Marketing Accounting

In this paper I will be discussing the link between marketing and accounting as I am a marketing/accounting major. There are many connections between the accounting business and marketing. The marketing business is something that should not be overseen and many times is more helpful and detrimental to a business.

It is absolutely true that all businesses, including professional service firms, need to distinguish themselves in their marketplace. This is accomplished by creating a compelling message that differentiates the firm from its competitors. Imagine this scenario: You could close an additional $275,000 in revenue in just one day. And on that same day, you could identify over $500,000 worth of additional revenue opportunities. It might take a little planning and some hard work, but it's possible. In fact, Clark Haley, president of San Antonio-based Business Computer Systems, did just that by holding the company's annual user conference. Although Haley feels that all marketing efforts have some value, "the event that is the most measurably effective is the user conference." Each client conference costs about $10,000 and demands more than 200 plus man-hours for developing content and planning. However, the firm closes $150,000 in new business from each one. (Caragher)

Public accounting firms that want to advance to the next level, becoming and remaining profitable, are adopting many of the proven concepts that have worked so well in corporate America. This includes recognizing and embracing the importance of structured, integrated marketing efforts.

Marketing is critical to the success of every business. Unfortunately, many businesses discount the effect it can have, and they forego their marketing efforts for other activities. Or they make one or more of these mistakes, and their marketing efforts become ineffective. Perhaps this is why nine out of 10 businesses end in failure.

Effectively communicating the firm's distinctive capabilities, its special skills and hard-to-duplicate expertise, is one of the key roles that accounting marketers play today. In a world of intangibles, marketing can take the firm further than ever before, helping contribute to the firm's growth by reinforcing the brand, position, and image that separates it from the competition. Marketing accomplishes this by creating and implementing a balanced strategy that integrates a variety of tactics like, research capabilities, planning/execution, and working together. Preliminary market research enables today's firms to make informed decisions, helping them assess obstacles, challenges, and opportunities as well as analyzing the firm's personality and culture, goals, strengths, and weaknesses while reviewing the available resources and skills.

The marketer cannot succeed if working alone. Rather, success is best accomplished when everyone in the firm works together to reinforce the firm's unique selling proposition. Linking marketing to profitability? At times it does sound like a magic trick. If you understand the elements that make up profitability and evaluate how marketing can influence each, it becomes easier to see the direct relationship between the two. Once this connection is understood, you can effectively implement marketing activities that will positively drive the profitability of your firm. According to industry reports, estimated billings for accountants providing payroll services to small business clients can range from $480 to $1,700 per client per year. If you are willing to invest a small amount of time and money into understanding payroll and how to market it as a service to clients, your annual profits could increase exponentially.

There are four basic concepts that drive profitability in a CPA firm: (Mostad)

* Chargeable Hours

* Realization Rates

* Effective Use of Non-Chargeable Time

* Cost Control

Clearly, the more business you bring in through marketing activities, the more chargeable hours you will have. (Mostad) Having a solid growth plan for future new business also makes it easier to cull unprofitable clients. Every CPA firm has a certain amount of time they know their staff and partners will not be able to charge to clients. But that doesn't mean non-chargeable time has to be unprofitable. If that time is focused on activities such as business development, new product development, or staff development, in the long run it will be profitable. The second way marketing contributes to better use of non-chargeable time is by making the most of proposals. Following a strategic marketing plan helps your firm avoid ad hoc, unfocused, individual marketing activity that wastes both time and money. It will save costs