CPA firm profit margins exist on a spectrum. While industry margins average between 20% to 30%, firms can realize higher or lower profit margins based on a variety of factors, including how you spend your money on marketing. In your efforts to increase your profit margins, you may be staring at the high cost of your CPA firm’s marketing strategy and wondering if it’s even worth it.
The answer to that is a resounding “Yes, if…” Your CPA firm needs marketing. That’s a fact. But it needs effective marketing. CPA firm marketing budgets can feel hard to justify, but that perspective will change if you have a better understanding of why marketing is necessary, and how to focus your marketing budget in the right way.
Why Is Marketing for CPA Firms So Expensive?
For many CPA firm owners, the cost of marketing tends to feel too expensive. But that comes down to whether you’re budgeting properly and spending that budget in ways that have a better return on investment (ROI). Those are certainly words that CPAs should be exceptionally comfortable with. Yet many CPAs aren’t marketers by nature, and if your firm is small, you may not quite understand what good marketing investments look like.
From a high level, marketing is expensive for everyone, not just you. There are multiple avenues for marketing with different costs to your business. These include, but are not limited to:
- Inbound marketing, which covers areas such as your company’s blog posts, podcasts, video content, and search engine optimization (SEO)
- Search engine marketing (SEM), which include primarily pay-per-click (PPC) ads on search engines
- Content marketing, which includes areas such as social media promotions and paid guest posting
And don’t forget that most of these marketing areas will also require marketing intelligence technologies, some of which will cost money. If you have a website, you get access to Google Analytics and Google Search Console for free (and we all love free around here), both of which are powerful and needed tools for your inbound marketing and SEM. You’ll likely need to extend that with other third-party tools that make your marketing far more effective, such as SEO software like MOZ or SEMrush. You will also likely need better lead generation and tracking tools, such as Salesforce or HubSpot.
The cost of all your third-party tools can start to add up over time, but if they’re properly deployed and utilized, you’ll start to see them as indispensable.
The U.S. Small Business Administration (SBA) notes that the average marketing budget (in 2018) was 7.9% of revenues. That can vary depending on the industry and whether your CPA firm mostly targets consumers or businesses.
If that sounds like too much for you, the SBA has a word of advice:
“Marketing isn’t an expense—it’s an investment, one that drives your sales. Without marketing you won’t reach new potential customers, and that could mean lower sales.”
3 Top Budget Considerations for a CPA Firm Marketing Plan
There’s no getting around it. Unless your CPA firm’s referral network is stronger than Hercules, you’re going to need to put some money into marketing. What’s more, you’re going to need to put enough money into marketing to make it effective, or else your spending will go to waste, and you won’t see a good ROI or any at all.
Here are three things to consider as you formulate a spending plan for your CPA firm’s marketing strategy.
1. First, assess your pipeline
First, get a better understanding of how you’re generating leads and converting those leads into new deals. If you have something that’s already working, stick with it. For example, maybe you have a killer salesperson who is able to self-generate the leads that you need. They have a strong network and can get new deals through that avenue. You probably won’t need as large of a marketing budget, at least right now.
But consider that person may not be with you forever. That person you’re relying on to generate and convert leads could leave. If that happens, is your pipeline going to dry up completely?
It’s important to have a diversified sales pipeline. Your sales pipeline is your lifeline. Relying on only one way to get prospects to your pipeline is similar to only having one large client giving you all of your revenue. It’s exceptionally risky. So, assess where you’re getting leads and how those leads are converting. Then, figure out what areas you should invest in to boost your lead sources.
2. Second, investigate the competition
Don’t dive head into any marketing channel until you understand what the competition looks like within that channel. Understanding that will help you understand just how much it will cost to generate leads through there.
For example, maybe you want to dip your toe into pay-per-click (PPC) Google advertisements. Start by researching the cost per click for the keywords you want to rank for in advertisements. Google has a specific formula for how much your cost will be, but the averages can give you a good idea. When done well, the ROI on PPC ads can be incredible, but the competition can be fierce, so the minimum cost of entry can be high.
Also, note that you’ll also need to account for the cost of making a high-quality advertisement and landing page for those ads. After all, those ads will need to lead somewhere, and that somewhere still needs to convert! See what your competitors are doing with their search engine marketing, and then figure out how to improve upon that.
3. Third, make yourself more visible
Marketing is all about visibility. Where is your core audience spending their time and doing their research? If you’re not showing up there, then you aren’t going to be generating any leads.
This is where SEO and content marketing come into play, in particular. You want to get your business in front of potential customers, but that means generating the type of content you need so that you show up in their web searches, across their social media channels, and in the content service they’re browsing.
SEO is a whole industry in and of itself. You can minimize your costs by repurposing content, but that still means you need to invest in creating useful content that people want to see. Third-party tools can help you get that marketing intelligence, and you may need to either hire someone to do this kind of marketing for you full-time, freelance, or through an SEO agency.
CPA Firm Marketing Can Be Expensive, But It’s Worth It
Is marketing pricey? Definitely. But done well, you can generate more than enough new revenue to make the budget seem small in comparison. That’s so long as you’re putting your marketing dollars into the right strategies and tools, and then having the right professionals around you who understand how marketing should work and who can help you optimize your approach.
To learn more, watch our video, Why Is Marketing So Expensive and How to Budget For It?