Success will mean something different for every accounting firm. For some, it may mean driving traffic to their website, for others it could be growing a following and increasing engagement levels on social media platforms; at the end of the day, it’s all dependent on your business goals. That being said, there are some metrics that every accounting firm needs to be measuring, five of which are outlined below. But, before we jump in, let’s begin by defining what a KPI is.
As the name ‘key performance indicator’ suggests, a KPI is used to monitor your performance and measure success in relation to your business goals. Essentially, KPIs are the metrics that indicate whether your business is where it needs to be and can help you to identify areas of strength and weakness within your strategy. With that in mind, let’s take a look at 5 key marketing metrics your firm needs to know.
Customer acquisition cost (CAC)
As you may have guessed, customer acquisition cost (or CAC) is the amount you have to spend to acquire new customers. It’s important to be aware of this metric as it can help you to understand how profitable your firm is. To calculate your CAC, you need to divide your marketing and sales expenses by the number of clients your firm obtained during the period that money was spent.
Knowing your CAC for each channel can help you to identify which is most successful, and thus, where you should be focusing your marketing efforts. The lower your CAC, the more efficient your accounting firm will be and the more profit you will make.
Customer lifetime value (CLV)
Your customer lifetime value is the net profit you can expect to earn from each client for the duration that they are with your firm. This metric also highlights the importance of knowing your CAC, as to be profitable, your CLV needs to be (on average, three times) higher than your CAC. So, if you’re spending a lot on your marketing but your average CLV is very low, you really need to rethink your strategy.
In addition, knowing your CLV can help you to identify which of your clients are most profitable and provide an indication of how you should be investing your time.
Return on investment (ROI)
As an accountant, you will be familiar with the term ROI, so to summarise briefly, your ROI is ultimately what determines which tactics are most successful and indicates where your marketing efforts should be focused. Above all, your ROI equips you with the information you need to inform your financial decisions and grow your firm.
Conversion rate
Your conversion rate looks at the percentage of your visitors who complete a specific action and is arguably one of the most valuable metrics as it indicates how successful your marketing truly is. It also impacts several of the metrics mentioned previously: the higher your conversion rate, the lower your CAC, the more revenue your firm will generate.
Are you looking for ways to boost your conversion rate? Check out our blog post for inspiration here.
Customer retention rate
Did you know the probability of making a sale to an existing customer is 60-70% compared to just 5-20% for a new customer! Not only are you more likely to covert, but it costs far less (in terms of both time and money) to upsell your services to existing clients than it does to acquire new ones. You’ll be noticing a pattern here, as again, your customer retention rate ties in with your CLV – the longer they are with you, the more revenue they will bring.
This metric will highlight the effectiveness of your retention marketing strategy and indicate if/ when it needs to be reviewed.
So there we have it, 5 KPIs your accounting firm should be tracking – and that’s only scraping the surface! To find out more about the importance of KPIs and exactly which ones you should be using, check out our ‘Ultimate Guide to KPIs and Reporting’ here. Or, if you are looking for an agency to help you achieve results that really count, contact us today for a free consultation with one of our marketing experts.
