Qualitative Performance Metrics for CPA Firms

Source: AICPA CPA Insider

The following includes excerpts, reproduced with permission, from an article by Lauren Prosser.

There are many metrics CPA firms use to evaluate quantitative performance. Here are 12 metrics that can provide more qualitative feedback.

1. Lifetime value of a client. Essentially, the sum of all revenues generated over the lifetime of the client.
2. Cost of client acquisition. The AICPA estimates it costs 11 times more to bring in a new client than to keep an existing one.
3. Client retention rate. It's important to know which service offerings are most successful.
4. Average number of services per client. Higher numbers can increase the retention rate exponentially.
5. Average number of top-client “touches” per month. Knowing this helps ensure that a firm's most important clients are constantly being contacted and that there are many avenues for identifying their needs.
6. Average client response time. If I were to ask your staff how quickly the firm strives to return calls, I should receive a consistent answer.
7. Number of cross-selling opportunities vs. those won. A huge discrepancy between these numbers can identify a need to develop training.
8. RFP win percentage, other proposal win percentage and pipeline win percentage (or pipeline conversion). As your CPA firm looks to bring in new clients, what venues have been the most successful.
9. Average number of professional development hours per CPA firm member (monthly and annually). Soft-skills training and development will set the firm apart.
10. Utilization rate and realization rate (by service offering). Although quantitative, these provide information on how profitable the firm's services are.
11. Staff-to-partner ratio. Partners should focus on their core competencies, but that means having the proper team in place for support.
12. Revenue growth per year (actual vs. expected). Examine by service offering/line, by partner, and by industry.

For the complete article, read “The Defining Dozen: 12 Metrics CPA Firms Should Track.”

From AICPA CPA Insider, January 7, 2013, http://www.CPA2biz.com.