Increasing revenue without increasing clients

One of the main goals of any business is to grow revenue, but the real challenge is to determine the proper strategy to do just that. Ultimately, it’s a math equation—music to any accountant’s ears. Let me explain.

Using a simplified business model, let’s pretend your food truck business has 1,000 customers paying you an average of $10 annually for your product/services. Congratulations! You now have $10,000 in annual revenue.

Revenue = # of customers x avg revenue per customer

In this overly simplified revenue equation, there are two factors that impact revenue: volume of customers and revenue per customer. To expand revenue, you can either increase your customer base or increase your revenue per customer. However, growing your customer or client base can be challenging in a competitive market where other service providers are constantly competing for the limited number of prospects. It takes a solid marketing strategy, among many factors. Let’s focus on the other side of the equation: Growing your average revenue per customer.

Land and Expand

When I was in the tech world, we used a strategy called “Land and Expand.” The goal was to land the customer first, then focus on expanding the footprint through license count, service lines, and new products, for example. For a technology company, this may mean hyperfocusing on the initial demo or POV (proof of value), then leveraging a separate team such as Renewals or Customer Success to keep the client satisfied and wanting more.

Many CPA and accounting firms only focus on growing their number of clients and miss the opportunity to grow revenue within their existing client base. At CCK Strategies, we are constantly looking for ways to increase the value we bring to our clients. Notice I used “value” instead of “revenue.” It is only after increasing the value you deliver that you can then increase the price you charge (revenue) for your services.

At CCK, our “Land” has historically been our tax strategy. Our tax professionals are incredible at immediately finding tax savings with prospective clients that quickly builds trust and shows the value of working with our firm. From there, we expanded into Client Advisory Services, Audit & Assurance, and Business Valuation/M&A Consulting, and we recently expanded our offerings to IT Consulting and HR Consulting.

Our mindset has always been, “What do our clients need to be successful, and are we able to meet those needs?” This client-centric care is what made and continues to make CCK successful.

Here’s an example

Let’s go back to your food truck and apply the “Land and Expand” model. Suppose you are known for serving the best hot dogs in your area. That doesn’t mean you should only serve hot dogs. If someone buys a hot dog from your food truck, but then buys their milkshake from the next food truck, you are missing the opportunity to meet the customer’s need (the milkshake) by not expanding your offerings. If you can deliver a tasty milkshake of equal or greater value than the neighboring food truck, you’ve now saved your customer the hassle of buying from two separate vendors to meet their needs.

The key factor here is whether you can deliver the expanded service/product line equal to or better than a competitor. If so, this one-stop-shop approach to service delivery can save the client time and money by consolidating their professional services with your firm. Meanwhile, you get to grow your revenue without growing your client base.

Land. Deliver great value. Expand. Deliver even more value and increase your fees accordingly. Everybody wins.

Editor’s note: This article was also published in the CPA Practice Advisor.