Many business developers and growth professionals in CPA firms are responsible for driving the growth of the firm. But how do you know you are making progress? Sure, top-line growth comes to mind and is often the catch all measurement. But is that the only metric? Are there other things you should consider? In this article, learn how to use Key Performance Indicators (KPIs) to drive growth in your accounting firm.
Many business developers and growth professionals in CPA firms are responsible for driving the growth of the firm. But how do you know you are making progress? Sure, top-line growth comes to mind and is often the catch all measurement. But is that the only metric? Are there other things you should consider?
Key Performance Indicators (KPIs) are values you use to measure your effectiveness, and they should be unique to your firm. The most successful measurements are tied to your firm’s strategic goals. That means one firm may want to measure growth in its technology practice since it’s a new addition to the firm, while another firm wants to measure response time to a client to reinforce its customer service philosophy. Basically, there is no one-size-fits-all set of measurements for each firm; rather, there are many options to consider.
Using Data to Drive Growth in an Accounting Firm
The key to KPI measurement is to work with firm leadership to determine which metrics are important at this point in time. It’s very likely what you measure will change over time as the firm’s strategic priorities shift. Here is a partial list of options that may give you inspiration in developing your own.
The Standards: These are metrics related to firm revenue used in most firms today. They are often looked at firm-wide and by geography (especially in multi-office firms), but sometimes by niche.
- Firm-wide revenue increases period-over-period
- Revenue increases by service line or industry niche most often period-over-period
- New dollars by project and/or recurring revenue
- Revenue progress in relation to goal
Growth Metrics: The following KPIs help a firm best determine if its driving revenue in the areas desired, and if there are enough leads to see growth.
- Average number of services sold firm-wide and/or by industry niche
- Average transaction size firm-wide and/or by service line or industry niche
- Percent of current revenue on the pipeline
- Pipeline win rate by dollar and number of opportunities won
- Percent of customers directly sourced by marketing
- New dollars from new offerings
Marketing-Specific Metrics: Marketing is done to help drive leads and these KPIs can show if those activities are effective.
- Sales revenue generated by campaign, tactic, etc.
- Cost per lead/client acquisition cost overall or by campaign, tactic, etc.
- Revenue to cost ratio by campaign
- Percent of customers influenced by marketing
- Website conversion rates and response time
Client Retention Metrics: Growth stems from keeping your clients on an ongoing basis and these KPIs are predictive of future revenue.
- Net promoter score; firm-wide and by office, person and/or niche if you have enough responses
- Wallet share which looks at the total a client spends with accounting firms compared to what they spend with you
- New dollars from existing clients on a recurring or project basis
Business Development Executive Metrics: Dedicated business development professionals need to have regular activity to keep their sales funnels full, which will help drive overall firm success, too.
- Progress to sales target
- Pipeline value broken out by stage; include proposals generated
- Close rate
- Average transaction size
- Contacts made; distinguishing between initial contact and follow-up meetings
- Percent of leads received by marketing that were worked into pipeline leads
- Lead breakdown by service, geography, partner, etc. to align with identified territory
Develop a CPA Firm Growth Dashboard
After you have come up with a handful of KPIs, create a dashboard to measure and report progress. This can be done in Excel or using a number of data measurement technology solutions. Keep your dashboard to one page and ensure it’s full of charts and graphs. It’s much easier to see progress made via pictures than in tables of numbers.
This dashboard should be shared with firm leadership on a regular basis. Monthly is most common. If you are using technology, the data can be live and available at any point in time. While some firms may be tempted to measure less frequently, it should be avoided. The reason you measure is to gauge progress so you can readjust, if needed, to hit your established goal. Frequent measurement will give you the time needed to change strategy.
With so many measurements to consider, start by looking at your strategic plan. If you don’t have a documented plan, talk to the partners to identify what they think is most important. Use this as your starting point. And while firm revenue will be at the top of the list, recognize it’s not the only measurement to ensure the growth your firm desires.
AAM Minute: Business Development
Katie Tolin, CPA Growth Guides
Last Updated on
About Katie Tolin
Katie Tolin is the president and chief growth guide at CPA Growth Guides. She’s a former in-house marketer having spent time at regional, super regional and national accounting firms. Today she helps CPA firms drive top-line revenue and profitability through data-driven marketing strategies. She’s a past president of AAM, a former marketer of the year and was inducted to the Accounting Marketing Hall of Fame. A member of the podcast committee, Katie was the interviewer for this episode.