As the old adage goes, “you can’t be all things to all people.” This rings true in many facets of both our personal and professional lives—and I find it to be especially true within client advisory services (CAS) practices.
As many CAS practices continue to mature and grow, so do their client rosters. They adopt a generalist approach, trying to find growth from serving many different clients. But soon, they find themselves feeling the strain of too many disparate client needs, too many software solutions to implement and learn, and at too high of a cost. As a result, CAS practitioners are operating as jacks-of-all-trades, unable to commit the time needed to become real experts within their clients’ businesses—a critical step in the evolution toward more advisory-focused practices.
Meanwhile, other CAS practices are taking a different approach, better positioning themselves to capitalize on the full potential of this fast-growing service line. How are they setting themselves apart? With a clear and well-defined client verticalization strategy.
What is verticalization?
Industry verticalization is where CAS practices focus on serving clients within a specific industry—such as not-for-profit or family office—aligned with the firm’s strategic ambitions, its people’s skills and experiences and its market opportunities. And CAS practices may narrow their client base even further within any given vertical. For example, within not-for-profit, a practice may opt to specialize in faith-based organizations, educational institutions, cultural arts, social services or an array of other micro-verticals.
This niche approach is nothing new, but it’s proving to be one of the most powerful and effective ways for CAS practices to focus their efforts on achieving long-term, sustainable growth. According to our most recent CAS Benchmark Survey, 77% of responding CAS leaders indicated that their practices are specializing in one or more industries.
Why is verticalization a powerful strategy?
There are numerous benefits that firms of all sizes can achieve through verticalization. Here are the top four we see:
Deeper, more focused expertise
When CAS teams focus on select verticals or micro-verticals, they develop industry-specific expertise that better positions them as trusted advisors. Each industry has its own unique landscape and nuances when it comes to operating a successful business—having an in-depth understanding of what these clients are facing every day allows CAS practitioners to deliver deeper insights and practical advice tailored to their businesses. That’s the kind of value clients are happy to pay for, and one that’s difficult for competitors to replicate.
Streamlined technology, processes and ability to scale
When generalists need to adopt new technology and processes to support each new client in a new industry, the costs quickly outweigh the benefits. Not only does each new solution incur expenses, but CAS teams must also invest time learning and maintaining the new systems and processes.
Great, growth-oriented CAS practices are built around repeatable processes and technologies. The more a practice can apply the same tools to tackle similar needs across clients, the easier it is to deliver on client needs—less time spent developing one-off approaches for clients and more time spent focusing on strategic, advisory-level issues. This level of focus and repeatability is achieved much more quickly within practices that focus on only a few industries. After all, what works for one restaurant client will usually work well for another … but for a charitable institution client? Not so much.
Greater brand positioning
While it’s great to be known for providing valuable CAS services, it’s even better to develop a brand and reputation within the restaurant industry (for example) for really “getting” the industry and delivering quality advisory services and insights that address their top needs and challenges. Additionally, with narrow vertical industry targets, CAS practices can identify a much more targeted ideal client profile and market. This enables them to better focus their marketing, sales and business development efforts and deliver clear value prop messaging that speaks to what matters most to their niche client and prospects. Generalist practices that serve many industries find it more challenging to seize the brand benefits of their hard-earned reputations.
An edge in recruiting and retaining talent
Verticalization is a powerful way for CAS teams to actively support their people’s career growth with the skills and experiences they need to advance. It also opens the door to recruiting nontraditional professionals who may not have a public accounting background but have valuable experience within a target industry—and could be attracted to the idea of applying their expertise in an industry-focused CAS practice.
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Proven in practice
We’re passionate about verticalization because it unlocks new and different opportunities for CAS practices to grow. Firms that start their CAS journeys with verticalization in mind can save time and effort, creating more effective, high-value CAS practices along the way. I recently dove deeper into this topic with CAS firm leaders Matt Gardner, co-founder and CEO of Hiline, and Roman Villard, founder of Full Send Finance. You can listen to our full conversation on-demand, including practical insights on how to implement verticalization.
For a wealth of other CAS-related insights—videos, articles, surveys and more—visit www.cpa.com/client-advisory-services.
Kimberly K. Blascoe, CPA, leads CPA.com’s CAS 2.0 practice transformation programs, focusing on helping firms establish and grow optimized CAS practices through consulting, practice development and training offerings. Prior to joining CPA.com, Kim spent more than 30 years in public accounting, which included leading the CAS practice for a Top 20 firm.
