Home – New Forums Money matters Xero accountants: is it really that good?

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  • #977992
    nominal
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    I Promise (hope) it is not going to be another one of those online accounting vs desktop accounting threads :-)

    Xero, being a public company and very open about their business, is actually helping me with market research and growth assumptions.

    I had a go at analyzing their growth which I was hoping will help me in verifying some of my own assumptions. See my blog post here:
    http://www.nominal.com.au/blog/entry/leap-of-faith-assumptions-and-xero-growth

    The most interesting thing I found was that Xero claims that their number of paying customers is 25% of their total users (trial users). This number completely blow my mind. One quarter of all people that are using Xero become paying customers!

    Not only is this number much better than Nominal trial conversions it is much more than any number I have ever heard off.

    Is Xero so good that they convince SO MANY of the trial users to pay?

    Someone provided an alternative explanation for me: that a lot the customers are actually signed up to the cashbook option (which can be cheap) and then the accountant has access to the bank records which makes it easier to manage the account without the customer ever logging onto Xero. Is this a common practice?

    The 2nd makes sense considering a couple of articles I read where Xero are saying that accountants account for 80% of their sales. This sounds rather high for a company that bases a lot of its marketing online. Perhaps all the online marketing is intended to convince the accountants :-)

    We, at Nominal, currently have over 50 accountants/bookkeepers on our partner network and we are looking for ways to come up with a compelling offer for accountants.

    Would love to hear any comments or suggestions.

    #1103967
    Dardee
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    Those figures are totally true. And the key is the 80% of users coming via the partner network. They do a massive amount of work helping their partners learn the system, keeping them updated on what is happening both with the company and the system, marketing, you name it, they do it. They are very accessible and go to great lengths to make sure we are happy.

    You just need to look at the numbers of partners. As at the time of posting this there are 534 Accountant Partners/Advisors and 224 Bookkeeper Advisors. When you have an effective sales force of that many people its a powerful marketing tool.

    So with all that in mind most of the trials would be coming from accountants who are recommending Xero to their clients. They sign them up for a trial, the client likes it, so they go ahead.

    Most importantly it is a good product as well.

    #1103968
    TehCamel
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    I think alot of people probably take te lead from their accountant – personally.. I’d prefer to not be doing my books and have the accountant do it all, but can’t pay for that just now.

    ultimately my wife will be doing it, so I’ve told her she has to find an accounting system that works for her.. whether it’s xero, saasu, quickbooks live or local, MyobLive, or AccountRight Live (when it comes out), I don’t mind… provided it does the things we need it to do.

    #1103969
    Uncomplicating
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    nominal, post: 115270 wrote:
    I Promise (hope) it is not going to be another one of those online accounting vs desktop accounting threads :-)

    Xero, being a public company and very open about their business, is actually helping me with market research and growth assumptions.

    I had a go at analyzing their growth which I was hoping will help me in verifying some of my own assumptions. See my blog post here:
    http://www.nominal.com.au/blog/entry/leap-of-faith-assumptions-and-xero-growth

    The most interesting thing I found was that Xero claims that their number of paying customers is 25% of their total users (trial users). This number completely blow my mind. One quarter of all people that are using Xero become paying customers!

    Not only is this number much better than Nominal trial conversions it is much more than any number I have ever heard off.

    Is Xero so good that they convince SO MANY of the trial users to pay?

    Someone provided an alternative explanation for me: that a lot the customers are actually signed up to the cashbook option (which can be cheap) and then the accountant has access to the bank records which makes it easier to manage the account without the customer ever logging onto Xero. Is this a common practice?

    The 2nd makes sense considering a couple of articles I read where Xero are saying that accountants account for 80% of their sales. This sounds rather high for a company that bases a lot of its marketing online. Perhaps all the online marketing is intended to convince the accountants :-)

    We, at Nominal, currently have over 50 accountants/bookkeepers on our partner network and we are looking for ways to come up with a compelling offer for accountants.

    Would love to hear any comments or suggestions.

    Accountants are software users just like anyone else, and a cloud model is quite attractive for them as it simplifies the process. It’s very trendy too! It may be more expensive from a $/Month perspective, but total cost of ownership is a complex calculation and there are many factors.

    So, that’s your competition if you’re trying to sell in to that market.

    But a more forward thinking alternative might be to build a version that is installed locally but uses remote data. Apps appear to the the future both for mobile and desktop. You get all the benefits of locally installed software, and all the benefit of remote data, which is really why people like cloud soutions.

    I’ve done a lot of work in recent years with distributed data and processing models and they’re very attractive solution to a lot of the problems that are currently being “solved” with a browser.

    #1103970
    Dardee
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    Hang on, I just read your blog post and realised you have made a mistake with your assumptions. The customers number is actually the number of companies/partnerships/sole trader etc files on Xero and users is the number of people logging in to those files. So in effect there are on average 4 users per file.

    It is NOT what you are thinking it is.

    #1103971
    nominal
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    Dardee, post: 115281 wrote:
    The customers number is actually the number of companies/partnerships/sole trader etc files on Xero and users is the number of people logging in to those files. So in effect there are on average 4 users per file.

    OMG you might be right. I was sure they were making the distinction between users and customers based on payment (used the term paying customers).
    But it actually makes sense that the number of users is the number of users logging in and not necessarily trial users like I assumed.

    That makes more sense to me, I could not believe the 25% conversion rate.

    #1103972
    Geronimo
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    It would be interesting to know what their conversion rate is. My own story is this.

    I started with the free accounting package that the ATO provided years ago. Used that for several years. When the ATO discontinued it, I trialled several accounting packages over about three months. I only trialled Xero toward the end of the process because of the *high* price. Within a couple of weeks of using it however, I subscribed. It simply is that good. With the amount of time it saves me, I’d pay triple the price and still think it was great value, and I’m only a one man band. In a small company I believe it would be even more useful.

    On top of that, I changed my accountant last year. They had never used Xero, but knew about it and were prepared to work with me on it. When I spoke to them about six months later, they are sold, and had since moved several clients over to it, and will continue to do so with other clients.

    So in short, yes, it really is that good.

    #1103973
    nominal
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    Uncomplicating, post: 115278 wrote:
    But a more forward thinking alternative might be to build a version that is installed locally but uses remote data. Apps appear to the the future both for mobile and desktop. You get all the benefits of locally installed software, and all the benefit of remote data, which is really why people like cloud solutions.

    We already provide a cloud solution like that. You can store/share/open your company data file (1MB) online and access it using your credentials. You can also share these with your accountants and the file will be locked (with a check-in/out mechanism)

    http://www.nominal.com.au/compare-us/254-work-online-or-offline

    #1103974
    Uncomplicating
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    nominal, post: 115319 wrote:
    We already provide a cloud solution like that. You can store/share/open your company data file (1MB) online and access it using your credentials. You can also share these with your accountants and the file will be locked (with a check-in/out mechanism)

    http://www.nominal.com.au/compare-us/254-work-online-or-offline

    Have I misunderstood? It seems that the user moves the data file backwards and forwards as required.

    I was thinking more in terms of a classic client server model where there is no data stored locally and all access is remote. For me, this is the perfect cloud model.

    #1103975
    nominal
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    Uncomplicating, post: 115329 wrote:
    Have I misunderstood? It seems that the user moves the data file backwards and forwards as required.

    I was thinking more in terms of a classic client server model where there is no data stored locally and all access is remote. For me, this is the perfect cloud model.

    You’re right our solution is not a server based, it is simply making it easier to store/share the local data file. It is not hard to make it a Server based database file, but I am not sure how the performance (or security) will be.

    I have not though about a (classic) server version (like MYOB or QuickBooks) because they are aimed at much larger businesses and require to store the database somewhere locally with everything that surrounds that.

    But to store the database on the cloud and the client on the desktop? I will need to think about the implications of this.

    #1103976
    Uncomplicating
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    nominal, post: 115332 wrote:
    You’re right our solution is not a server based, it is simply making it easier to store/share the local data file. It is not hard to make it a Server based database file, but I am not sure how the performance (or security) will be.

    I have not though about a (classic) server version (like MYOB or QuickBooks) because they are aimed at much larger businesses and require to store the database somewhere locally with everything that surrounds that.

    But to store the database on the cloud and the client on the desktop? I will need to think about the implications of this.

    Security is no different to all other cloud vendors and performance will be better than Xero or anything similar because you wouldn’t be building screens on the fly or going via a webserver. And assuming that you make sure that the I/O is managed on the server and not the client, all you’re returning is data.

    I’ve spent a number of years working in this space, designing data and object model solutions for exactly this style of application. I’m a big fan of it and I believe it makes for a far superior user experience.

    To give you a sense of the performance, you can get, I wrote a simple test last year that went to a server in Sydney via the internet and found the first item matching the value I entered. It did this every keystroke, and I couldn’t keep up with it. I’d say that’s more than sufficient.

    #1103977
    James Millar
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    Hey Nominal. How big a proposition would it be for you to remodel your platform to distribute via cloud? Have you done some financial analysis on the cost benefit of this? You seem to have all of the features covered very well, you have a well presented brand etc but for a software company surely there is a compelling case to establish a cloud solution. If nothing else the success (growth) of xero and sassu relative to MYOB / qbooks demonstrates that the market wants a cloud solution. I really think you swimming against the tide without it.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1103978
    nominal
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    JamesMillar, post: 115375 wrote:
    I really think you swimming against the tide without it.
    It certainly feels like it sometimes.

    I actually think that being a desktop software is a differentiation point. In the online world there are good and strong players (Saasu/Xero) as well as host of platforms popping up all over the world.

    Within the desktop software the main players are not doing a very good job from a product perspective (that’s the only reason I started Nominal in the first place) and I hope we can carve out a niche based on our features and pricing. I believe the market for desktop software is large enough and will remain for quite some time.

    These last two are my growth assumption.

    My hope is that we will be able to put Nominal in front of enough accountants and make them realise its benefit for their customers and for them. The intention is that Nominal will be one of the tools in their solution belt which they can offer their customer when they see a good fit.

    My concern is that accountants are too busy to learn or use more than one system.

    #1103979
    Uncomplicating
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    nominal, post: 115379 wrote:
    It certainly feels like it sometimes.

    I actually think that being a desktop software is a differentiation point. In the online world there are good and strong players (Saasu/Xero) as well as host of platforms popping up all over the world.

    Within the desktop software the main players are not doing a very good job from a product perspective (that’s the only reason I started Nominal in the first place) and I hope we can carve out a niche based on our features and pricing. I believe the market for desktop software is large enough and will remain for quite some time.

    These last two are my growth assumption.

    My hope is that we will be able to put Nominal in front of enough accountants and make them realise its benefit for their customers and for them. The intention is that Nominal will be one of the tools in their solution belt which they can offer their customer when they see a good fit.

    My concern is that accountants are too busy to learn or use more than one system.

    My wife, who works for one of the big four, and I discussed developing a competitor to MYOB some years ago, but concluded that the cost of getting in to the market vs the potential gain wasn’t sufficient to make it worth the risk.

    Given that you already have the desktop software written, building in a comms layer should be pretty straightforward. Of course, if you’ve been a very lazy developer in the past and kept your view and data coding in the same modules, you’ll face a somewhat bigger task. But either way, the hard bit should be done already.

    It seems that for a relatively small input, having a cloud offering as well as a desktop offering, with both using exactly the same front end, seems like a great feature and would make Nominal standout from the crowd.

    #1103980
    alwaysonbooks.com
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    Staying away from a hosted solution, is ignoring the current software trends, so if you want to compete with client apps MYOB has got a huge portion of the Australian market, so you are taking on a company with deep pockets.

    Five years ago I could see the change in companies using cloud software, Gmail has moved exchange out of the SME market, online banking and cloud accounting are perfect partners for companies. Clients I know want one software/place to do everything. They also have paid huge rates to maintain local networks.

    The only way I see you can get a competitive advantage it to make the software back up from the cloud, so the software works both online and offline. Even look at dropbox to help you make it.

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