5 KPIs for a Post-Pandemic Accounting Firm
Even before the pandemic, the ground was shifting under accounting practice. Digital transformation, the shift to accounting automation, and then COVID-19. The big question now is what will keep an accounting firm stable and competitive in a post-pandemic reality? One way of staying ahead of the pack is to up-date your accounting firm's key performance indicators.
But which KPIs should you use? And how should they be updated? Here are five KPIs that aren’t getting enough attention as we plan for our post-COVID accounting practice.
1. Human Contact
With lockdown came an end to face-to-face meetings and the rise of Zoom. But consider how much of your business was driven by the human connection made during one-on-one meetings. What is the future of such interactions post-pandemic?
Even before the coronavirus, some accounting firms were using a Human Contact KPI to measure the level outreach their staff were making (e.g. ten client meetings per month). Post-pandemic these kinds of human interactions—on apps like Zoom, but especially real-life, in-person meetings—will be vital to measure as you grow your client base as the economy rebuilds. Despite the benefits of technology, its those human connections—especially after months of not having them—that will have employees and clients alike happier and more engaged.
Churn is a more traditional KPI, but one that will be increasingly important in a post-pandemic world.
Churn is, at its most basic, is a measure of the percentage of customers lost by your business during a given time period. Some churn is always to be expected as clients either leave or are fired by you. Clients may leave for a variety of reasons, such as dissatisfaction with your services, or a lack of engagement. So long as the churn rate remains below approximately 5% of your fee base each year while you continue to add new clients then you are likely in good shape.
However, in a post-pandemic world, keeping your eye on Churn as a KPI will be vital to the health of your business. With the unprecedented economic upheaval caused by the pandemic, we can anticipate a great deal of flux in the marketplace for the foreseeable future, as the economy rights itself. We will need to keep a close eye on our clients and business partners to see how many of them end up going under simply due to the realities of a struggling, rebuilding economy. You could lose more than an average number of clients as, through no fault of yours or theirs, their businesses are no longer sustainable in a post coronavirus economy.
3. Client Retention Rate
Closely related to Churn is your Client Retention Rate. It costs 5 to 25 times more to earn a new customer than to retain an existing one, so failure to retain clients can seriously impact long-term profitability.
With the risk of clients disappearing due to their business failing entirely in the post-pandemic period, it will be more important than ever to keep those clients you do have while also understanding why clients who are taking their business elsewhere are choosing to do so.
Which of your service are driving the business and which are holding it back? Which kinds of clients are you retaining longest? Which kinds leave quickly? Assess your retention rates at regular intervals (i.e., 1-, 3-, 5-, and 10-years) to gain insight on how to keep clients happy. For those that leave, ask for an exit interview—understand why these clients have chosen to leave, and let them know their feedback is valuable to you.
4. Employee Turnover
This KPI isn’t directly related to your finances, but nevertheless is a key a part of your firm’s post-pandemic success. And what’s already clear is that the future of the workplace will look very different from what it did prior to the pandemic.
For one thing, with so many employees having transitioned to remote work, expect that many (or perhaps even most) won’t want to return to a traditional 5-days-a-week-in-the-office role. Nearly half of all work could be remote post-pandemic—is your firm prepared to offer that option permanently? Likewise, employees who have become accustomed to more time with family and a better work-life balance during lockdown may not be willing to put that aside for a return to long hours in the office and on the commute. They may shop around for roles that offer more flexibility and concern for their personal well-being—are you able to offer it to them?
Your success depends on a stable workforce, and high turnover is expensive and negatively affects performance. And Employee Turnover KPI will help alert you if something is amiss in your organization so that you can address it quickly.
5. Time to Recovery
This is a KPI borrowed from other industries like IT support and logistics, but which has increasing relevance for all industries post-pandemic.
Time to Recovery measures resiliency within an organization and its supply chain. The goal is to test a company’s agility and ability to resume normal operations following an unplanned event. Prior to the pandemic, 55% of organizational redesigns focused on streamlining to increase efficiency. An unintended consequence of this was the creation of fragilities within systems, leaving them little to no flexibility to respond to disruptions. Resilient organizations, on the other hand, are able to correct course and adapt to change more easily.
In a post-pandemic world, you will need a KPI that measures how prepared your organization is to rebound from disruption of any kind, and your Time to Recovery KPI will let you, your employees, and your clients know just how quickly you—and they—can get back on your feet to resume business as usual after the unexpected.
How Caseware Can Help
Demonstrate the value and resilience of your firm by focusing on client-facing needs and simplifying the number of administrative tasks your team has to focus on. Put smarter reporting tools into the hands of your managers, so they can quickly understand engagement profitability, progress, and identified issues. Learn more what Caseware solutions today.