7 Ways to Build a Better CPA Marketing Budgetby
While the COVID-19 pandemic hit some industries hard, accounting was generally positively affected. Many professionals even managed to grow their business, despite the setbacks. Here, Lee Frederiksen of Hinge Marketing offers some research findings on how those accountants were able to thrive and discusses setting up a marketing budget.
COVID-19 shook the global marketplace. Overnight, businesses large and small had to find their footing in a radically adjusted world — with no clear roadmap for success. While some firms struggled, others found ways to thrive.
As priorities shifted, how we communicated with clients and prospects changed as well. Now, as we adjust to our new normal, one thing is clear. Marketing will never look the same.
This is why, for the fifth time, the Association of Accounting Marketing (AAM) joined forces with Hinge on the industry’s most comprehensive study of CPA marketing budgets. The 2021-2022 AAM Marketing Budget Benchmark Study outlines industry benchmarks in marketing spending and includes a special section on the most successful techniques used by the fastest-growing accounting firms.
This study allows marketers to see the ways the past year changed the industry and how to better prepare for the future. Much can be learned from the strategies that succeeded—and those that failed.
The study sampled 140 CPA firms with over $6.7 billion in combined revenue and more than 23,000 employees. Outlined below are seven key research findings, which can be read in further detail in the Executive Summary. The full report is available on the AAM website here.
1. Many firms were positively impacted by the COVID-19 pandemic
The move to a socially distanced world affected businesses in a variety of ways. While one-third of firms reported a negative impact on business development, a significant portion (45.3 percent) benefitted from the situation.
In addition to changing marketing techniques, these firms adjusted their services to their clients’ evolving needs and priorities. (Payroll Protection Plan support was a popular addition.) They also quickly adapted to remote work and adopted new technologies across the board.
These firms grew four times as fast as an average-growth firm.
The loss of in-person meetings and events, however, affected business development and company management.
2. 85 percent of firms experimented with new marketing and business development strategies in 2020
Creativity and experimentation paid off for many firms. Over two-thirds of firms (68.6 percent) reported their initiatives were somewhat or highly successful.
The reason? These firms quickly pivoted by offering clients new services and shifted to digital marketing channels and virtual events. Innovation flourished.
The complete list of successful strategies is available in the full report.
3. Marketing budgets surged as firms adjusted to their new marketplace reality
As accounting firms became more innovative, they also spent more.
Over the past two years, the average marketing spend doubled from 1.5 percent to 3.0 percent of firm revenue. (This figure included staff compensation and was impacted by firm size and the nature of services offered. See complete study). Although spending grew, on average, so did top-line revenue by an impressive 10 percent.
4. High-growth firms outpaced their peers by a wide margin
This study focuses on the fastest-growing firms and their spending behavior, which makes it helpful to firms looking to drive revenue. We define High-growth firms as those that achieve an average annual growth rate in roughly the top 25 percent of participating firms.
In this year’s study, we observe an astonishing 31.9 percent growth rate for the fastest-growing firms.
5. High-growth firms invest more in marketing resources
High-growth firms invest more in recruiting and retaining marketing staff. The result? The ratio of marketing staff to all employees is much higher.
High-growth firmshave one marketing staff person for every 26 employees. Slower-growing firms have approximately 45 employees for every one marketing person.
This gives high-growth firms an advantage when it comes to implementing complex marketing programs. It gives marketers the time and resources to study which strategies outperform others and pivot to more creative solutions.
6. High-growth firms dedicate a more significant portion of their budgets to digital techniques
When we break down the marketing budgets, a clear pattern forms. Marketing firms are spending more on digital strategies to reach clients and drive growth.
High-growth firms invest 42.9 percent of their resources into digital techniques, with average-growth firms devoting 32.7 percent of their resources to digital.
7. High-growth firms are turning to digital strategies versus traditional marketing techniques
For years, marketing teams have found themselves at a crossroads. Was it time to move away from traditional marketing techniques, like print advertising and direct mail, in favor of digital marketing? COVID gave them the space to explore.
Fast-growing firms invest more resources in digital channels, including pay-per-click advertising, social media, and email marketing. At the same time, they are significantly reducing spending on traditional techniques that no longer bring a high return on investment.
To make this shift possible, firms invested heavily in outside resources to supplement internal staff. They also spent heavily in education and training to build new sets of creative and technical skills.
This is not to say that traditional techniques should be abandoned. However, the past year has shown us that they should no longer be the star in your marketing efforts.
Change is in the air—not only in how we live and work but also in how businesses engage with their clients and prospects.
In a time of great adversity, two out of three accounting firms were able to adapt and thrive. They embraced the limitations placed on them with creativity, and innovation flourished.
These firms responded quickly to their clients’ needs, offering solutions like Payroll Protection Plan support. Meanwhile, marketing teams pivoted to a digital-first model, investing resources in their staff and new channels.
One-third of accounting firms did not fare so well. This study can be a roadmap they can follow for growth and profitability. This data provides a similar blueprint to achieve exceptional financial performance to the three-quarters of firms that attained average or below-average growth.
Every firm can emerge from this experience stronger and wiser than before. This study provides a clear path forward.
Lee W. Frederiksen, PhD, is managing partner at Hinge, a marketing firm that specializes in branding and marketing for professional services. Hinge conducts groundbreaking research into high-growth firms and offers a complete suite of services for firms that want to...