Shareholder and Consultant Boomer Consulting
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CPA Firm Metrics From a Client's Perspective

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Boomer Consulting shareholder Arianna Campbell offers an pointed view on what firms should really be looking at to measure their value to their clients.

Sep 3rd 2021
Shareholder and Consultant Boomer Consulting
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One of the core concepts of any process improvement initiative is that value is defined from the client's perspective. But how many firms have metrics that are aligned to a client-centric perspective?

Metrics in a CPA Firm

Some of the metrics we see firms track include:

  • Chargeable and non-chargeable hours
  • Realization
  • Utilization
  • Ratio of staff to equity partner

All of these provide useful information, to be sure. But they don't provide much information about how clients perceive the value we're providing.

What about revenue metrics? Tracking revenue by service line is another popular metric in firms. Again, revenue metrics are useful.

One could argue that revenue is a good indication of how clients perceive value because it demonstrates that clients are willing to pay for your services. However, revenue can be a lagging indicator, with many components that mask true potential value.

For example, do clients engage you for tax returns because you're cheaper than the competition? Do clients believe they're receiving value for the fees they pay or are they currently cultivating other alternatives?

Client Performance Indicators

In Harvard Business Review, Gene Cornfield, Global Lead for the High-Tech Industry at Accenture Interactive, writes that two elements make a metric useful from a client perspective. He calls these metrics "Customer Performance Indicators," or CPIs rather than key performance indicators (KPIs):

"Most importantly, it must be an outcome customers say is important to them. Second, a CPI must be measurable in increments that customers actually value. Time, convenience, number of options, dollars saved, or recognition of their achievements are some increments that customers value, and there can be many others depending on the context, and if they're deemed relevant by customers."

Some ideas of CPIs include:

Average number of services per client. From a firm's perspective, this can be a useful metric because it's more cost-effective to introduce new services to an existing client than win a new client. However, it also demonstrates that the firm addresses a broad spectrum of client needs and wants.

Lifetime value of a client. Revenues from new clients aren't enough if existing clients are leaving the firm at the same clip. Tracking the lifetime value of a client shows how long clients have been with the firm and whether they're purchasing a greater number of services as time goes on.

Net promoter score (NPS). NPS is a client satisfaction benchmark that measures the likelihood of a client recommending you to others – an excellent indication of how clients perceive value.

Work turnover. Work turnover measures the number of days it takes to complete an engagement, from when the firm receives the information until the client receives the deliverable. Clients value efficiency, so a low work turnover number can be a useful measure of client satisfaction.

So what is important to your clients? What services or features would they be willing to pay more for? Perhaps more importantly, what is your firm spending money on that clients don't really care about? The only way to find out is by talking to them.

The original article appeared on the Boomer Consulting website.

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