By Lisa Rhatigan, Vice President Operations and Consulting, The Whetstone Group, Inc.
It happens in accounting firms everywhere â partners tell you they want a positive substantiated ROI from their marketing efforts, but then allocate the majority of their marketing budgets to activities that can't be measured. From memberships dues and advertisements to event sponsorships and the traditional catchall category âclient meals and entertainment,â marketing plans everywhere are full of activities that, while valuable, can rarely be substantiated. Infusing measurable activities into your plan and achieving a balance is the key.
We all know that some non-measurable marketing activity is necessary. Participating in brand-building programs and community events helps solidify relationships in your marketplace. In fact, without such investments, your measurable activities would rarely be successful. (Clients won't refer you if they don't feel valued, prospects won't attend your seminar if they've never heard of you, etc.) So how do you achieve the balance between measurable and non-measurable activities to establish a comprehensive marketing program? It's easier than you think.
When incorporated into an integrated marketing plan and executed correctly, direct marketing is an effective activity that will not only build long-term name recognition and brand, but also provide that positive, measurable ROI you're looking for. But just mailing a few letters isn't enough. To be genuinely effective, your direct marketing effort has to be part of a comprehensive approach with a well-defined target market, a mailing series of compelling marketing messages, phone follow-up on a regular basis and face-to-face sales calls with interested prospects. Only then will you realize the full benefits direct marketing can offer.
Determining the ROI from your direct marketing campaign is an easy calculation. You simply subtract the total costs of your campaign (list purchase and enhancement, printing and postage, telephone lead generation costs, etc.) from the total profits of the work generated as a result of your effort. The ROI is this number as a percentage of the total costs (or investment). The only tricky part is determining just how much work was actually generated from each specific campaign.
To do this, you not only need the discipline to consistently track your sales activity over time, but also the patience to realize just how long of a time that can be. As you already know, sales cycles aren't exactly quick in the CPA world and you may find yourself tracking activity up to a year after your campaign began. Balancing the benefit of including every sale with the ability to credibly tie it back to a specific campaign is the secret.
Over the years, I have seen several successful direct marketing campaigns with ROI's well over 100%. Here's an example of one such campaign a Midwest firm implemented just a few years ago:
The firm began their effort by purchasing a list of 500 manufacturers in their geographic area with annual revenues in a pre-defined target range. They then went through a simple enhancement process of calling each company to update their contact information and obtain the name of the executive responsible for financial and tax decisions. A series of mail pieces were then sent to each contact regarding the firm's experience and the benefit they could bring to manufacturers with the final piece detailing a specific tax service available for their industry.
After the final piece was mailed, follow-up phone calls were made to set appointments for the firm's full-time business development professional to meet with interested prospects. (Over 30 appointments were scheduled!) To track each appointment and its progress, a simple spreadsheet was created with fields to record what services were discussed, budget considerations, necessary next steps, etc. The business development professional then continued to work the sales cycle and even involved other tax consultants and firm members when appropriate. The result? After just eight months, the firm realized over $100,00 in revenue with another $100,000 in pending proposals!
Total cost for the campaign (list purchase and enhancement, mailing and phone follow-up) was about $13,500. Overall, the firm estimated a rough 30% margin on sold work and an ROI of over 120%. And that doesn't even factor in the lifetime value of newly acquired clients, the pending proposals, the re-usable list or the long-term branding value of the marketing message in the direct mail pieces!
Making it Work for You
Obviously, the above campaign is one of the most successful examples of direct marketing. And that success can be attributed to two factors: effective implementation (targeted market, good list, compelling message, etc.) and, more importantly, plan integration. The firm implemented their campaign as part of an integrated marketing plan that included a balance of brand and name recognition activities with measurable, proactive tactics like direct marketing.
Building your firm and achieving aggressive growth goals is hardly out of reach. And it doesn't require forfeiting those brand-building activities you've come to depend on. The secret is achieving the right balance of non-measurable activities with activities that provide more quantifiable results. And direct marketing is on the top of the list. Not only will you know immediately what messages your prospects are responding to, but you'll also have specific results that substantiate that response. And that's a solution any CPA will love!
The Whetstone Group helps CPA firms develop and implement strategic growth plans.