How to meet changing client expectations
The changing times and an economy in constant flux are causing clients to shift expectations for their accounting firms. Practices that evolve to meet these expectations will gain a significant opportunity to steal a march on their competition and strengthen their position in the marketplace. But evolution will require revising strategies for pricing, technology, services and more to create lasting, mutually beneficial client relationships.
The Hinge Research Institute recently conducted a survey of over 650 accountants and business professionals who purchase accounting services to identify emerging trends in client preferences. The study takes a close look at how buyers perceive value and the changing factors that affect how they evaluate and purchase accounting services. Some of the results may surprise you.
Most accounting firms have utilized the same traditional business model for decades. And while that model has depended heavily on billing for tax and compliance services, evolving market conditions are causing client expectations to change as well, leading to new business models favoring non-hourly fee structures, diversified services bundling and greater industry specialization.
Analysis of the Hinge survey results yielded these top five buyer perception insights:
1. Buyers are willing to pay more to address their most significant accounting challenges. This includes planning for growth and expansion, cash flow and minimizing overhead costs, staying in compliance, and the lack of time needed to focus on accounting and financial matters.
2. Strategic advisory services present the biggest revenue opportunity. Accounting firms may be able to increase monthly client revenues by as much as 50 percent if they offer strategic advisory services.
3. Buyers have clear priorities among service offerings. Accounting firms can demonstrate their value by providing services ranked as highly valued by buyers, starting with accounts payable/bill pay, forensic accounting, data analytics and technology services.
4. Automation is directly linked to successful price increases. Accounting firms are nearly 3.5 times more likely to successfully increase their prices when they communicate the benefits of automation to clients.
5. Value pricing introduces benefits beyond the bottom line. Accountants said the top benefits of value pricing include transparency, demonstrating the value of firm expertise and a lack of billing surprises.
Value pricing: Set prices based on what clients perceive as valuable
It has always been difficult to align service pricing with perceived value, especially with new services. But it’s crucial to understand the connections between value and pricing.
To implement value pricing, accounting firms must clearly understand the business challenges faced by potential buyers and structure their service offerings to effectively address those challenges. For example, our study revealed that receiving expert financial insights is among the top buyer challenges. Firms that can establish and promote expertise will be in a preferred position to determine value pricing and gain a substantial advantage over their competition.
The kind of expertise sought by clients is often based on industry specialization. In the past, many accounting firms simply offered the same general services to clients in all industries, making it difficult to differentiate themselves from the pack. As technology and expanding markets have added complexity to various industries, professional services firms have found it both necessary and advantageous to specialize in specific or niche industries where they can develop expertise and a unique brand identity. Specialization, in turn, makes it easier for accounting firms to increase their perceived value and align their pricing with it.
So where are the most significant growth opportunities for accounting firms today? The survey results point to small and midsize businesses as potential growth juggernauts, particularly for strategic advisory services and other services that buyers indicate they value most.
Most survey respondents indicated they would be willing to pay as much as 50 percent more for a package that includes both strategic advisory and consulting services that meets their expectations. Buyers struggling to plan for growth and expansion may be open to strategic consultation on revenue growth and business modeling. Those facing cash flow challenges and a need to minimize overhead costs may find budgeting and advanced reporting on key performance indicators helpful.
Here are several key tips to help you create a strategy for meeting evolving client expectations:
- Sell to buyers’ challenges and demonstrate how your services effectively address them.
- Focus more on strategic advisory services because they offer one of the best opportunities for growth and a chance to solidify client relationships.
- Create a services roadmap to launch new services in a timely, structured manner.
- Reassess your technology and determine what you might need to increase efficiency and improve the customer experience.
- Experiment with value pricing to boost revenues and reconfigure your client strategy to emphasize billing consistency and results.
In light of the rapid and significant changes affecting the accounting marketplace, real business transformation is warranted for many firms. The tips and insights outlined here, based on a detailed analysis of industry survey results, provide key guidelines for transforming your firm’s business model to meet evolving client expectations.