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Research Center >> December 2008

Why CPAs Love Recessions
And how you can too.
by Rick Telberg/For the CPA Channel Marketer
AICPA Custom Media Solutions

With the worst recession in perhaps a generation, some CPA channel marketers are battening down the hatches. But, if past slowdowns are any guide, the competitive winners in 2009 will be those marketers who can afford to maintain and even extend their spending and investment plans.

Historically, CPAs and accounting firms are recession-resistant. They enter recessions later, bottom shallower and recover sooner. The core services a CPA provides cannot be cut out of a budget — tax returns must be filed, bank statements reconciled, monthly P&Ls prepared and payrolls run. There’s nothing as reliable as death and taxes; and CPAs can make money on both.

For CPA channel marketers, five lessons are clear:

  1. Don’t flag in demonstrating your commitment to the CPA business. CPAs notice.
     
  2. The vendors who maintain or even extend their marketing activities in a downturn will strengthen their positions. CPAs believe that many of those that cut back will disappear forever.
     
  3. Innovation pays. While no one’s looking, nimble upstarts will emerge to challenge market leaders.
     
  4. Expect consolidation. The firms and companies that can, will continue expansion-by-acquisition strategies.
     
  5. Follow the leaders. In a classic “flight to quality,” consumers and clients are turning increasingly to CPAs over non-CPAs for their professional services.

Every accountant knows their mother was right. And in times like these, they can practically hear their mother’s voice saying: “Become an accountant and you’ll always make a living.” The fact is, most accountants today are making a very good living indeed.

Take a look at the latest jobs report from the U.S. Department of Labor, which showed the overall economy lost 533,000 jobs in November — but it also showed gains for CPA firms again non-CPA accountants and bookkeepers.

For the broad accounting and bookkeeping services category, the government counted 974,500 persons employed, which includes everyone from staff accountants to self-employed tax practitioners. November’s figure represents a loss of 1,700 jobs in the month, and an 18,800 loss from the record peak of 993,300 in December 2007.

But look a little closer, and the numbers tell another story: The market appears to be consolidating around the market leader — the Certified Public Accountant.

CPA firms are expanding their employee rosters and continuing to gain market share against non-CPA accountants. CPA firms had 450,200 employees in the latest month, for which data is available, up 23,300 jobs from the year-ago month, or 5.5 percent.

Meanwhile, non-CPA-owned payroll services and other accounting services showed declines.

Clearly, CPAs and CPA firms are positioned to gain market share and even grow their business in this economic cycle.

The facts on the ground bear that out. A number of established CPA firms are consolidating their hold on their markets — effectively investing in the business they know so well.

In recent weeks, a number of large and small firms have announced new acquisitions, including: Weaver & Tidwell, JH Cohn, Rothstein Kass, Brown Edwards & Co., Habif Arogeti & Wynne, Burr Pilger Mayer, Eide Bailly and Crowe Horwath.

As one veteran vendor told me: “Regulatory compliance, government audits, restructuring, work outs, bankruptcy activities, liquidations, fraud, expert witness activities — CPAs will be fully employed for many years to come.”

After almost 20 years in the finance and accounting business, I can tell you personally that the vendors who can and do maintain aggressive marketing postures will emerge even stronger a year from now.

CPAs ask me every day about various vendors in the marketplace. CPAs are conservative by nature and training. They want the best deal, of course. But they also want to invest their precious time and reputation in a stable and reliable partner.

In times like these I tell them that their choices are simplified: Go with the vendors who demonstrate a commitment to the business. Go with the ones who are advertising, innovating and supporting the profession’s future development. They’re the ones who will still be around in good times, as well as bad.

Recession Marketing Strategies

Numerous authoritative studies show that recessions can be huge opportunities for smart marketers — if they know the rules:

  1. Don't cut your advertising budget, increase it. Let your competition cut theirs. When you increase your spending, you increase your share of voice. If your competitors cut back, your message grows even stronger.
     
  2. Develop a strategic marketing plan so you don't waste money advertising the wrong message in the wrong place to the wrong audience.
     
  3. Reassure your customers. Implement marketing strategies that allow buyers to feel they are minimizing risk by doing business with you.
     
  4. Achieve greater media efficiency by taking advantage of softer rates and special promotions.
     
  5. Start sponsoring. This type of awareness advertising gives your business valuable exposure to targeted, core audiences.
     
  6. Keep your friends. You know who your loyal customers are. Keep in touch with them and let them know what you have to offer.
     
  7. Maintain continuity to sustain awareness. Advertising works cumulatively so you have to remind people frequently about your brand or they'll forget you.
     
  8. Step up public relations efforts. Be sure to maintain a media presence with smart, effective PR programs.
     
  9. Don't "cheapen" your advertising by trying to save on creative or production costs. Your customers will notice and worry about quality. This is a time to stress quality and value.

(Source: The Clark Company)

 
 
RICK TELBERG is AICPA Editor at Large and president of Bay Street Group LLC. He also blogs at CPA Trendlines. In his two decades in media and marketing for the finance, tax and accounting industries, Telberg has played pivotal roles in the development and operation of the leading media and e-commerce outlets in the business, including Accounting Today, The Practical Accountant, Accounting Technology, WebCPA.com, SmartPros.com, and CPA2Biz.com. Contact him by e-mail at rtelberg@baystreetgroup.com or by phone at (914) 674-4531.