If you’re an accounting professional, it’s imperative that you are able to offer your clients are a high level of service, and in order to do that, you need to be setting and tracking some important performance targets.
Performance targets are goals that you set and aim to achieve within a certain period of time, such as a year, and which can be used to help accounting firms (and all other types of businesses) reach goals, improve upon their performance, and boost productivity.
Here are 4 performance targets for your accounting firm to aim for:
- Client profitability
Your firms’ profits are entirely dependent on your clients, and so every month, quarter, or year (profitability tracking will vary according to each firm), you can get a picture of just how profitable certain clients are by totalling up the revenue generated by each one, and subtracting costs related to the job, such as supplies and software.
Accounting software can be used to do this, and once you’ve established the profitability of each client, you can work out how to increase it. This may be through reevaluated pricing, or the addition of offers or extra packages, for example, and once you’ve done this, you can set some goals that fit your profitability plan for the year.
2. Client base growth
Targets and goals can also be used to track and improve upon the growth of your client base, helping you get a clearer picture of whether your company is experiencing growth or not.
It may be wise to track overall and new client growth, for the clearest picture. Then, you can look at your existing metrics for growth to see how many clients have been brought in during a specific time frame, and work out what your goal should be. Once a realistic target has been determined, you can make a list of what can be done to help you reach it, such as by asking for referrals, or adjusting your marketing strategies.
3. Client retention
While attracting new clients is always desirable, retaining clients and providing them with a good service on a long-term basis is what every accounting firm needs to be truly successful. With this in mind, client retention becomes one of the most important performance targets to track.
Once you’ve figured out what your existing retention rate is, you can start by setting some goals for the short-term, such as a referral program, which will help you meet your primary goal of improving upon client retention.
4. Price per engagement
By tracking your firm’s prices for every engagement, you can better determine whether you might be charging too much, or too little for your services. As your firm gets bigger, working out the average price of every client engagement should help you tweak your costs to ensure that as you grow, your price per engagement grows too, and that you and your associates are being paid the true worth of your services.
There are numerous performance targets that your accounting firm can set for itself, to stay on track and support your long-term growth. Some may be big and take a lot longer to achieve, while others may be smaller and achieved on a much quicker scale. Conduct some research, study your existing metrics, get a sound idea of what needs to be improved, and start setting those performance targets today, for a healthier, wealthier tomorrow!
