If you’re curious about the importance of millennials on your firm’s growth, you’ll want to read this post.
Xero conducted a survey of more than 1,500 small business owners to study what millennials value in an accounting firm and what they think about their current advisors.
The 14-page report has a bunch of interesting findings.
This post will highlight my 11 key takeaways from the report and how you can use them to help grow your firm.
Let’s go!
About the Survey
The research included in Xero’s report was based on a survey of over 1,500 small business owners across Canada.
Characteristics of Millennials
Millennials are characterized a lot differently than most older generations.
Generally speaking, they are:
- Tech-savvy
- Used to operating in an online world
- Hyper-connected
- Used to getting what they want with a click of a button (ex: Uber, Amazon, etc)
These are important traits to keep in mind for the purposes of this post.
Takeaways from Xero’s Study
Takeaway 1: Growing Your Firm Will Be Difficult Without Millennial Clients
Of the survey respondents, 40% of businesses established in the last 2 years were started by millennials.
Consider the gravity of this figure. It’s only natural to expect that this figure will continue to increase over the next few years.
What that means is that any growth strategy should likely take into account millennials and their unique characteristics as they need to be marketed to and serviced differently.
Takeaway 2: 1 out of 5 Millennial Businesses Attracted to Stress Minimization
Millennials are an extremely stressed out bunch of people according to various studies. There’s no doubt that COVID-19 has only made matters worse as we are now seeing unprecedented levels of anxiety according to the Mental Health Index.
With Xero’s report indicating that 20% of millennial business owners say they want to be less stressed out pre-COVID, there’s no doubt this number is higher now.
What does this mean?
An easy, seamless, streamlined customer experience can be exceptionally attractive to a lot of business owners out there.
It’s so important for millennials actually, that 39% of them are seeking an advisor that’s “enjoyable to work with”.
If you’re curious about the importance of implementing a customer experience in line with the above, check out my post on the subject.
Takeaway 3: A Monthly Check-In Can Go a Long Way
33% of millennial businesses don’t receive information, ideas, or advice from their accountant more than twice a year.
This is a problem.
Remember, these are hyper-connected individuals who are used to getting information in a real-time fashion. If you’re only delivering valuable information once or twice a year, that’s not going to cut it.
Here’s an easy suggestion:
When I ran my firm, my team and I would have a monthly task to check-in with all clients and make a few comments on their financial position.
If you have all clients on a cloud accounting system like Xero, all you need to do is log in to their account, check their financials and send off a brief comment like,
“Hey there! Wow, I was so happy to see that your revenues went up 18% last month. I also noticed that your expenses went up by 24% however, so you might want to look into your advertising expenses to see if there’s anything you can cut as they’re significantly higher than the previous month.“
Simple as that and it only takes a few seconds.
Takeaway 4: Their Taxes Aren’t Top of Mind
Your clients have a lot more on their minds than their tax returns. In fact, only 15% say taxes and compliance are holding their business back.
Things like increasing sales (34%), keeping up with the competition (27%), hiring & retaining staff (21%), and getting paid (20%) are significantly more important to them.
If the majority of your services are comprised of year-end tax work, you’re not actually helping them with their bigger priorities and as such, you’re not as valuable to them as you can be.
While tax returns are necessary, if you can somehow free up more of their time to focus on things that are holding back their business growth, you become exceptionally more valuable.
This is where the importance of different accounting automation tactics come into play.
Takeaway 5: Client Satisfaction is Very Low = A Huge Opportunity
50% of millennials are looking to replace their accountant. A staggering number! 1 out 5 wouldn’t even recommend the advisor they’re currently with.
This is further demonstrated by the exceptionally low 7.4 Net Promoter Score that these millennials provided, which measures just how likely these business owners are to refer their accountant.
And to be honest, I personally love seeing this kind of stuff, because I see it as a huge opportunity for firms to analyze why millennials are so dissatisfied and then offer up an experience not currently being provided in the market.
Millennials today want easy, seamless, and painless. Deliver that kind of service experience and they’re yours!
Takeaway 6: Only 7% of Millennials Are Using Cloud Accounting Software
This is totally baffling to me. How can a generation that’s been living in an online world all their lives not be using cloud accounting software? And 18% are using written journals… yikes!
This stat is further backed up by an interview I had with Xero Canada’s Country Manager, Will Buckley, where he stated that around 10% of Canadian businesses are running off of a cloud-based accounting ledger (15:20 of the interview).
It’s no wonder why millennials aren’t happy with their accountants.
Takeaway 7: Millennials Aren’t Getting the Client Accounting Services They Want
CAS (Client Accounting Services) consists of services relating to bookkeeping, bill pay, chasing payments (you can automate A/R collections using this process), and anything else similar.
Compared to all services that millennials are paying for, CAS has the largest discrepancy between those wanting it and those getting it.
As you can see below, 77% would pay someone to stop having to do it themselves, while only 37% are paying for it. That’s a 40% differential.
The moral of the story is that if you push these services to your millennial clients, you’ll likely succeed in bringing more business through the door.
Takeaway 8: Your Team and Their Experience is Not a Selling Point
I gave a presentation in early 2020 about how to differentiate your firm. This was one of the slides:
Notice how “years of experience” is listed as a bad differentiator?
I’m not saying that experience is a bad thing. Actually, it’s a good thing.
But it’s not the reason why millennials are signing up and staying with your firm.
According to Xero’s survey, only 15% of millennials are signing up and staying with your firm because of your team.
To flash this image again, look at all the other things they value more:
Takeaway 9: A Smooth Client Onboarding is Make or Break
I’d be curious to know the differences between millennials and other generations on this one. It’s worth pointing out that 37% of millennials who have had a negative onboarding experience are planning to replace the very firm they just joined.
It really goes to show that your customer experience must start off on the right foot.
My recommendation:
- Have a standard onboarding checklist.
- Pick a project management app that allows you to invite your client into it and assign them to tasks that require action on their part.
- Have a defined process for walking through the onboarding phase. Work shouldn’t start until onboarding is complete.
This will help standardize the optimal onboarding experience and get your client collaborating with you on things that require their attention.
Takeaway 10: Ask for Feedback More Often
A few months back I wrote up a similar style piece on 10 must-know insights from another Xero survey of over 250 accounting & bookkeeping firms. The top 10% performing firms were called pacesetters and they were the ones growing much faster than the rest. I wanted to know what set them apart.
It was found that one of the things they do a lot better than the rest is asking their clients for feedback.
Why?
Because this allowed them to improve the client experience.
When I ran my firm, the #1 thing I wanted to know before re-engaging clients for a new year was an assessment of our services. I asked questions like:
- “What weren’t you happy with?”
- “What could we do better?”
- Etc.
And I didn’t want any sugar-coating either. This allowed me to patch up anything not working smoothly.
In reality, unfortunately, only 18% of business owners get asked for feedback from their advisors.
If more firms would ask these questions, you’d see much higher levels of satisfaction amongst millennial business owners.
Don’t be shy or too proud. Find out what your firm can do better by directly asking for feedback. You’ll only make yourself better.
Takeaway 11: A Good Customer Experience Can Lead to Almost Twice What You Charge
Not convinced yet that millennials highly value an easy, smooth, pleasant customer journey with your firm?
Well, “promoters”, those most likely to promote your business to others (due to your firm’s excellent customer experience of course), saw those clients paying an average of $8,900 per year compared to “passive” clients paying an average of $4,900 per year.
That’s huge!
Conclusion: Your Firm’s Customer Experience is Crucial
The major takeaway here is simple. Millennial business owners, who represent a fairly large chunk of the market, are not happy with their accountants. They also value an easy, online, seamless customer experience. And the numbers are showing it.
If you can properly craft and market a customer experience around what they’re looking for, the opportunities for growth are endless.
For the full 14-page Xero survey, please click here.
