Xero has released their partner benchmarking study for 2018 and we’ve summed up the best and most notable findings from the report. The respondents are all Xero partners, and focus has been put on forward planning, strategy, marketing and advisory services.
Clients are gravitating to cloud practices
Clients are leaving their accountants and signing up with advisory-focused cloud-working practices. An estimated 224,000 businesses changed accountants in 2017, which is an unprecedented amount. The partner benchmarking study states that firms which are using Xero are able to provide far better value.
Xero’s capabilities teamed with Futrli’s forecasting and reporting really lets you examine what’s going on in a business, and present your findings quickly and easily, from anywhere with an internet connection.
Benefits for clients include providing “far better value by boosting collaboration and increasing ease of use while removing the cost, hassle and complexity of older methods for doing accounting.” As with most projects or jobs, collaboration takes outcomes to a new level.
Offering advisory services boosts revenue
Xero data shows compliance only firms charge an average of £4,200 against £6,990 where business advisory is offered.
Advisory positions you as a key player in a business’ team. You lead with your knowledge of their business and industry, backed up by the real-time data provided by Xero.
Problem-solving is at the forefront of business owners concerns, as Xero prove. The highest revenue per client is coming from advisory.
Practices that provide specialised services and urgent care are realising the highest annual revenue per client (£4,980 and £4,190), by offering expertise in solving challenging business problems.
Business owners are now actively requesting advisory services, so not adopting this way of working will see a firm being left behind. “On average client fees are 66% higher where business advisory is offered.”
Marketing has become an opportunity
Xero found that few firms, other than the largest, are investing in their marketing efforts, it’s a great time to roll out a campaign to help with awareness and conversions. Of course, referrals are often the best source of new clients for firms, but you will find businesses, especially locally, who you can target with an online campaign.
Small businesses seeking to hire new advisors were the largest source of new clients. This was followed by new business startups – who are often confused by the compliance terms and regulations they face during their first year as a business.
The breakdown of reasons clients moved was as follows:
- Switched from another firm 49%
- New business startups 30%
- Were doing it on their own 18%
- Other 3%
Four factors that lead to positive outcomes and higher growth for accounting firms:
- Firms that have larger numbers of online accounting clients grow faster and have an easier time signing on new clients.
- Practices that provide advisory services earn considerably more revenue per client than firms that offer only compliance.
- Firms that serve a larger number of online accounting clients generate significantly more revenue per employee.
- Practices with the largest numbers of online accounting clients have the lowest rates of regretted client departures.
Lastly, and great news for our existing customers, the report states:
Advisory services, eg, budgeting, cash flow forecasting, business planning is seen as the largest area for revenue growth.