CX for Accounting Firms
The Power of CX: Transforming Accounting and Business Advisory Firms
Today, we reflect on two decades of working on CX in Accounting firms—26 firms, to be exact. As a Customer Experience (CX) expert in this industry, I have learned that a few solid trends can help accounting firms fully benefit from strategic CX management efforts. I have also learned there are several easily avoidable dead-ends that gobble up resources and leave firms with a poor CX taste in their mouths. All in all, there are a few best practices that leadership and CX practitioners in accounting firms should understand.
Let’s get into it. First, accounting and business advisory firms face numerous economic and technology challenges. With an expanding client base, changing regulations, technology reinventing processes every few months, and evolving market dynamics, staying ahead of the curve is essential. Client Experience (CX) has emerged as a transformative force, offering these firms a unique edge in acquiring and retaining clients. In this article, we will explore the significance of CX and showcase success stories of Accounting and Business Advisory firms that have harnessed its power to achieve remarkable outcomes.
The CX Imperative for Accounting and Business Advisory Firms
Accounting firms might not have been quick to embrace CX in the past decade. However, since the pandemic, our firm, which specializes in CX management for professional services, has seen a notable uptick in accounting firms investing in CX management programs—surpassing other professional services by over 40 percent. This is an industry trend. We believe the pandemic forced everyone into new patterns of service delivery, and in today's client-centric world, prioritizing to compete through strategic client experience is no longer optional; it's imperative.
Why Should Accounting Firms Care About CX?
CX, when done correctly, elevates client retention and profit margins. It will significantly boost client lifetime value and reveal insights about buying attitudes and behaviors, allowing the accounting firm to offer more valuable services. Accountants have a unique advantage in that they can see a business’ livelihood (as finances tell the most complete story) and make strategic decisions other service providers cannot. This is an advantage that CX can supercharge when looked at more strategically. Most firms tend to overlook this.
There are two things we’ve heard from all 26 accounting firms we’ve worked with over the years. They are:
- We want to get more of our accountants comfortable with selling more of the firm’s advisory services—"everyone should help stem commoditization while selling more of the firm to our ideal clients.”
- We want to pinpoint service friction early to prevent regrettable client churn—we want to understand how to move toward a predictive model to spot weaknesses in our key client relationships to remain competitive.
Why is this? Today’s accounting environment is getting tougher each day. Both regional players and leading national accounting firms are constantly challenged to differentiate themselves from competitors, enhance client retention, and safeguard profit margins. The challenge hiding in most firms' blind spots is that competitive advantage is no longer gained through technical services; it’s through the experience clients have with how well those technical services are delivered in conjunction with other factors that help a client’s business succeed.
We’ve had the pleasure of surveying and speaking directly to tens of thousands of accounting and business advisory firm clients over the years. What they are saying needs to be heard. When asked why they chose to stay or leave a firm, their answers very rarely reference the quality of services—because those are now perceived as table stakes. What they do reference is personal, idiosyncratic, and attitudinal factors about the relationship and how well their advisors understood their broader goals and expectations in the context of their unique business—essentially how the accountant and advisor made them feel over time. They reference stages of their relationship, moving from one project to the next, how well the firm transitioned from one team member to the next, communication, responsiveness, and accessibility to expertise.
The number one complaint accounting firm clients voiced over 9,800 surveys and interviews between 2016 and 2023 was,
“The firm seems to be growing out of touch with my business.”
This is a universal sentiment we hear in almost every accounting firm. This has competitive implications. Naturally, if you saw this comment, you’d want to get to the bottom of it, seek out the root cause and address it, right? If you had the right VoC (Voice of Client) feedback system in place to close these loops, you could. However, 85 percent of accounting firms don’t have suitable strategic, loop-closing feedback systems in place to do this effectively and efficiently.
In one case, a small regional accounting firm passed on the implementation of a VoC system due to its $70,000 cost and later that same year lost $875,000 in regrettable client churn. Early the next year, they bit the bullet and installed the VoC system.
While the right client feedback system in your firm is invaluable, it's just one piece of the CX management program puzzle. To truly thrive and prevent the commoditization of accounting services, accounting and business advisory firms must embrace a comprehensive Customer Experience (CX) management program.
Understanding CX in Accounting
It's no secret that client expectations in the accounting industry are evolving rapidly. Clients are no longer satisfied with basic tax/compliance services; they demand value-added insights and strategic advisory. This shift in expectations has led to increased competition and pricing pressure. The solution? An integrated CX management program that goes beyond client feedback to create a holistic, client-centric approach. Here are the steps:
8 Steps for World Class CX Programs for Accounting Firms
Step 1: Align CX with Strategic Goals
Start by aligning your CX program with your firm's strategic goals. Consider the following statistics:
- According to a Walker study, by 2024, customer experience will overtake price and product as the key brand differentiator.
- A Temkin Group study reveals that companies can expect to gain an additional $7 million for every $10 million earned within three years of investing in customer experience.
By weaving CX into your firm's strategic vision, you ensure that client-centricity becomes a core element of your organizational DNA.
Step 2: Measure CX Beyond Satisfaction
While measuring client satisfaction (CSAT) or Net Promoter Score (NPS) is crucial, it's equally essential to delve deeper. Collect data on Client Effort Score (CES), and Client Loyalty Index (CLI) to gain a comprehensive understanding of your clients' experiences. This data will uncover opportunities for improvement and help you identify areas where strategic business advisory services can add value.
Step 3: Segment Your Client Base
Not all clients are created equal. Segment your client base based on their needs, industry, most growable, most likely to encounter challenges, and revenue size. A Gartner study indicates that businesses that use customer segmentation strategies see a 36% increase in their profitability. Tailoring your services to specific client segments allows you to provide more relevant and impactful advisory services with greater ease.
Step 4: Leverage CX Technologies and Data Analytics
Invest in CX technology and data analytics to gather actionable insights. A Harvard Business Review study found that companies that leverage data analytics for CX improvement outperform their competitors by 85% in sales growth and more than 25% in gross margin. Analyzing client data can uncover cross-selling opportunities and assist in developing tailored advisory solutions. Work on developing easy-to-use predictive models to begin spotting signs of weakening relationships so you can switch from broke-fix mode to predict and prevent mode.
Step 5: Make Client Journey Mapping the Norm
Develop a firm CX Journey atlas that indicates all the prospect and client journeys you want to understand better. Every accounting and business advisory firm should ultimately have 30 – 40 journey maps. 10 that dissect prospect buyer’s journeys, 20 that dissect client journeys, and 5 -10 specialized journeys for key interactions such as onboarding new clients, transitioning from one service area to another, and project completion or wrap-up. Each journey should have a shelf-life of about 18 – 24 months so update them accordingly. Share the maps across business units to get more of the firm to understand the client’s experience more empathically.
Step 6: Learn How to Build a Client-Centric Culture
CX should be ingrained in your firm's culture. Encourage all employees to be client advocates. According to a study by Bain & Company, firms with a strong client-centric culture experience a 4.5 times greater retention rate and 7.4 times more revenue growth. Expert Tip: Create a CX Charter that helps everyone in the firm understand why you’re investing in CX and what their role will be in driving toward client-centricity.
Step 7: Teach People to Offer Strategic Business Advisory Services
To prevent commoditization, accounting firms must evolve from compliance-focused service providers to strategic business advisors. Provide advisory services that help clients navigate challenges, capitalize on opportunities, and achieve their financial goals. A survey by Deloitte found that 60% of clients are willing to pay a premium for strategic advisory services.
The top business advisory (consulting) service lines we saw emerge from traditionally pure-play accounting firms were:
- Cyber security
- Human resources
- Succession planning
- M&A advisory
Interesting note: Look no further than EisnerAmper and Schellman to understand private equity’s growing play in the industry. If there is one prediction, we’re very bullish about, it is this—private equity wants to accelerate the disruption to accounting’s status quo more than ever. This means to compete; accounting firms will need to act quickly to shift into a business advisory mode more than ever. Understanding how your client audience can help you achieve this has everything to do with managing client experience (CX).
Step 8: Monitor and Adapt Continuously
CX management is an ongoing process. Continuously monitor feedback, measure outcomes, and adapt your strategy accordingly. A Qualtrics study found that companies that adapt based on customer feedback can increase their annual revenue by 6 – 7 percent. Regularly reviewing your CX program ensures it remains aligned with client expectations and market trends.
Conclusion: Thriving in a Client-Centric Era
A comprehensive CX management program is not a luxury but a necessity for accounting firms looking to improve profit margins, enhance client retention, and stay ahead of commoditization. By aligning CX with strategic goals, measuring beyond satisfaction, segmenting the client base, leveraging technology, building a client-centric culture, mapping for client friction points, and offering strategic business advisory services, firms can truly differentiate themselves and deliver unparalleled value to their clients. In today's client-centric era, CX management is the key to long-term success and profitability in the accounting industry.