Accounting firms commonly ask how much they should be spending to acquire a new client. This article provides our marketing key performance indicators (KPIs) for paid search and SEO campaigns for various accounting services.
After reviewing our data, we hope you’ll use the information to optimize your marketing campaigns and maximize profitability. You may find one of your services is much more profitable and choose to focus primarily on that service for advertising purposes and upsell other services later. You may find your campaigns are performing within KPI and begin looking into scaling the campaigns until they reach a point of diminishing returns. Some firms realize that an entirely new advertising strategy is necessary. In any case, we hope you will find our data and recommendations beneficial.
Customer Acquisition Costs by Service
The following spreadsheet presents the average customer acquisition costs (CAC) you should expect based on our estimate of the average annual revenue generated from one client. For a paid search campaign, ideally, we observe a 3:1 ROI from the campaign (i.e. for every $1 spent on advertising, $3 in revenue is generated in the first year). For SEO, we are looking for a 9:1 ROI (i.e. for every $1 spent on SEO, $9 in revenue is generated).
In our calculations, we estimated the average first-year value for one client for 13 services and ran the numbers for our 3:1 and 9:1 KPIs. In many cases, your firm will have a varying average, so you should figure your KPIs based on those numbers.
In calculating your numbers, allow for outliers and skewed metrics. For example, the average first-year value for audit clients generated from paid search campaigns may vary from the first-year average for clients generated from SEO or word of mouth. You should calculate for target CAC to the furthest degree of realistic granularity to make more statistically viable business decisions. If any clients account for >10% of annual revenue for one service while also being >5% of your total client base for that service, remove that client from average annual value calculations to avoid paying too much for lower-value clients.
Service Avg Annual Value Paid Search SEO Bookkeeping $4,200.00 $1,398.60 $466.20 Individual Tax Preparation & Filing $250.00 $83.25 $27.75 Corporate Tax Preparation & Filing $1,000.00 $333.00 $111.00 Auditing $20,000.00 $6,660.00 $2,220.00 Consulting $2,500.00 $832.50 $277.50 Payroll Services $2,400.00 $799.20 $266.40 Forensic Accounting $5,000.00 $1,665.00 $555.00 Management Accounting $3,000.00 $999.00 $333.00 Internal Audit $10,000.00 $3,330.00 $1,110.00 Tax Planning $2,500.00 $832.50 $277.50 Financial Planning $2,000.00 $666.00 $222.00 Business Valuation $10,000.00 $3,330.00 $1,110.00 Estate and Trust Planning $5,000.00 $1,665.00 $555.00
Paid Search vs SEO for Accounting Firms
Looking at the statistics above, one may jump right to SEO instead of paid search due to the vastly higher ROI potential. Before making a decision, here are a few points to consider:
- SEO, while extremely profitable, takes 6-8 months to begin observing results, and years to reach the maximum ROI potential.
- Paid search can yield a positive ROI in as little as a few weeks, but does not compound in ROI potential. Advertising platforms such as Google must be continually paid to maintain campaign results.
- SEO executed properly will result in a higher ROI every year it is maintained correctly. SEO ROI operates on an exponential curve.
- The ROI from paid search is linear. Expect $1 in to $3 out to be the average results over time.
Thinking of your marketing as an empty garden, SEO is planting seeds in the ground, and paid search is renting potted plants. While at the outset, renting the plants will provide for a more beautiful garden, over time planting and nurturing seeds will provide much better results in the long term.
Should Accounting Firms Use SEO or Paid Search?
In our experience, accountants begin in one of two places. Firstly, they require an immediate injection of clients into the business. In this scenario, we recommend they begin with paid search due to its nature of providing quick results. In the background, we recommend an SEO strategy is started, so the paid search advertising can be slowly phased out, making the advertising campaigns more profitable with a lower budget.
On the other hand, some accountants are at 80%+ capacity and looking for a scaling solution for their firm. Preparing to support more clients takes a large investment in the business, and partners want to know that clients will be there to support their investment. In this case, we recommend going all in on SEO and estimating a jump in the lead count at the 6-8 month mark and a steady climb from there.
Next Steps for Accounting Firms
We hope you have found this information useful in optimizing your online advertising campaigns. If you are searching for an agency with a proven track record to work with regarding campaign creation and management, you may find it beneficial to speak with us. Please send us a message on our Contact Us page.