By now, any CPA not living under a rock has gotten the memo: In order to achieve growth, you need to incorporate consulting into your service suite. Our core compliance services have grown long in the tooth and thinly margined. To provide clients the value they demand, remain relevant, and expand, all signs point to consulting, especially in the tech-related offerings clients need now.
Change is in the air
For decades our profession, and likely your firm, has been relying on annuity compliance work — mostly renewable annual engagements centered on tax and audit. In many firms, annuity work represents as much as 90 percent of total revenue. However, the shift to advisory services brings with it the requirement to continuously develop and manage opportunities that do not necessarily recur. As a result, a consistent pipeline process supported with sales professionals will be key to driving successful revenue growth.
Statistics suggest that the pivot to advisory services is under way, though it has not gained deep traction. Over the past three years the Big Four have seen consulting revenue inch up, from 38 percent to 40 percent of total revenue, representing about $1.2 billion. The next three largest firms have grown their consultancies by a similar percentage. In the next 20 largest CPA firms, consulting represents 22 percent of overall revenue. However, the remainder of the Top 100 have stayed flat over the past several years, with consulting making up 17 percent of total revenue. Yes, there’s been much talk about consulting services, but the midmarket has a long way to go. What’s it going to take to substantially grow consulting revenue?
Prime your pipeline
I have long and passionately advocated an institutionalized pipeline process driven by the managing partner and embraced firmwide. As firms pivot toward advisory services and face the inevitable shrinking of annuitized revenue, a pipeline process becomes even more important. It shines a bright light on opportunities, requiring that they be managed at a higher level of focus and sophistication.
The secret to pipeline success is not the customer relationship management software your firm uses. It’s the strength and integrity of the process itself. It hardly matters if your system lives on an Excel spreadsheet or on the most sophisticated software available. What matters is the quality of opportunity pursuits resulting in revenue wins. Win rates and percent of total annual firm revenue in the pipeline are the two indicators that monitor sales success. A full pipeline, with regular reviews and accountability for action, is the crystal ball into your future revenue.
Go pro and go long
The second element of a consulting reboot is hiring professional salespeople. I cannot emphasize strongly enough the value of bringing in skilled business developers. “But Gale,” I hear you saying, “we have rainmaker partners here in the firm!” I’m glad you do. But partners are at best part-time contributors to your sales effort; they’ve got their own work to do. What’s more, partners are used to a slow burn when it comes to securing business. Professionals who do nothing but identify, pursue and close opportunities can achieve in 20 weeks, or sometimes 20 days, what could take a partner a year. Another plus is that, as your firm welcomes more tech-oriented practitioners, these people will be quite comfortable working with sales pros, and will often expect it.
In fact, many of the best business developers in the accounting world come from a tech background. I urge you to hire those who know how to sell tech-driven services, not someone who sold in a commercial banking environment. What’s more, tech-oriented sellers are used to a large geographic territory and, by necessity, have honed the skill of selling virtually.
Perhaps the most important attribute certain sales professionals bring, and one you need to hire for, is that they are solution sellers with a long-term view, not transaction sellers with a short-term perspective. Solution sellers have their eye on larger, more layered engagements. They’re comfortable uncovering hidden needs and delivering strategic responses tied to a client’s potential needs and longer-term value proposition.
An analogy that comes to mind is vendors who sell services to accounting firms. A strategic seller might reach out to the managing partner with discussions about the strategic direction of artificial intelligence capability within the firm. A transaction seller approaches the head of the tax department with a platform to drive tax service efficiency.
Be the solution
If your firm is on board with the big idea that advisory services are its future, you’ll need to develop a culture and infrastructure to support that change. Essential to your growth aspirations is a robust, firmwide pipeline process, supported by professional sellers that are skilled and devoted to bringing you winnable opportunities. Don’t invest valuable time looking for the perfect CRM system, or expecting your partners to morph into sophisticated business developers. Take the bull by the horns and become the business-solution provider your clients deserve.