Why do some accounting firms grow faster and have higher profitability than others? Do they know something that the rest of us don’t?
Every year, my firm studies more than a thousand professional services firms to identify emerging marketing trends and to understand what drives the growth of the fastest-growing cohort. And now, we’ve broken out accounting firm performance for special study (about 30% of this year’s participants were accounting firms).
In this post, I’d like to share some of our data and insights into the fastest-growing accounting firms—and turn them into a few lessons you can apply to your firm.
Big Picture View of the Accounting Industry
When it comes to investing in marketing, the accounting industry is pretty conservative. In fact, of the five major segments we studied, Accounting & Finance came in fourth, just above the even less adventurous Legal industry.
The modern marketplace brings modern challenges. Here are the top five challenges private and public accounting firms are facing today:
This year’s top challenge—finding top talent is exacerbated by the current tight labor market, but it is a perennial problem in any economy. The other four challenges are interrelated, with competition, automation and commoditization depressing the fees firms can charge for many common accounting services.
How do buyers of accounting services find a new provider? In today’s marketplace, they increasingly go online. Below are two charts: how buyers like to research their business challenges (left) and how they evaluate service providers (right):
Meet the High-Growth Accounting Firms
The high-growth firms in our study achieved a 20% or greater compound annual revenue growth rate over a period of at least 3 years. In our sample, 29.7% of firms met this standard. The rest experienced average or no growth.
This elite group of high-growth firms grew nearly five times faster than their average growth peers.
What Makes High-Growth Accounting Firms Successful?
One of the best ways to understand high-growth firms and uncover their secrets is to compare them to their no-growth peers—which is exactly what we did. Let’s take a look at five major findings from our research that makes high-growth firms different.
1. High-growth firms invest more in marketing
Fast-growing firms do not just invest in accounting professionals. On average, high-growth firms budget more for marketing than no-growth firms. In fact, they are seven times more likely to be in the cohort that spends the most on marketing strategies and team members. In recent years, we have noticed an increasing correlation between marketing spend and high performance in new business.
2. Differentiation is these firms’ top marketing priority
We asked firms about their most important marketing priorities, and the high-growth group identified differentiating their firm as their top concern. Given the industry’s increasing competition and drift toward commoditization, this priority makes a lot of sense in receiving referrals and securing new clients. A successful firm is one that finds a way to distance itself from the crowd by doing something (or several things) differently.
3. They focus on their websites
The most common way firms do this is by specializing in a target industry or, less commonly, a service offering. But there are many other ways firms can differentiate themselves, too, from focusing on a geographic area to deploying a novel business model.
Our study showed that the best performing firms were far more likely to invest in modernizing their website and search engine optimization (SEO). These upgrades can generate more high-quality online leads—the kind that come in 24 hours a day from a wide range of locales and require no active outreach. By focusing on their website and SEO, these high-growth accounting firms can ensure they are publicizing their latest bookkeeping and advisory services, tax compliance, competitive pricing, newest managing partner, and more.
4. Subject matter experts at high-growth firms tend to be more highly skilled
While the differences below may not look dramatic, in all but two of this chart’s categories, subject matter experts at high-growth firms outscore those at no-growth firms. And in the two exceptions (putting together slide presentations and outreach to organizations and media), the differences are relatively small.
So what does this really mean? It means that experts at high-growth firms are more than CPA-certified, but instead, are better equipped to share their knowledge with others. And when you share your knowledge widely, you can more easily build a loyal client base who trust your firm’s expertise.
5. High-growth firms create content that demonstrates expertise
How do high-growth firms share their knowledge? By creating valuable content. And high-growth firms are just plain better at it. Here’s the data:
The best performing firms invest more time and money in webinars, original research, blogging and developing gated content (content behind a form that’s used to capture leads). Where are you investing your marketing capital?
Some Advice to Become a Fast-Growing Accounting/CPA Firm
Research studies can be long on minutia and short on practical application. To buck that tradition, I’d like to offer a few practical takeaways from our research—ideas you can bring back to your team and start acting upon today.
There is a clear correlation between marketing spend and performance. If your small business usually invests very little in marketing, consider budgeting a bit more in the future. And don’t spend it all on traditional marketing activities like sponsorships or print advertising. Digital is where the present and future lie. Put at least some of your marketing dollars toward promoting your expertise. Be sure to market your accounting practice all year long and not just during tax season to be top of mind for when your services are needed.
If your firm is one of the thousands that look and behave a little different from your competitors, consider working on this weakness. Differentiation is a critical key to breaking out of the crowd and building a more reputable, visible brand.
1. Make improving your website a high priority. Today, a firm’s website is (or should be) its most important marketing tool. If your website isn’t generating a steady stream of leads, you are missing a huge opportunity to grow like a leader.
2. Invest in your team’s business development and marketing skills. The better prepared your professionals are to write and speak about their areas of expertise, the faster your firm will build trust with new audiences. And the faster your firm will grow.
3. Create valuable content that features your expertise. Whether your firm’s business owners, CFO, or accounting professional delivers a speech, participates in a podcast, produces a webinar or publishes a blog post on LinkedIn, use every opportunity to demonstrate your firm’s knowledge and professional acumen. This is how people find, learn to trust and ultimately hire experts in the modern marketplace—in other words, firms like yours. Experts at your firm can and should position themselves as thought leaders, even if they are otherwise ordinary people.
How do you turn your startup from an average or below-average performer into a high-growth standout? It’s not as difficult as it might seem. You need just two things: 1) the will to succeed, and 2) the knowledge to make it happen. I’ve given you the secrets to number 2. Number 1 is up to you.
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