Does Your Business Model Still Serve You – and Your Clients – Well?
The effects of the COVID-19 pandemic have rippled across every industry, including accounting. To stay in business, it's crucial to ensure your firm is evolving so it can continue to meet the changing needs of its clients. Hinge Marketing's Lee Frederiksen provides some insights into pricing.
As a society, we are still taking the full measure of how the COVID-19 pandemic has affected daily life, the economy and how we do business. The virus’s deep and widespread impact has shone a spotlight on the many gaps and weaknesses in our healthcare system as well as our retail, commercial and industrial infrastructures.
As a result, virtually every business in every industry is closely examining how they operate and where their money is going. It’s no surprise, then, that accounting firm clients are looking to get more for their money from their service providers – more value, more insight and more service model options tailored to their specific business needs. COVID-19 is upping the ante for accounting firms to become more creative and flexible in how they serve their clients -- to help them not only survive, but thrive and grow into new opportunities.
In part to help gauge the pandemic’s impact on the accounting profession, Hinge Research Institute (HRI) partnered with CPA.com and Bill.com to survey more than 650 accountants and business buyers to identify benchmarks and emerging trends. The goal was to capture the current state of the profession and to gain insight into how accounting firms and their clients are responding and evolving to meet the new economic reality. We took a close look at discrepancies in value perceptions between firms and buyers, and gathered information to pinpoint key ongoing challenges.
The survey results provided three key insights that can help accounting firms recalibrate their service models to successfully adapt to the new economic environment:
1. Strategic advisory services present a significant revenue opportunity
Survey results suggest that accounting firms may be able to increase monthly client revenues by up to 50 percent by offering advisory services.
While some accounting firms have, in fact, been offering higher-order business advice beyond traditional accounting services, many have not structured those offerings in a meaningful manner that would enable them to successfully capture the revenue associated with those enhanced services.
Almost 65 percent of the survey’s service buyers indicated a need for help with strategies for revenue growth and business modeling. Other key strategic advisory areas include:
- Risk management
- Advanced Key Performance Indicator (KPI) reporting
There is no better time than right now to augment and package in-demand advisory capabilities and present them to your clients, especially those that have been hit hard by the pandemic. Buyers in need of strategic assistance indicated they expect to pay 50 percent more for an accounting service bundle that included both strategic advisory and consulting services. And, they are willing to pay more each month for it.
2. Buyers have clear priorities for new services
Substantial growth opportunities exist for accounting firms able to offer services that their clients now require in response to the pandemic.
This includes services that clients may previously have handled internally but no longer have the resources for due to downsizing and are looking to outsource. Services that survey respondents identified as high-value for outsourcing include:
- Accounts payable/bill pay
- Data analytics and technology services
- Forensic accounting
Among survey respondents, only one-third of the firms currently provide accounts payable/bill pay services. Only 14 percent provide data analytics and technology services, which can help them automate repetitive manual processes and gain better insight into their operational practices and finances. A mere 8 percent of firms indicated they offer forensic accounting services.
3. Value pricing can improve your bottom line and client satisfaction
In these uncertain times, clients are willing to pay more for a valuable service with a fixed price than deal with the uncertainty of billable hours.
Value pricing involves setting a fixed price in advance for a service measured by the value it creates for the client. It also enables you to capture the extra value that a particular client segment associates with a specific feature or benefit of your firm’s service. As businesses slowly come out of the lockdown and get a better handle on their expenses, switching to a flat fee for services provides clients the certainty and peace-of-mind that can lead to greater satisfaction and loyalty.
Sixty-four percent of accountants who responded to the survey said one of the top benefits of value pricing is the transparency it creates between the firm and its client. Sixty percent indicated that value pricing clearly demonstrates the value of the firm’s expertise, and 59 percent cited “lack of billing surprises” as another significant benefit.
More than ever, clients are looking for additional help these days as they struggle to address critical business issues caused by COVID-19. If you’re ready to kick your own tires and take a good look under your own hood to see how you can supercharge your services, start by focusing on areas where your clients need the most help. Do they need to lower overhead costs so they can weather lost revenues caused by a business downturn? Or are they in an industry that’s a hotspot for growth and need sound strategies to make the most of new opportunities?
Have a frank conversation with each client about what they need right now, then create your services roadmap. In many cases, your team will be able to adapt and reconfigure to respond to a pressing need, especially if you have built a strong relationship with the client. If not, identify the critical skills and resources to add and allocate management time to plan for pricing, processes, staffing and technology.
The pandemic is not going away any time soon, so now’s the perfect time to rethink your business model and how you package your services. You may be surprised at how little you might have to change to address the new needs of clients that must evolve to survive and succeed in the new economic environment. Repackaging and re-emphasizing certain service offerings – and adding a few new ones where needed – can go a long way in staying ahead of the competitive curve reshaped by COVID-19.
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...