12 Metrics All CPAs Should Track —AICPA Insights

Consider Lifetime Client Value, Cost of Client Acquisition, and Retention Rate

Is your CPA firm making the most of current relationships and doing all it can to expand into new ones?   While there are many metrics CPA firms use to evaluate quantitative performance, AICPA Insights suggests 12 metrics than can provide more qualitative feedback. These metrics can help CPA firms measure their reach with clients and provide insight into how well processes already in place are helping to identify opportunities with clients.

1. Lifetime Value of a Client. This is essentially the sum of all revenues generated from the CPA firm’s service offerings over the lifetime of the client. Certainly, most CPA firms want to know this metric and how it changes from year to year for the biggest clients. It’s good to review how long these “A” clients have been with the firm and to monitor whether new service offerings have been introduced to those clients.
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, so studying this metric is a good reminder of those differences. Knowing this metric can also help your CPA firm evaluate how effective its efforts are to reach the target audience.
3. Client Retention Rate. Each CPA firm can’t be everything to every client or potential client, so it’s important to know which service offerings are most successful. Where is the firm keeping clients, and what patterns can help refine the approach to client services? Evaluating the retention rate for clients at 1-, 3-, 5- and 10-year intervals can provide insight into how to keep the relationship on solid ground.
4. Average number of services per client. Compare this alongside retention rates. As your CPA firm is more closely entwined with a client, it will be more attuned to their needs and can address a greater spectrum of the clients’ needs. That can increase the retention rate exponentially.
5. Average number of top-client “touches” per month. Knowing this helps your CPA firm ensure its most important clients are constantly being contacted and that there are many avenues for identifying those clients’ needs. Looking at this metric by partner and by industry can be used to improve internal communication so that partners excelling in certain industries can teach others.
6. Average client response time. If I were to ask a staff member, manager or partner in your CPA firm how quickly the firm strives to return calls, I should receive a consistent answer. That is the first step in developing a firm that is truly responsive to client needs.