We hear it all the time from our clients in the accounting industry. What can we do to give our marketing efforts an edge? Are we spending our money wisely?
The Hinge Research Institute partnered with the Association for Accounting Marketing to conduct a benchmarking study on CPA marketing spending and organic firm growth. We walked away with a new understanding of how high growth firms market themselves differently.
How We Did It
We recruited a group of 30 firms to participate in our study, drawing many of the participants from AAM’s diverse membership. We analyzed their marketing budgets, firm growth, and overall budgeting process.
We used a standardized set of spending categories to ensure compatibility across firms. We also separated organic growth from the effects of same-year mergers. This innovation in methodology made possible an all-inclusive, apples to apples comparison.
Our respondents represented a full spectrum of the accounting industry. We segmented our results by firm size (Small average = $4.9 million, Medium average = $16.9 million, and Large average = $114 million); areas of operation (Major Metropolitan, Mid-Sized Metropolitan, Micropolitan, and Rural), and high growth vs. low growth firms. Extensive breakdowns in the full report allow readers to draw effective comparisons with their own firms, no matter their size or scope.
What We Found
Overall marketing spending (including compensation for marketing department) across our sample averaged 2.19% of firm revenue. On average, firms employed one FTE marketer for every 65 employees. Excluding marketing staff salaries, their top five spending categories were:
- Individual partner business development set asides
- Non-educational firm events
- Networking events/trade shows
It Gets Even Better
Stay with us now, because the most striking results surfaced when we compared marketing spending against organic growth. High growth firms—the fastest growing 20% among our respondents— showed very consistent patterns in their marketing strategy. And these patterns came with some surprises:
- High growth firms are actually spending less on marketing. This was one of our most intriguing findings. High growth firm marketing budgets accounted for just 1.04% of revenue (excluding compensation), compared with 2.08% in low growth firms.
- They are employing more marketing professionals. They may be spending less, but they are prioritizing their marketing department at a ratio of 1:48 employees compared with 1:64. The right talent—and more of it—seems to be one way they’re doing more with less.
- They are spending their budgets very differently. High growth firms spent much more on their online presence, content and materials, networking and trade shows, and educational events. They spent less on traditional strategies like advertising, sponsorships, non-educational firm events, individual partner business development set-asides, and PR.
The Bottom Line
Fast growing firms are doing things differently. They’re making unconventional choices, embracing an evolving landscape, and—most importantly—making marketing a priority. They’re spending smarter, not harder, and it’s working.
How do we know? The difference between our high and low growth respondents was galactic. Our growers achieved an average organic growth rate of 23.6%. This is a stark contrast to their low growth counterparts, who shrank by an average of -3.7%.
With this data in mind, it’s easy to see how neglecting marketing strategy could leave a firm in the dust. But, we also know it’s not that easy. The reality is that many managing partners are under more budgetary pressure than ever. Many are taking long looks at their marketing spending and wondering if there’s room to pare down. This research should give them pause.
For CPA firms looking to stay competitive, marketing is too important to be an afterthought. It’s too critical to be somebody’s side responsibility. Make it a priority, fund and staff it appropriately, and watch the ROI roll in.
To learn more, check out the new study, which was released on May 9. An executive summary is free and available to all. The full report includes an interactive benchmarking worksheet, spending data for high growth and low growth firms, spending by firm size, spending by market size, and a detailed budget breakdown. You can find more information on how to purchase the study from AAM here.
If you would like to participate in a future edition of this study, contact Hinge at [email protected] Participants receive the full study for free. Talk about budget friendly!