Business clients are willing to pay 25% more for specialized accounting services, according to a new survey.
TaxDome polled 353 businesses across the U.S. for its inaugural
"Niche specialization isn't just an effective strategy for growth, though it's certainly that as well," Ilya Radzinsky, cofounder and chief product officer at TaxDome, said in the report. "It's a signal to business clients that you understand what they're up against, and that you're built to help them win now and for years to come. More importantly, it's the key to unlocking premium pricing from clients who are actively seeking expertise and willing to pay for it."
The data found that as businesses grow, they gravitate toward niche services: 53% of businesses that leave generalist accounting firms move to firms that offer niche services, while 82% of businesses leaving semi-niche firms choose a new provider with either the same level of specialization or a fully niche firm.
Once businesses switch to niche providers, they tend to stay. By extension, businesses heavily rely on referrals for choosing the firm they work with, with 92% of respondents ranking referrals as important and 58% reporting that referrals were the primary method for finding their current firm.
Communication is another crucial factor for businesses when choosing a firm. Eighty-five percent of the businesses polled said that responsiveness is either "very" or "extremely" influential during the selection process.
"There are times when I work with people who don't have specific answers I need right then and there," one respondent, with over $100 million in revenue, said in the report. "If I can have an accountant who can answer my questions thoroughly right then and there, you've got me. I'm already roped in."
But "niche" doesn't automatically mean success for firms. Thirty-two percent of business clients leave generalist firms because of poor service, lack of industry knowledge (29%) or because they've outgrown their firm (26%). And once a client chooses a niche firm, their expectations rise. Of the clients who have left niche firms, 38% cited high pricing and 36% cited outdated processes or technology as contributing factors.
A firm's technology use is another vital factor for business clients. The more clients spend on accounting services, the more they prioritize tech. Among companies that spend more than $10,000 per year, between 76% and 83% put technology in the top-two important boxes, versus 46% in the sub-$1,000 spending bracket.
