Top Five Ways Accountants Can Use Industry Data

By Mary Ellen Biery, Research Specialist, Sageworks
 
Many accounting firms tout their "excellent customer service" as what sets them apart from competitors, but if everyone is bragging about the same thing, are they truly unique?
 
To stand out, your firm needs a clear differentiator. Industry data can provide insight and services that can distinguish your practice. Here are the top five ways accountants can use industry data to boost existing relationships and to help create new ones.
 
1. Increase "wallet share" of existing clients. Your clients currently receiving audit or tax return services (so-called compliance services) could probably benefit from advice on their business' operations and finances. Use industry data to go beyond compliance-only services and offer business advisory servicesBenchmark your clients' current performance against peers and use that information to help them develop plans for capitalizing on strengths or addressing weaknesses. How profitable are they compared with others in the industry? Are expenses high, relative to sales and to competitors? 
 
Recent research showed that client retention rates improve as the number of services received by the client increases. At the same time, another study found that two-thirds of buyers of accounting and financial services admitted they don't know about all of the services offered by sellers, yet 44 percent said they were interested in additional services.
 
Use industry data to track industry-specific key performance indicators (KPIs), such as food costs to sales for restaurant owners or subcontractor costs for construction companies, and help the client understand how these affect cash flow and profits.
 
2. Identify new business opportunities for your firm. Industry data allows you to look across industries to study performance trends and assess possible future market opportunities. You can identify fast-growing industries or industries with expanding margins (which may afford businesses more financial latitude to pay for new accounting and advisory services). Focusing on an industry niche or a small group of industries may help improve your own firm's efficiency and returns. 
 
3. Win new business. Once you've targeted a new customer, hone your industry expertise by examining industry data that shows the potential client you know his or her area and understand his or her challenges. Examine a benchmarking analysis of current clients in the same industry to identify their strengths and weaknesses and use that knowledge to build your advice library. Or pull a summary report of industry data to reduce preparation time when meeting with prospects on short notice. 
 
4. Identify new business opportunities for your clients. Imagine someone you trusted approached you and said, "Here's an attractive pool of customers that I think you'd be good at reaching." You'd be grateful, right? In the same way, your clients would probably appreciate a trusted advisor bringing market intelligence to their attention. Use industry data and your knowledge of clients to show them possible markets for their goods and services. Which industries are growing quickly in their region? Which industries have a high failure rate and should be approached with caution?
 
5. Help clients plan the business future. Use industry data to identify cost or profitability trends before they become problematic for the client. Your client may not be seeing some of the same issues others in the industry are facing with slow vendor payments or rising labor costs, but industry data can reveal them. 
 
Related articles: 
 
About the author:
Mary Ellen Biery is a research specialist at Sageworks, a financial information company that provides financial analysis and industry benchmarking solutions to accounting firms. She is a veteran financial reporter whose works have appeared in the Wall Street Journal and on Dow Jones Newswires, CNN.com, MarketWatch.com, CNBC.com, and other sites.
 

You may like these other stories...

With our recent coverage of the recent changes and complexities found in FATCA, we realized that regulations are just part of the story. Accounting professionals have to work with foreign financial professionals, and the...
Four years after the first iPad spreadsheet, users finally have a Microsoft-sanctioned solution. When I first installed Excel on my iPad, I immediately focused on its limitations, but upon reflection I see that Excel for...
Change. For some people, it can be a dirty word. Change means adjustment, re-thinking and perspective shifts—all daunting thoughts for an industry such as accounting that is based on mitigating risk and regulations...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.