.  Here are 10 ways to start:

• Understand your niche, and market to it. Every small tax preparation firm is a niche marketer.  By that, we mean that the client base for your services relies on a set of unique characteristics.  They may be located in a single community or neighborhood.  They may have a specific type of source income, such as small business owners, investors, rental property owners or contractors..  But they traditionally use your service rather than a large franchiser.  By understanding who they are, you can market to them more effectively.

• Get your Google on.  People use search engines to make buying decisions, and tax preparation is no exception.  These services, however – Google, Bing, Yahoo, and others – have the same drawback in that they can contain erroneous or outdated information.  Check the major search engines to make sure your service is correctly listed. 

• Connect with locals using social media. One of the things that large national chains might struggle with at the local level, and small firms can do really well, is effective use of Facebook, Twitter, Pinterest and YouTube.  Use these services to maintain a better and more personal relationship with current and prospective clients.  Remember that clients value low costs and higher refunds, but they value competence and connectedness even more.

• Use your location to your advantage.  The data is clear: People tend to use a tax service near where they live, and usually within five miles.  Marketing efforts should focus primarily on this geographic area, rather than the universe as a whole.
• Blog locally. The large national franchises have blogs, but these are general discussions of national tax issues out of necessity.  Remember that people read a large daily newspaper (or online news site) and also a community newspaper.  The reason is that people enjoy reading about people they know, and issues of local interest.  Keep the focus of your blog local.

• Study the competition.  Though they may carry the same brand, no two franchises are identical – each has unique advantages and disadvantages.  The better you know these for each of your competitors, the more effectively you can compete with them. 

• Stay involved.  As a local business yourself, pay attention to what's coming up on the local events calendar and join up with civic-minded organizations that are targeting the same people who might like to buy your services. Just because this is tax season is no excuse for dropping out of the public eye.  Choose the events carefully, but make your presence known.

• Hold Events.  In addition to community events, consider holding events of your own.  First, poll local restaurants and retail stores to see who is offering “tax filing incentives” such as a free cup of coffee – and co-sponsor the event.  Hold events such as free hot dogs on a “Tax Prep Saturday,” or hire a local radio station to do a remote broadcast from your location.  Want ideas for how to do it?  Ask the marketing directors of local car dealerships.

• State your differences as positives. Negative campaigns seldom work outside of politics, and not always then.  Don't bash the national chains or other competitors, either in front of your staff or with clients. Rather, have a clear understanding of the differences between their services and yours – better training, a local commitment, a better understanding of the clients’ needs – and state your strengths in positive terms.

• Use size to your advantage. In most cases, everything you see on the shelves of a big box or chain store, or being sold or offered by a franchise, is there because a national buyer or category manager approved it. You, however, can start selling a new item at a moment's notice. By specializing in the niche items that helped you build your enterprise, you'll continue to drive business in your direction.

It is possible to compete directly with the national tax franchise chains, not by offering lower prices or rebates but by connecting with your local market; harnessing your connections within the community; building a reputation of competence, fairness, and honesty; and implementing low-cost marketing programs centered on search engines, blogs, and social media.