10 Questions to Improve Growth & Profitability
Do you know the magic word that unlocks the secret to greater growth and profitability for your accounting firm? It’s “research.” Our recent comprehensive professional services study on service buyers and sellers and confirmed that the single most important business tool shared by all high growth accounting firms is research.
All the top-performing accounting practices conduct frequent research on a wide range of topics including target audience, market, brand, and client satisfaction, to name a few. Out of the dozen or so research categories, a handful of topics produce the most high-impact insights. For this blog post we’ve focused on those particular areas of inquiry, highlighting the ten top research questions whose answers can drive faster, more significant growth and profitability for your firm:
1. Why did your top clients choose you? If you want to sign more highly desirable prospects, find out what it is about your firm that attracts the best clients currently on your list.
2. What do your top clients not want from an accounting firm? Our research shows that firms that do not conduct regular research often misunderstand prospects’ priorities. What they think is important to potential clients can be very different from reality. Our study revealed that the biggest concern among service buyers was an accounting firm that overpromised and underdelivered, followed by incompatible values that made a firm ill-suited to the client.
3. Who’s your actual competition? Who you identify as your competitors may be quite different from the firms that actually come to mind for your clients. In fact, our research has found that there is only about a 25 percent overlap in lists. This is often due to differing opinions about what qualifies as competitive factors. For example, your firm may pride itself on your expertise in regulatory compliance issues, but your best clients actually use you more for tax return preparation. So while this may cause you to consider all other firms specializing in federal tax regulations as your competitors, your clients see all the other tax preparation practices as potential accounting service providers. How can you compete and win more clients if you don’t know who you’re actually competing against and why?
4. What keeps prospects and clients up at night? Understanding the biggest challenges potential clients face is key to winning their business. If the “medicine” you’re selling doesn’t get rid of the “pain” your audience is experiencing, they’ll go elsewhere for a cure. For example, if your marketing strategy is to sell more accounts receivable/payable services but your best prospects and existing clients are focused on streamlining payroll expenses you’re missing out on a great opportunity to expand your services and win more business. Even worse, you might lose a client to a provider that establishes their expertise on streamlining payroll.
5. What proven benefit does your firm provide? Once again, reality often differs from opinion. You may think your clients benefit most from some particular service or expertise your firm provides when in fact they actually value something entirely different. For example, some clients may have initially tapped your firm for its tax expertise, but once they started working with you, they ended up appreciating your month-end closing support much more.
6. Where are market trends and preferences headed? Frequent market surveys and analyses can help you spot emerging trends and challenges so that your firm can be prepared to take advantage of opportunities when they appear. Instead of guessing and “going with your gut”, use research and data to drive decisions and help you time service expansions, new hires, and budget boosts to build your business.
7. How does the marketplace view your brand? Your brand value is one of the biggest assets your firm has – so just how strong is your brand? What are you known and respected for? How visible are you in the market? How well your brand works for you can determine a number of things such as how much you need to spend on marketing, the need to take any corrective actions, and your recruiting strategy, to name a few. Understanding your brand’s strengths and weaknesses can help you understand why you are getting traction in one segment and not another.
8. What marketing strategy is most effective for your prime target audience? The only way to be truly cost-effective with your marketing is to understand how, where, and when your best prospects like to receive information. Research can reveal the channels preferred by potential clients who are looking for service providers with the help of search engines, social media, traditional advertising, and referrals.
9. How should we set pricing? Pricing, of course, is a key determining factor in profitability, but our research reveals that accounting overestimate its importance to prospects. Fear of overpaying actually ranks fourth out of the top five client concerns.
10. What do your current clients actually think about your firm? Some accounting firms might balk at asking this question, fearing the answers, but it can provide insight into what you’re doing right as well as wrong. Asking the tough questions can help you fine tune your overall business strategy. So go ahead and find out what your clients would change about your firm, how willing they are to refer you to others, and how long they might realistically stick around. Because questions like this can be awkward to ask directly, you may find it more productive and revealing to hire a third-party research company to survey current clients.
The questions presented here are just a sampling of the queries you should be making on a regular basis to obtain the vital information needed to successfully chart a course to greater growth and profitability. Without proper research, you’re just guessing, and as a smart accounting professional you want research and data to drive your business, not hunches.