Episode 152 | How KPI Strategies Drive Success With Ron Baker

KPI strategies can transform how accounting professionals measure success and build lasting client relationships. Michelle Weinstein welcomes Ron Baker, a leading expert in value pricing and predictive indicators, to share actionable insights that go beyond traditional metrics. Together, they explore how firms can track meaningful data, improve client satisfaction, and increase profitability. Discover how small changes like focusing on high satisfaction days and reducing customer effort can lead to huge business results. This episode is packed with practical advice to help you redefine success and lead your accounting firm to peak growth.

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Episode 152 | How KPI Strategies Drive Success With Ron Baker

How We Help Accounting Professionals Build Abundance

In this episode, we have a very special guest. Our special guest started his CPA career back in 1984 with KPMG Private Business Advisory Services in San Francisco. Now, he is the founder of VeraSage Institute, the leading think tank, dedicated to educating professionals internationally, and also hosts a radio talk show, which you can find at VoiceAmerica.com. He’s also the author of seven bestselling books that you can find on Amazon.

Before we welcome our very special guest to the show, if you’re an accounting tax or bookkeeping firm owner and you want to stop trading time for dollars, let go of overly demanding clients, and finally get paid based on your value and your worth, and still massively increase your total revenue, here’s what I’ve got for you.

Here at The Abundant Accountant, I show you a system to fill your firm with ideal clients who value your time so you can take your firm to the next level and work the hours you want to work while still having plenty of free time every week for yourself and your family. Not only that, I’m also going to show you how to do all of this in a way that feels simple, effortless, and automatic. If you want me to show you exactly how to do this, go to TheAbundantCall.com right now and book your call with me and my team. Now let’s welcome our very special guest, Ron Baker, to the show.

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Welcome, Ron, to the show.

Thanks for having me back, Michelle. This is great.

Yeah, thank you so much for always coming back here on the show. I have heard from personal clients of mine how they love your episodes and have supported so many people. I wanted to say thank you for being here. Ron, before we dive into our topic, which is learning how to identify which KPIs firm owners should measure to help increase revenue and profitability and understand your definition of KPI, why don’t you tell everyone who you are and what you do, in case they don’t know.

You could cut and paste what I’ve said in the past, but I’m a recovering Big Eight CPA, so I left the Big Eight firm and started my own firm. This would’ve been like ‘87 and ‘88 and started value pricing very rapidly in our CPA firm in 1989 or the end of ’88. I did it to enhance the customer experience. It worked tremendously. The customers loved the certainty and price. There was nobody on the circuit talking about this. There were no books and no consultants, at least not in the professional space.

We did it because we thought it was a better customer experience. It worked so well. It allowed us to upgrade our practice, fire a bunch of low-value customers, and make more money with a lot less work. We got rid of time sheets, which of course the team members loved. I got so excited by this. I started teaching it. I started with the California CPA Society, and then I rolled it off across various state societies and then wrote a book that came out in ‘98. That book sold 40,000 copies worldwide. I’ve been writing about it and teaching about it ever since.

What’s the latest book, in case someone wants to pick up your latest?

The latest book is all about the subscription economy. That’s Time’s Up: The Subscription Business Model for Professional Firms. I wrote that with Paul Dunn, who I wrote The Firm of the Future with twenty years ago. We were talking about value pricing. This book deals with the subscription business model, and I think we did a show on how the two are completely different models, but they each need KPIs.

Time’s Up!: The Subscription Business Model for Professional Firms

Any business needs a KPI. I would love it if you could share the regular definition of KPI and then the Ron Baker version of KPI and how you’ve tweaked it, and also maybe share the backstory of why you’ve tweaked it. In my business, the biggest KPIs I look at are conversion rates. How many prospects are we talking to? How many are enrolling? I’m looking at my Facebook KPI indicators for my advertising spend. There are so many different metrics.

Why Traditional KPI Definitions Need Rethinking

I think now, if you own a firm, accounting, tax, bookkeeping, fractional, CFO, or whatever, there are certain things you need to measure on a daily or weekly, and Ron will tell us what to do. What I do in my business and what you need to do for your firm, or if you’re in a job and you want to quit your job and go all in on a firm, you need to pay attention because you don’t want to throw money down the drain. You don’t want to waste time, you don’t want to spin your wheels, but you also want to have a predictive approach to this whole thing. Ron, what is the definition of KPI that normal people like me know of, and then what is the one that you’ve invented?

I used to firmly believe this, and we’ve all heard this term or this sentence, “What you can measure, you can manage.” I used to believe this. I used to tell it to my customers. I now think this is incredibly dangerous advice. The most important things in life cannot be measured. How do you measure the love of your spouse and the love you have for a child? How do you measure the trust and respect you have in your partner?

The most important things in life cannot be measured. How would we understand feelings or poetry or music? You can’t. I can take a violin into a laboratory and measure it. It’s height, weight and width. When Joshua Bell picks it up and plays it, it makes me weep or march off to war. That can’t be measured. There’s a material realm where things are measurable, but there’s a spiritual realm. By spiritual, I mean those things that can’t be measured.

I would put starting a business in that spiritual realm. I would put marriage in that spiritual realm because they fail. Whereas if I build a boat, an airplane, or a building, it’s going to sail and fly and stand through wind and bad weather probably 100% of the time unless it’s hit by a boat like in Maryland, but you know what I mean.

Maybe if the plane was put together incorrectly, like one of those Boeing ones or something, and the door flies open, then it’s a little different problem. I get your point. One is more spiritual, based on feelings, and based on emotion. The other is this piece goes with this piece or you can use a ruler and you can put it on a scale and you can get a tangible outcome.

You can take it into a lab and measure it scientifically, and you can replicate those measurements. Humans can’t be replicated. We’re spiritual beings. We’re material beings too. We need food and water, but we’re also spiritual. This philosophy recognizes that. What I do believe is what you measure, you will get. Usually, what you can measure, you can manage. It is attributed to Peter Drucker. He never said it, wrote it, nor did he believe it. What he did say is key, “What you measure, you will get, and you’ll get it good and hard, even if it ruins your business.”

We do have an obsession with measurement. There’s a word that was coined in the 16th century called pantometry, which means universal measurement. We humans have been fixated on counting things for a long time, the number of sheep, the number of people, the number of hamburgers McDonald’s serves. The question for business people is what should be measured. There’s a great Scottish proverb that says, “You don’t make sheep any fatter by weighing them,” just like you don’t change your weight by weighing yourself more frequently.

If you go on a diet, you’re going to need to weigh yourself to track progress, but that alone is not going to change your weight. Just like if you want to become a better golfer, you can’t keep a more accurate score. You have to change the dynamics of your swing. What we measure is critically important. Now I’ll answer your question. I wanted to set that up because it’s key.

I think all that is very important. I’m not doing a diet, but I’m doing this showcase and I’m measuring food. I am measuring the scale. I’m keeping track of these tangible measurements that are not spiritual, but some of it is spiritual because if you’re stressed out or you’re not sleeping well, that affects the results. Those are crucial to always keep top of mind. I like that distinction.

The scale results that you see are the result of your behavioral changes and what you’re eating and the food intake and your exercise and all of that. The numbers are not the business. This is where I think accountants make a big mistake, including me. In my old days, I thought the numbers reflected everything, but the numbers were the symbols of the business. They’re the results. They can’t tell you the cause without looking at the interdependencies and relationships inside the firm.

To answer your question, most people, when they say KPI, they mean a key performance indicator. That’s fine. A performance indicator, by definition, is about the past. As with all the KPIs you said about your Facebook spend and your funnel and your close rate and all those, they’re important. I’m not saying that these KPIs are not important to measure. I think they are. I think we can have too many of them, and we can talk about that.

How Predictive Indicators Outperform Performance Indicators

The important concept of a performance indicator is telling you about the past. It’s something that you can pull off a financial statement, but the only way to peer into the future is to use theories because conclusive data is only available about the past. Hence, the a distinction between the performance indicator that looks backward and the predictive indicator that tries to look forward. I’ll give you a quick real-life definition of a KPI predictive. Think about the airline industry. What does the airline industry use to predict whether or not you will come back and fly with them?

I’m not 100% sure. I thought you were going to talk about the weather a second ago. What do you think the airline industry measures before they’re going to take off? I don’t know.

That’s a good point. They do. They have their own weather facilities for sure. In terms of predicting, I’m talking about predicting customer behavior. In future customer behavior, we know you’re going to make the round trip this time because you bought a ticket. What’s going to predict you coming back and flying with United or Southwest or whoever?

I guess if you have a reward program, maybe.

That’s part of it.

What’s the other part, Ron?

This goes to the heart of what a predictive indicator is. It defines success the same way the customer does. We measure things that are important to the customer. When you fly, what’s important to you?

I wouldn’t say there’s service anymore. The space around the seat is the only thing that’s important to me these days. I don’t think I’m the best person to ask that question.

There’s something known as the Triple Crown criteria in the airline industry, and it’s universal. They all measure this. You can go onto the Department of Transportation’s website and you can see where your airline stacks up against the others. That is an on-time performance because you need to make a connection, you want to get there on time, so you make your connection. Lost luggage. You can imagine you want your bags to show up where you end up, and if there are customer complaints. Do they handle those complaints? Do they fix the customer and then do they fix the underlying problem so it doesn’t happen again? Those are the three.

Those are predictive because that’s how a customer defines the success of flying. If they do well on those three criteria, then chances are, the customer will join a loyalty program and will spend more of their wallet with one airline. I’m a United flyer, and they have 99% of my spending except where places they don’t fly, maybe, but I’ll always fly with them. If they start missing on-time performance or they lose your luggage every time, then you’re going to have to think about another option.

The great thing about those KPIs, the lost luggage, and the on-time performance is everybody in the organization can understand them, the ground crew, the baggage handlers, the pilots, and the flight attendants. If a plane is delayed, and because it doesn’t have say, catering on board yet, the food is not there, maybe the pilot makes a call and says, “No, screw the food. We’re going. We’ll compliment everybody with a drink. We’ll give them free headphones or free internet or whatever. Let’s get the hell out of here.”

On-time arrival is the number 1 out of those 3 that matter to people. That’s the difference between a performance and a predictive indicator. A predictive indicator has to be a statement of cause and effect. If we arrive on time and we don’t lose people’s bags, they’ll be more loyal. That leads to what would it be like in a CPA firm.

To develop a KPI, you have to understand how the customer defines the success of the CPA firm and maybe do what FedEx founder Fred Smith did, where he asked his executives to brainstorm the worst things we do to our customers. We lose their package, we damage it, we invoice them wrong, and all these different things. It’s called a hierarchy of horrors in FedEx. They have a FedEx service quality index where they measure twelve KPIs around how the customer defines success.

You look at the KPIs of what happened to come up with your K predictive I of how you’re going to measure going forward in a way because everything is based on history. It’s like my Facebook. I can’t predict what I’m going to do today or tomorrow until I look at what’s happened in the last 3 days, the last 7 days, the last 14 days, or the last 24 hours. I then make a predictive decision based on that.

Yeah, but we’re talking about customers. I want to keep the focus on customers because we’re interested in them coming back, referring, and spending more.

For the accounting firm, if we brainstorm the worst things that happen to your customers, they won’t hear back from you. How many times has a client called you and you haven’t responded in a timely fashion, or you have so many emails in your inbox or so many voicemails and you’re not responding? I would say that’s probably a top one.

Seven Reasons Why Clients Leave CPA Firms

The great thing is we don’t have to brainstorm or speculate on this. There have been decades of research about why CPAs lose customers. There are seven big reasons.

What are the top seven?

“They don’t treat me right.” If that’s not a spiritual statement, I don’t know what is. They feel like they’re a small fish in a big pond and they don’t feel like you’re giving them the attention, the love, the care that they want or that they desire from you.

Also, what they deserve because if you want to charge premium fees, or you want to do a highly concierge-like doctor subscription model like we’ve talked about in a different episode, or you want to do anything of the client experience, we’re talking about sales stuff right now. You can’t have a client feel like a small fish in a big pond and have them stay around and want to continue.

They want to feel special and they want to be treated not as a number like our cable companies do, but they want to be treated individually. That’s the number one reason. By the way, that’s about two-thirds of the reason why people leave. This is from surveying people who fired their CPAs. Everybody’s done this research. The software companies, the state societies, and the AI CPA, academia, think tanks have even done this research. The second reason is we ignore them. I have a theory about why we ignore our customers because we don’t like them, which means they probably shouldn’t be customers.

From the clients that I’ve worked with, I think we ignore some clients and we being firm owners because they’re not paying you enough and you don’t feel valued by them. When we don’t feel valued by them, then it goes back to item number one. They’re just small fish in a big pond, which is true in that aspect. If your clients feel ignored by you and you’re ignoring them, it’s because they’re too big of a headache for the amount of revenue you’re generating, so you’re out of balance. When you’re out of balance, it’s not good for anybody.

There’s a lot of interrelation between these seven. I’ll give you the rest. Fail to cooperate, which means that we’re not meeting their expectations. This could surround the price too, by the way. We’re billing them in arrears. That would be a failure to cooperate and meet their expectations. We let partner contact lapse. Obviously, this is bigger firms, but partners sometimes leave and the customer’s usually the last to know, or clients get reassigned and the client’s the last to know.

That’s a terrible thing to do to the customer. We don’t keep them informed. They say things like, “Your firm is a black box. I give you stuff. I have no idea when it’s coming back out. I have no idea when my financials are going to show up or when my tax return’s going to get done.” Think if we did a Domino’s type pizza tracker in firms. That would probably keep everybody on its toast because that’s on-time arrival.

It’s like the airline. It’s like the baggage, making sure your bag is there when you get downstairs.

We assume they are technicians. We talk in a language that they don’t understand. The last reason is we use them as training grounds for new team members. The reason why this is annoying to people is because we’re billing them by the hour. Michelle, when you go into a bank or a restaurant, you’ve seen people wear a trainee badge. Do you care when you see a trainee badge? No, because you’re not paying for it.

When we do that in CPA firms, the client knows, “These greenhorns are coming in right out of school. It’s going to take them longer. They’re going to bill me more hours.” Even if we end up writing them all off, they don’t know that. That creates that uncertainty and that unpleasantness. This is why the billable hour is such a lousy customer experience. Those are the top seven.

The hourly is the dumbest thing I’ve ever heard of.

Those are the worst things we can do for our customers. Now let’s turn the coin over and ask, why do people select their CPAs and stick with them? What do you think the number one reason is?

Probably similar to a marriage.

It’s very good. Keep going.

It’s more of a spiritual connection. They have a rapport and they have trust. I talk about the know, like, and trust factors. When I meet with a new client, since we’re keeping it client-facing, I know the ones that we end up working with have trust. They have a belief that we will be able to get the end outcome that they are looking for. We will be able to solve the problem for me and the firm owners. It’s not being paid your worth, billing in arrears and not getting paid upfront, having a ton of AR. When you have the belief and the trust that I can do that for you, that is the number one reason why you’ll select me to help you, and you’ll stick around with me for a very long time. It has to be the same thing for a bookkeeping, tax, or accounting firm owner.

This is why I love you, Michelle because you’re so smart. It’s interpersonal skills. In a doctor-patient relationship, what do we call it? Bedside manner. It’s that they care about you. They don’t condescend to you. They don’t talk down to you. They explain things in a way that you can understand. They care about you as a person, not whatever they’re treating, not the disease that they’re treating. Interpersonal skills, communication, and all of that.

Aggressiveness. I don’t mean tax aggressiveness. I mean we’re willing to roll up our sleeves and help them through difficult times or pursue opportunities that they may be chasing. We show an interest in them. We explain procedures and terms they can understand. We willingly give them advice. We don’t nickel and dime them every time they call or want to meet with us.

They perceived us as honest, which we scored high in the CPA profession. Those are the best things we can do for our customers. You can get into what customers say they want from their CPAs. They want us to help them invest in new areas of our business, help us develop and think through strategies, help us think about what other businesses in our industry are doing, suggest things that we should be doing, and all of these types of things. How could you build KPIs around these types of things? What we’re defining here is how the customer defines the success of their CPA firm.

KPI Strategies: Clients want CPAs to help them invest in new areas of business, develop and think through strategies, and explore brand new opportunities.

You mentioned concierge and direct primary care doctors, and I know we talked about that when we talked about subscriptions on one of the earlier episodes. Let me share it with you for comparison purposes. We’ve looked at how the airlines do it. We’ve looked at how FedEx does it. Let’s look at Dr. Paul Thomas from Detroit, Michigan. He’s a direct primary care physician. Here are his KPIs, Michelle.

Predictive indicators. He has all the standard performance indicators. He looks at his monthly recurring revenue. He looks at his churn rate, his bottom line, and his cashflow. He looks at all the necessary performance indicators, but here are his leading indicators. For him, this is fulfilling his purpose as a doctor and why he became a doctor.

Here’s what he looks at for each patient. Hospitalizations that he’s prevented. That’s pretty good. Urgent care and ER visits that are prevented. Patient’s weight-loss goals if that’s one of their goals. Managing patient anxiety or depression. Money saved on procedures and prescriptions, as well as savings on unnecessary ones not prescribed. Also decreased morbidity and mortality.

Now, those are all things the patient cares about. Notice that he’s not measuring things just for the sake of measuring them, or because he can pull it off a financial statement, or because it pops up on a dashboard from one of the software vendors. He’s measuring these things because he knows that they’re important to his patients.

I don’t know if you’ve heard about it from this angle, but when I teach our students in our eight-week sales mastery course, they call these consequences or opportunity costs. It’s almost the same list if you think about it for a firm owner. The clients I work with, which are all of your accounting, tax, and bookkeeping firm owners, if I were to come up with my predictive indicators, it’s how much more freedom you have instead of those total hours that you’ve worked.

Most firm owners work too many hours and they need to work a lot smarter instead of harder. It’s reducing that. I had a client say, “Michelle, my revenue is up 2.5 times more than when I started with you and I was able to get rid of about 50% of my clients and still have 2.5 times more revenue.” They’ve been on almost six weeks of vacation. They didn’t have to have a stressful tax season. Instead of hospitalization prevented, I have non-vacations prevented because most people don’t take vacations. You’re all too stressed out.

I had another client book a trip to Scotland and Ireland because most people that I’ve worked with have postponed vacations. They say they can’t afford it, not make it a priority. “I’ll do it later. I’ll do it after I’m done working my 80 hours a week,” and then it’s like the next deadline and the next deadline, then it never happens. I see this as very similar to that list.

Top Predictive Indicators CPA Firms Should Track

These are theories. You have to test them in your own firm to see if they apply to you, but more importantly, to see if they are predictive of your customer’s future behavior. I’ll tell you some of my favorite predictive indicators for a CPA firm. These have been used and tested in CPA firms, especially firms that have adopted value pricing. Those firms that have gotten rid of their time sheets. People always ask us, “If you get rid of the time sheet, what would you replace it with?” You’d replace it with better predictive indicators.

Here’s my first one. Turnaround time. Just like the airlines or FedEx, what we care about as a customer is it drops on my doorstep by 8:30 or noon or whatever it is. Why aren’t we doing the same thing? Why don’t we have the pizza tracker that our customers can access and see where their tax returns are in the queue?

Yeah, or like DoorDash. I ordered DoorDash for my mastermind group and it says, “Your order will be ready in fifteen minutes. Your order will be ready in one minute. Your order’s ready. Here’s the text.”

We love that as humans. We absolutely love that. We love to see where our Uber driver is. There’s something psychological about that, again, spiritual, that can’t be measured, but it’s psychologically important to us. Turnaround time, by the way, can be tracked at the individual team member level. What I care about for my team is not how many hours they put into something but did they finished it by the deadline that was assigned to them. I’m not talking about the statutory deadline. I’m talking about the firm’s internal deadlines. Every time you assign something, there should be a deadline attached to it. We can track the team members’ on-time performance.

KPI Strategies: When you assign something within your firm, always set internal deadlines. This way, you can properly track the performance of your team members.

Also, when you have a deadline, you’re setting the expectation to deliver the promise to the client. There’s also more trust being built, which then has them stick around for a longer time as well.

Another one is, for some firms this works. For other firms, I’ve seen it fail, but it’s the net promoter score. If you track the net promoter score, you can read about it in the ultimate question. It tells you how to do it. There are companies you probably might even help some of your clients with, but I have seen it be predictive in some CPA firms. Not everyone because it depends on how you do it and who’s doing the surveying. Is it a third party? Is it the firm? Are the customers being honest? There are all sorts of issues and noise involved with it. It can be a predictive indicator. It can predict future customer loyalty.

Why High Satisfaction Days (HSDs) Build Team Morale

The other one that we like is tracking what is known as HSDs, High Satisfaction Days. These are so much easier to track than when this KPI was invented because now we have social media and Slack and all of these different ways. This is when a team member or anybody in the firm has a day where you pump your fist and you say, “Yes, this is why I’m a CPA.” Maybe you helped a client through a bad situation. Maybe they sent you a gift or came in and hugged you for all your support. It’s something that makes you pump your fist and go, “Yes, this is why I get up in the morning. This is why I do what I do.”

Share that with the rest of the team on social media. Let them see it, post pictures, or whatever, but let them see it. That shows us that the firm is walking its talk and it’s living its purpose because it’s delighting our customers. It’s going over and above. It can be for internal things too. You might help a team member out with something or whatever, but most HSDs are driven by the customer because they thank us or they send us a gift or whatever it might be. I think that’s cool to track that. One firm I know tracks handwritten thank you cards that they get. I think that’s fascinating because when was the last time you got a handwritten thank you note? It’s probably been a while.

I did get one, and I’m going to talk about this at the end. Stick around to the end.

This is cool, but let me ask you. Do you have that in a special place?

My office is a little messy because I did a full painting of the house ceiling.

You didn’t throw it away.

No, I didn’t throw it away. It was from my dog’s eye doctor. It was from her. The reason was because you said all those things about the bedside manners and everything else for the doctor in Detroit, Dr. Paul Thomas. I’ll share it now. I got sent to an eye specialist because she had some eye thing going on. This doctor had no bedside manners. I think he created more anxiety in me.

It was terrible. He was smart and he would help and call. You said it earlier too. He did not explain things in my words. He used a lot of medical terminology that I didn’t understand. I also felt nickel-and-dimed because they charged me for a plastic cone. I was like, “Are you serious? I spent a couple of thousand dollars.” I felt he was honest. I don’t remember when we were talking about this earlier, but I also felt like a number. I felt like this eye doctor operated like the deli counter at a grocery store where you grabbed a ticket back in the day and then would wait for your number, or I had to go renew my license at the DMV because they had to do an eye check.

I had to go in for a physical eye exam at the DMV and you get a number and you’re sitting there waiting for your number and you feel like you’re in a bingo game. That’s how I felt with that eye doctor. I had booked another appointment with a different eye doctor for my dog, but she had a two-month waiting list. I had our first appointment with her on one day and a follow-up with the other guy on the same day, later in the afternoon.

Seriously, when I went to the eye doctor, I felt all the things that you’re talking about. They were so caring. Bedside manners and spoke to me in English. I got to watch the whole exam. I was not feeling like a number at all. I said, “If Mila was your dog, what would you do?” She goes, “We need to do the surgery.” I said, “Okay, when can we schedule that?” I canceled the other doctor and never went back since. That’s the experience that you’re talking about.

She did this surgery. They called. They went above and beyond and I brought them a gift on our fourth eye checkup or whatever. The nurses and the doctor were like, “This is crazy. We’ve never seen this before.” I’m like, “Really? You did an amazing eye surgery and you can’t even tell that she had something done. I’m super grateful.” I brought her a wine kit and some candles. The nurse had some candles. They were over the moon. I then got a handwritten card. That’s my story.

You created an HSD for their team, for sure.

I did because they probably did the fist pump and they were all loving all their candles because these weren’t cheapo candles. These were nice ones. Here’s the thing. When you do this stuff, my dog woke up and her eye was shut the other day. I was like, “What’s happening now?” I sent them a text and an email and I said, “I know you guys book out way in advance, but my dog’s eye shut. I don’t know what the heck’s going on. We saw you three weeks ago.”

They said, “Can you come in at 2:00 today?” I’m like, “Yes, I can.” They go above and beyond now to get us in. I don’t even know how she figured out what was wrong with her. It was like in a dog, they had an eyelash stuck in her eye. They got it out and she’s fine. I could have been through her vet and all these other doctors, but I went right to the specialist and she got us right in and she found one hair that irritated the whole eye to the point where it was so painful. When a dog’s eye is shut, they’re in pain. That’s how it went.

I did create an HSD for them and they’re amazing. I will continue to bring gifts to them because I believe, especially with the vets and even her regular vet, I do that and they know us by first name. I don’t know if that’s a good thing or a bad thing because we went there too often last year. It’s that client experience. For my client, every single client ends up getting a package from us with a handwritten card. I still do that to this day. I don’t even know what we’re talking about, but we’re talking about the number three HSDs.

I want people to recognize and even go back to your story with your dog. Michelle, how many times have you said the word, “I felt?” That can’t be measured. This is my point about the most important things in life can’t be measured.

I did not like the other eye vet. I had an icky feeling every time. I’m like, “They want your money.” I spent thousands of dollars there and their guy’s like, “I don’t know what’s wrong. I don’t know.” The way they communicate that bedside manners and the way you communicate with your clients, and I talk about it for the accounting firms or on where we have to remove the accountant ease, it’s the most crucial thing because people don’t understand it. People like me, regular humans who don’t have an Accounting degree, don’t understand their taxes, they need plain old English.

How To Measure Customer Effort To Improve Retention

Otherwise, they wouldn’t need you. They’d do it themselves. Let me give you one more that I like. This is relatively new. It’s in my book Time’s Up. I like this. It’s the customer effort score. It’s not the net promoter score. It’s how much effort we put our customers through. There are three ways to look at this. If we’re going to measure time in this profession, we should measure the time that we save the customer. Time saved. Let’s stop sending them 400-page tax organizers because that’s like going to the doctor and getting the 50 forms to fill out every time.

It’s ridiculous. Dr. Paul doesn’t do that to you, I assure you. If you’re in his system, he knows everything about you because he has taken that history once and he updates it and all of that. The time that we save the customer and then make the customer feel like the time they spend with you in a meeting, phone call, Zoom, even email. Every interaction is time well spent. They always get value when they interact with you.

If you want to take it to the next level, and this ties into the transformation concept where we’re talking about where we guide transformations, we help the customer go from where they are to where they want to be, some desired future state, make the time that they spend with you feel like it’s well invested. In other words, there’s a tangible ROI that they’re getting when they invest time with you.

I think that is indicative of generating a loyal customer who’s going to come back and refer and be a raving fan. Those are some of my favorite predictive indicators. Notice that you can’t get any of those off a financial statement. You can’t get any of them off a dashboard. They are theories that you have to develop around what the customer cares about.

Question, Ron. When we have the turnaround time, the net promoter score, the HSD, and the customer effort part, do you recommend a firm owner put this into their own spreadsheet to track it? Do they track it weekly? Are they tracking this daily? What would you recommend is the best execution plan for someone reading right now?

They have to find the cadence that’s right for them in terms of the frequency. They have to test this. They can’t measure it and not pay attention to whether or not there’s a cause-and-effect relationship just because their HSDs go up, but if their churn rate goes up at the same time, then the HSD isn’t very predictive. Something else might be going on in the system. You have to pay attention to the actual results. Don’t boil the ocean with this. Don’t have more than 2 or 3 KPIs. The airlines run with three KPIs. Running an airline is a little bit more complicated than running a CPA firm.

Take Action With Predictive Indicators

Maybe pick one to start and then once you feel confident with that, pick another one. As you’re saying, find the cadence that works for you. Sometimes weekly has always been the best for all my measuring of things, but not with my food. I got to do that every single day.

When I attended Disney University, one of the first questions the instructors asked the group they were talking about particular hotels at Disney World. Some of the hotels had a 95% return rate and other of their properties were in the 70%, and some were in the 60% and Disney was trying to figure this out. He said, “We undertook this massive study. What do you think the number one predictor was that a family with children would come back to a particular hotel or resort within Disney World?” What do you think the number one predictor was?

I don’t know. There’s so many rolling around in my head. Maybe the greeting person at the hotel?

That’s not a bad guess. People said character breakfasts. Were there characters on the property like Goofy or Mickey wandering around? It was the swimming pool. They always gave you homework assignments. They said, “When we’re out visiting properties, we want you to pay attention to how much investment we’re putting into the swimming pools with the slides and the wave machines and all that.” This was 1997. It’s now 2024. I doubt that’s a predictive indicator anymore because Disney has raised the bar and put more money into their pools and now I’m sure it’s something else. I don’t know what it is.

I’d be curious to know. In our next episode, you need to report what it is. That’s your homework. You have to find out what is Disney’s thing instead of a swimming pool these days that gets every kid wanting to go back all the time.

I have to go back to Disney University to be able to do that, but awesome. I would do that in a heartbeat, by the way. If you ever get a chance to go to Disney University, do it because it is some of the best education that you’ll ever get.

Ron, when I get bored and have a lot of free time on my hands, I’m going to head on over to Disney University. This was so awesome. Thank you so much for this insightful and very fun conversation. I think there’s a lot of things to execute on. I want to say thank you for your time and for being here with us again on the show. It’s always an honor to have you and I look forward to having you back soon. Thank you.

Thanks, Michelle.

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Thank you all so much for joining Ron and me here at another amazing episode. He is such a joy to have on the show. I think choosing one of the predictive indicators and measuring that on a daily or weekly basis and finding the cadence that works for you is going to not only increase your revenue because having clients stick around longer and being joyful to have them there and being excited about your firm and measuring all of these things on when do you have a high satisfaction day and when are you giving yourself a fist pump is so crucial. I saw it in the eyes of my dog Mila’s vet. Make sure to take action on that. It’s so easy to do and figure out what works for you and make it happen, just like doing a tax return or doing the monthly books for a client.

If I told you that there was a way that you could also only work with your ideal clients who value your expertise and your time and do all this within a two-month timeframe without having to account clients for paperwork and without them ignoring your request and only having to spend every night and weekend working to keep up with things, but you could do this without sacrificing your time with your family and freedom, what would that be like?

What if in just an eight-week timeframe, you could multiply your revenue and work four days a week instead of grinding 12 to 16-hour days and having to work on the weekends to keep up with stuff? Not only that, I’m going to show you how to do all this in a way that feels simple, effortless, and automatic, so you barely even have to think about it, like measuring your predictive indicators.

It’s the same system that I’ve shown hundreds of other tax accounting and bookkeeping firm owners like you who have used it to create the firm that they’ve always dreamt of and that’s possible for you too. If you want me to show you exactly how to do this, go to TheAbundantCall.com right now and book your call with me and my team. Thank you so much for tuning in and I’ll see you in the next episode.

Important Links

• VeraSage Institute
• Voice America
• The Abundant Call
• Time’s Up: The Subscription Business Model for Professional Firms
• The Firm of the Future

About Ron Baker

Ronald J. Baker started his CPA career in 1984 with KPMG’s Private Business Advisory Services in San Francisco. Today, he is the founder of VeraSage Institute—the leading think tank dedicated to educating professionals internationally—a radio talk-show host on the www.VoiceAmerica.com show: The Soul of Enterprise: Business in the Knowledge Economy.

Ron has authored eight best-selling books, including: The Firm of the Future; Pricing on Purpose; Measure What Matters to Customers; and Implementing Value Pricing. His latest book, co- authored with Paul Dunn, Time’s Up!: The Subscription Business Model for Professional Firms, was published in November 2022.

Ron has toured the world, spreading his value-pricing message to over 400,000 professionals. He has been named on Accounting Today’s 2001-2007, and 2011-2023 Top 100 and Top 10 Most Influential People in the profession; and inducted into the CPA Practice Advisor Hall of Fame in 2018. He is a faculty member of the Professional Pricing Society. He presently resides in Petaluma, California.