The accounting and bookkeeping industry has come a long way and shown just how willing a group, that is perhaps better known as conservative and quite old-school, can really embrace change and technology. But marketing remains a foreign land for many bookkeeping firms. Whereas law firms, financial planning firms and many other financial service sectors allocate marketing as a budget spend, bookkeeper’s marketing dollars remain stuck in the wallet.
A recent survey of bookkeeping business owners conducted by http://www.bookkeepershub.com.au/boc revealed that while marketing is considered a ‘big challenge’, near zero percent of participants allocated 10 percent (or more) of revenue to marketing. Why the paradox?
Some reported that were satisfied with their current level of referrals, yet a majority placed high importance on the need for lead flow of prospects. They wanted to ensure that productivity gains arising from automation of compliance-related data gathering and practice management gains were put to good use; to onboarding new clients and selling higher value services to existing clients.
Reasons (a.k.a Excuses)
For sure a lack of funds is one reason given for not opening the wallet for marketing spend. Yet this may simply be a case of denial or ignorance of the costs of NOT spending on marketing. In business the term ROI is applied to any and all investment decisions whether it be a purchase of new equipment, developing a new product and so on. Few decisions would escape the scrutiny of an ROI analysis.
Risk lies with no investment in marketing. Acquiring new clients, marketing to existing clients requires some knowledge of the financial returns from a client. This needs be looked at from a lifetime value perspective.
Mobile phone companies do it, banks do it, financial planners do it, insurance companies live by it and, increasingly, accounting and bookkeeping firms appreciate that clients are recurring customers, and investing in acquiring them and having the appropriate systems in place to on-board them, can pay off dramatically in terms of their lifetime value.
These firms assess the value of retaining a client paying recurrent revenues over a nominal lifetime and bring that return back to the cost of acquiring the customer, that is, the marketing costs. It’s not just your technical expertise that makes your clients ‘sticky’; it’s managing people, developing your reputation, deepening client relationships that are the drivers of lifetime value.
ROI of lifetime revenue
That’s the amount of revenue you’ll generate from one customer over the lifetime of your engagement with them minus your costs to acquire them and then service them over time. Many business owners will already know as a general rule of thumb it costs 3 to 5 times as much to get a new customer as it does to keep an existing one. It pays to keep existing customers happy.
It is useful to study your firm’s experience in lifetime value terms and reduce that to a benchmark: to achieve X number of new clients a year, how much am I willing to spend?
All that said, these metrics can give you an idea of how to create a model to calculate the ROI of one aspect of your marketing program.
For guides and resources on marketing check out resources (free for subscribers) at www.bookkeepershub.com.au/free-reports/