The Three Factors Behind High-Growth Firms' Continuing Ascent

The past two years have reshaped accounting firms of all sizes. Over eight out of 10 firms are offering nontraditional services, says the newly released 2023-2024 Marketing Budget Benchmark Study. The study examines how High Growth Firms (HGFs) managed to post an average annual growth rate of 29% – up to five times that of their slower growing peers – in a forbidding business environment marked by turbulence and uncertainty.

Conducted by the Association for Accounting Marketing (AAM) and the Hinge Research Institute (HRI), the study identifies the enabling factors of growth amid adversity. A total of 115 firms participated in the study, representing 954 total offices and more than $6B in revenues.

The top three growth factors stood out as especially noteworthy: digital maturity, digital marketing and workplace culture.

 “These three factors are not only drivers of growth, but also signs that accounting firms are evolving their business models,” says Hinge managing partner Lee Frederiksen. “Firms across the board are offering nontraditional services like ‘business consulting’ and ‘advisory,’ which can be delivered by non-CPA talent. HGFs, in particular, plan to bump up their budget for product development in a bid to diversify those offerings even further – a strategy to address the talent shortage and leverage existing talent.”

 “None of this digital maturity and diversification of offerings is possible without a strong growth function,” adds AAM president Nicole Sterling. “This fast-paced growth takes high-caliber expertise in branding and marketing that targets three audiences: buyers, talent and industry media. In order to thrive in today’s competitive marketplace, firms can’t afford to tighten their marketing belts. In fact, the study’s HGFs are planning to spend even more on technology, marketing and people.”

The AAM study details how the three top factors lifted HGFs to higher levels of growth:

Digital Maturity: According to the research, “although most, if not all, accounting firms stepped up their use of digital and cloud technology, HGFs sped up the pace of their digital transformation. On a five-point scale, over 9 out of 10 of High Growth Firms scored in the three highest levels of maturity. By way of contrast, only 23% of Low Growth Firms (LGFs) achieved that level of digital maturity.”

Use of Digital Marketing: This transformation, says the study, is best illustrated by HGFs’ greater use of digital marketing and content marketing techniques over more traditional techniques. “LGFs spend more on traditional techniques like conferences and events. Moving forward, 90% of HGFs will raise spending on SEO, 75% on research, 70% on their website and 57% on digital PR to make their SEO efforts more effective. LGFs allocate 0% of their budget to digital PR, limiting the impact of their SEO efforts on firm brands and experts’ personal brands.”

People and Workplace Culture: The research shows that HGFs are committed to building and reinforcing a workplace culture that draws and retains hard-to-find talent. “Compared to LGFs, they spend 14% more of their marketing budget on people and resources, and are 48% more likely to publicly recognize people for professional and personal accomplishments.” Their efforts are paying off. “HGF employees are 75% more likely than LGFs to be highly satisfied with their firm’s culture. To cement their advantage in attracting and retaining talent, all HGFs plan to grow their budget for the marketing department’s compensation. If positions are hard to fill, they make use of outside resources such as consultants and marketing agencies.”

 Access the full report or the executive summary.