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CPA Marketing Is the Edge for High-Performing Firms

Lee Frederiksen, PhDBy Lee Frederiksen, PhD

The coronavirus pandemic and its consequences have had a profound impact on virtually every sector of the economy, and accounting is no exception. To gain a clearer picture of how accounting firms are adapting, the Hinge Research Institute and the Association for Accounting Marketing (AAM) conducted a comprehensive study on CPA marketing budgets. The 2021-2022 AAM Marketing Budget Benchmark Study outlines industry marketing spending and looks in-depth at the spending behavior of the fastest-growing accounting firms.

The report looks at how the pandemic’s effect on the economy caused firms to innovate to more effectively address the changing marketplace. The study sampled 140 CPA firms, representing more than 23,000 employees and a combined revenue of over $6.7 billion. What follows are a few highlights from the findings.

COVID-19 had a surprisingly positive effect on almost half of accounting firms – The pandemic affected firms in a variety of ways, but over 45% of CPA practices actually benefited from it. Firms that were able to quickly pivot and provide timely and appropriate services (such as Payroll Protection Plan support) and address fluid workplace environments saw an increase in business.  

High-growth firms significantly outperformed their peers – The study defines “high-growth” firms as those that achieve a compound annual growth rate of 20% or greater. The research revealed an astonishing 31.9% growth rate for high-growth firms, compared to 6.1% for average-growth practices.

Marketing budgets doubled over two years – Many firms opened their wallets a little wider to ensure that they remained visible and viable in a mostly shutdown economy. Many doubled their marketing expenditures from 1.5% to 3% of revenue, driving top-line revenue growth on average to an impressive 10%.

Someone on 3 electronic devices is open to electronic marketing.About 85% of firms experimented with ways to develop new business – Many firms adopted new tools tailored to a remote-but-connected workforce, shifted to more screen-friendly marketing by using digital channels such as webinars and virtual events, and offered new services to suit their clients’ new priorities. High-growth firms delivered less-traditional services (including outsourced client accounting, information security, and software/technology) while many slower-growing peers offered general business consulting, audit/assurance, and wealth management services.

High-growth firms beefed up their marketing resources – Accounting firms with double-digit growth have one thing in common: they actively focus on recruiting and retaining a high-quality marketing staff. These firms have almost twice the marketing resources of slower-growing firms.

High-growth firms spent more on digital marketing solutions – While the study revealed that, on average, firms doubled their marketing spend from 1.5% of revenue to 3%, high-growth firms set themselves apart by spending 26% more than their peers on digital marketing and acquiring and retaining larger teams of marketing talent (one marketing resource per 26 employees for high-growth firms compared to one per 46 for others). High-growth firms increased their use of online digital platforms as an effective way to engage new clients and support existing ones with educational opportunities to help them understand and address the evolving economic environment.

Low/no-growth firms spent more on traditional marketing tools than high-growth firms – Even as the marketplace and the general economic environment underwent significant changes, low- and no-growth accounting firms continued to invest substantially higher percentages of their marketing budgets in traditional tools, such as sponsorships, print and broadcast advertising, networking events, and direct mail.

High-growth firms, however, bulked up their marketing spend on education and training as well as outside expertise to bolster internal resources. They invested in the knowledge and skill sets required to take full advantage of the latest marketing techniques and technologies needed to increase revenues and gain market share.

The Road Forward

Everyone seems to be yearning to “get back to normal.” If this pandemic has taught us anything, though, it’s that there is no going back. Accounting firms were forced to find creative ways to develop new business and deliver services in work environments and an economy that were drastically affected. Two out of three accounting firms were able to adapt and even thrive. Those that grew the fastest parted ways with other firms by experimenting with nontraditional, new services.

Unfortunately, a third of the country’s accounting firms fared less well. They need to rethink their business and marketing strategies if they’re to forge a new path to the kind of success and growth that high-growth firms achieved.

The study summarized in this post provides a roadmap that under-performing firms can follow to growth and profitability. To successfully navigate their way, however, they need to be willing and able to embrace further change.

Lee Frederiksen, PhD, is managing partner of Hinge in Reston, Va. He can be reached at lfrederiksen@hingemarketing.com.

You can download a free executive summary of The 2021-2022 AAM Marketing Budget Benchmark Study, or purchase the full report on the AAM website.

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