How to Prove Value: Loyalty v. Satisfaction
by Lee Frederiksen, Ph.D., Hinge –
May 15, 2019
Savvy professional services providers don’t just strive for client satisfaction but rather client loyalty. One way CPAs can gauge loyalty versus satisfaction is by talking with their clients. But the reality is that clients may not speak openly and honestly for a variety of reasons. A better approach in some circumstances is to use independent research to help uncover perception gaps between the firm and its clients and measure brand strength.
A recent Hinge study, Inside the Buyer’s Brain: Understand your buyers. Win more business, engaged with 1,475 buyers and 3,005 sellers. More than 32 percent of the respondents represented the accounting and finance marketplace. The study uncovered three sets of industry loyalty and satisfaction insights and data that can help CPAs assess value loyalty and satisfaction with their firm.
1. Buyers are Becoming Less Loyal
Hinge buyer research from 2013 through 2018 showed a 14-percent drop in “highly likely” buyer intent to stay with the service provider in two to three years. However, while loyalty is dropping, satisfaction is on the rise. On top of that, the average professional services brand is weakening.
Hinge’s Brand Strength Index measures both reputation and visibility. The average Brand Strength Index has dropped from 60.1 in 2013 to 54.3 in 2018. There has been a decline in both reputation and visibility with professional services firms over the last five years.
How likely are buyers to stay with the same service provider in 2–3 years?
2. Online Search is Becoming More Common
In 2013, more than 70 percent of buyers reported turning to their network when they needed a new service provider. While referrals remain the top search method, less than 60 percent of today’s buyers ask for referrals — a 15-percent decrease.
While clients are more willing to be referral sources, the rate at which they are actually making referrals is down almost 5 percent from 2013 data. This suggests that prospects are using other methods to find CPAs rather than asking a friend or a colleague for a referral. Online search has become more widely adopted — up from 11 percent in 2013. Today, online search is used by nearly one in five buyers.
3. Clients Are Placing a Higher Importance on CPA Expertise
When evaluating a CPA practice, buyers are most likely to look at past performance (35 percent). This top selection criterion has changed since 2013 — when a good reputation, price and cultural fit were the top three selection criteria.
Since 2013, Hinge has observed an increase in the average perceived value rating. Buyers value their professional service firms 33 percent more today.
Rather than asking “How do I prove value loyalty versus satisfaction?” today’s CPA firms should be trying to answer the following questions:
- How do my clients really see me?
- How do I stack up against my competitors?
- How can I better differentiate my skills and expertise?
- Why do my best clients choose me?
- Why did some of my prospective clients choose other practices or firms?
All of these questions can be answered with research and data.
Loyalty is going down. Satisfaction is rising. It appears that fewer prospective clients are asking for referrals. They are accessing online resources more and more as they select CPAs. These prospective clients are looking for CPAs who can solve their immediate problem and help them develop new business. Leverage research and statistics and then go stake your claim. As any good CPA knows, “the numbers tell the story.”
Lee Frederiksen, Ph.D., is the managing partner of Hinge. He is an author and frequent speaker on strategy, marketing and organizational management. He can be reached at 703-391-8870 x101.
This article appeared in the May/June 2019 issue of New Jersey CPA magazine. Read the full issue.