Essential Lessons from High-Growth Accounting Firmsby
Turmoil is nothing new to accounting firms. For years, the profession has faced pressures from many directions, be it competition, shrinking differentiation, changing buyer behavior and a shortage of much-needed talent.
Despite the constantly shifting—and often volatile—business environment, a group of accounting firms managed to outpace their peers’ growth by a 3-to-1 margin for at least three consecutive years. These are the high-growth firms.
How did these firms achieve extraordinary growth? What does their growth playbook say? These questions form the premise behind the Hinge Research Institute’s (HRI) annual High Growth Study. To learn what fuels high growth, we surveyed more than 230 accounting and financial services firms with a combined revenue of over $15B and 95,000 professionals, paying close attention to those that posted 20 percent or greater compound annual revenue growth over a three-year period.
They also proved how profitability and growth work in tandem. Not only did they grow thrice as fast as their peers, they were also twice as likely to be highly profitable (25 percent or greater profit as a percent of gross revenue), and less than half as likely to be low profitability (10 percent or less). What follows are key lessons we learned from this year’s study and what you can do to crisis-proof your business.
Marketing as Growth Strategy
There are two ways to grow a firm—through marketing and through M&A. Under most circumstances, marketing delivers slower growth in exchange for lower risk. For high-growth firms, however, it is a major driver of extraordinary growth.
One reason high-growth firms advanced so much faster is their deployment of effective marketing strategies. Compared to their peers, they achieved 25 percent greater impact from their digital marketing activities. They also obtain two-thirds of their leads through such activities, a distinct competitive advantage to peers who rely mostly on referrals.
Many people are now able to work virtually. It has been trending for some time, now it’s coming to bear, but why?
We found that 90 percent of clients said they rule out firms they’ve never spoken to, signaling a shift in buyer behavior. In other words, the prospect who never called, despite your contact’s glowing referral, probably went online and ruled you out.
Key Skills for a Low-Risk Growth Strategy
High-growth firms have greater expertise in five key areas of marketing and business development than their slower growing peers:
- simplifying concepts
- strategy development
- research, outreach
- search engine optimization (SEO)
The ability to simplify complex concepts is an attribute that visible experts all share and are able to parlay into marketing messages that resonate with their audiences. If your firm does not have these skills in-house, what are your options?
The key is to keep the skills you will need for day-to-day activities in-house. You can upskill your team through training or hire talent, though these options can take time. If you need to close the skills gap quickly or need the skills less frequently, outsourcing is a good option.
Creating Value Requires Knowing What is Valuable
Market research on prospects and clients is crucial to delivering value to target audiences and capturing it for your business. The study shows a strong direct relationship between research frequency and growth. Firms that conduct original research at least once every quarter grew 40 percent faster than firms that did no research.
What makes original research effective? First, it provides insights into what target audiences need. Firms that put little to no effort into market research are unable to identify, much less anticipate, client needs.
Market research helps you to invent or renew your value proposition, marshal the right messages and deliver those messages through the right channels. In short, market research heightens the likelihood of your marketing efforts’ success.
Second, market research helps you develop high-value content for audiences who are always on the lookout for industry trends and competitor intelligence. Publishing insights from original research and garnering publicity for them positions your firm as a team of trusted, recognized industry experts. In an uncertain environment, businesses will choose advisors who present lower risk and a higher likelihood of success.
High-Growth Firms Invest in Marketing
High-growth firms’ marketing priorities are different from those of their no-growth peers. First, they are much more likely to run an effective content marketing program that includes content creation, SEO and marketing analytics.
Second, they pay more attention to their brand, which helps them attract and retain top talent. And finally, they are significantly quicker to embrace marketing automation and buyer journey mapping to reach and serve their audiences, as well as to stay relevant in an evolving marketplace.
Cycle of Growth
High-growth accounting and financial services firms prove that marketing can be a low-risk and high-impact growth strategy — one that has handed them a sizable advantage over their peers. They pulled off this accomplishment by committing resources to marketing talent, processes, and technology.
Their efforts have positioned them for longer-term success by putting into motion a cycle of continuous growth: building up knowledge of what their audiences need, delivering value to their audiences, capturing value for the business, and, as a result, having additional resources to reinvest in people, processes, and tools.
Their strategy is a valuable lesson for firms that want to get through the crisis. By having adopted techniques to follow their clients online, they are better equipped than most to thrive in today’s unrecognizable and unpredictable marketplace.
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...