Lessons from the 2012 Practice Excellence survey
Participants at the Practice Excellence Forum in London on Thursday 20 September got a preview of the findings from this year’s online survey of more than 2,000 clients of the 70 participating firms.
AccountingWEB has been conducting customer surveys of this type for more than 10 years and our Software Satisfaction Awards have confirmed wider market research findings that customer satisfaction really does drive growth.
While participation in the Practice Excellence survey grew nearly 25% over the past year, we saw a slight decrease (0.5%) in overall satisfaction levels. This trend is consistent with software buyers’ responses during the post-dotcom bust period; economic difficulties can also put strain on the accountant-client relationship, it appears. With the government now estimating that the increased audit exemption thresholds could take more than £300m in annual audit fees out of this market in the coming years we are entering a potentially disruptive period for firms; if accountants cannot demonstrate to clients that they are contributing value to their businesses, they could be vulnerable to departures.
The principle behind the Practice Excellence process is that you need to measure satisfaction in order to manage it; by rewarding and learning from firms who are being really innovative in how they serve their clients, we are trying to spread best practices throughout the wider profession.
Practice Excellence Award judge and Principa founder Ric Payne urged participating firms to pay particular attention to their clients’ “willingness to recommend” ratings. Though based on a different measure (points out of 4), it provides a parallel measure to the Net Promoter Score (NPS) devised by Fred Reichheld.
Widely used in the IT industry, NPS distils customer satisfaction into whether clients are detractors, neutral or active promoters of the services and products they use. Research has proved strong correlations between revenue growth and a high NPS. In the Practice Excellence survey, the average score across the profession for 2012 was 3.80 out of 4.
Value for money
Large firms experienced the most notable fall (-1.9%) in satisfaction, which was offset by an equivalent increase among medium firms. A closer examination of the ratings in these key areas showed that understanding the client’s business was most closely linked to their willingness to recommend, followed by how important the firm made clients feel.
The medium firms’ performance in the survey appeared to confirm this “magic formula”. Value for money was slightly less crucial a factor on recommendation, and many firms gaining good recommendation scores were not so highly rated on value for money. This apparent disconnection appears to confirm the arguments of practice development experts like Ric Payne, that if clients feel they are getting valuable advice from their accountants they will not resent paying higher fees.
The apparent drop in small firms’ ratings is less of a problem, as it was caused in part by the creation of the new firm category this year; newer firms scored better than established small firms in several areas, so the category as a whole would have been about the same compared to last year.
Small firms rated highly for value for money and making their clients feel important, but a slight dip in this category compared to last year should remind these firms not to be too complacent. Submissions from the entrants shortlisted in the new and small firm categories showed that these practices devoted considerable efforts to meeting regularly with clients, for example to discuss monthly or quarterly management accounts or strategic benchmark reports. Where some of the top smaller firms said they aimed for quarterly meetings as a minimum, even the top-performing large firms indicated that twice-yearly strategy sessions were their norm.
Across all the Practice Excellence categories, the best performing firms were using technology to stay in touch, or catering for clients’ preferences in the way they delivered their data and insights - for example via smartphones, tablet computers or Cloud accounting applications.
Our feedback shows that the Cloud really took hold during 2011-12, but where smaller firms in particular tend to offer Cloud applications as a way to simplify bookkeeping for clients, pathfinder firms are running outsourced finance departments for their clients, reviewing figures in real time and feeding back the numbers to clients at those all-important progress review meetings.
This article presents a general overview of the survey data from 2011 and 2012; AccountingWEB is still at the getting-to-know you phase with participating firms, but we have ambitious plans to expand the Practice Excellence process to provide more timely and sophisticated feedback to participating firms. As the project continues into its third year, we expect to see more meaningful trends emerge from the data and the analysis we are able to provide.
Specific results and analysis will be included in the Practice Excellence benchmark report for each participating firm. If you would like to keep informed of preparations for next year’s survey, email email@example.com.