Five ways to evaluate your firm’s performance (Sponsored)

Sep 25, 2019

Service industries are all about clients. Are you making them happy? Are they making you profitable? You need metrics that cut to the heart of those questions. Here are some simple measures you can take to rate firm performance.

What are clients staying?

It’s important to maintain a healthy client base with consistent revenue. The following indicators can help you to see how you’re doing:

  • The rate of increase or reduction in your total client base.
  • How long clients stay with your firm.
  • How often you acquire new clients.
  • Why clients leave.
  • The strength of your client relationships.

The expense of acquiring new clients dwarfs the cost of keeping old ones. Some sources say it costs between five and ten times as much.

Do you know who your most profitable clients are? Make sure you look after them. You can improve retention by cross-selling other services to them and regularly reviewing your offerings to make sure you stay relevant to their business.

How happy are your clients?

About 60% of small businesses said they were highly satisfied with their accounting firm, but 20% were dissatisfied. Could 20% of your clients be unhappy?

You can reduce the likelihood of dissatisfaction by developing a system to invite and track client feedback. Ask if they’re happy with the quality of work, the level of service and the loyalty you show them. Start with your key clients.

You can ask them face to face – some clients will like that approach – but use online surveys where you can.

How do you find new business?

New business can come from many different sources, such as referrals, invitations to put forward a proposal (RFPs), networking, marketing or seminars. Keep track of where your new clients come from. It pays to know which sources are working and which aren’t.

Are you making the most of your existing clients?

Could you be under-serving some of your clients? Think about their potential value compared to their current value. If there’s a gap, work out how to close it. Calculate the costs of moving clients to more profitable services.

To find out where the profitability is in your firm, calculate the annualised revenue per client, per service. Some revenue streams will look good. Others might not. Once you know which types of clients and services make money, you’re better placed to set a strategic direction for the firm.

Do you monitor your clients’ needs?

It’s a good habit to check in with your clients regularly. It’s a common courtesy and a good way to reinforce the value of your services. Always make contact using your client’s preferred method.

Be sure to track all these communications so you can build on past conversations without repeating yourself. Regular, thoughtful contact improves client satisfaction and retention, and it makes it easier to upsell additional services.

Read more from Xero at xero.com.

(This article is sponsored by Xero)