Intuit has launched a bookkeeping service in the US and announced it in Australia in what looks like the beginning of a global rollout. QuickBooks Live targets the 40 percent of businesses that don’t have an accountant or bookkeeper connected to their QuickBooks file.
US startups such as Bench sell bookkeeping services directly to small businesses and service them using Bench’s own accounting software developed in house. However, QuickBooks Live is the first time that a global accounting software company selling software through accountants and bookkeepers has added a bookkeeping service.
While Intuit’s stated intent is to avoid competition with accounting professionals, QuickBooks Live will have an unknown impact on market share, the average price of bookkeeping services, and expected quality of service in the market.
Rich Preece, Intuit’s global accountant segment leader and US country manager, holds the P&L for QuickBooks Live. Digital First caught up with Preece last week to understand how the service works, what its impact will be and where Intuit wants to take it.
The interview below has been edited for brevity and clarity.
DigitalFirst: What exactly is QuickBooks Live?
Preece: I’ll give you the two or three minute answer because to show how we got here. , what is it? And then we can go in any direction you would like to. As you know, we have always had what we call the Find a Pro Advisor platform, where we connect small businesses with accounting professionals. We know that small businesses say they’re more successful when they work with an accounting professional, and transparently, it’s a better experience in terms of retention rates (for QuickBooks) when small businesses work with accounting professionals.
We know it’s a win, win, win. We’ve done it for many years. Sixty percent of all QBO customers are connected to an accounting professional. Now, the question that we didn’t ever spend a tonne of time on is, what about the other 40 percent? Why are they not connected?
So a year ago we asked those 40 percent, why are you saying no to working with an accounting professional? Is it that you don’t need any help? And we were somewhat surprised that the answer consistently was, “I probably need some help getting started and I think I need some help with basic bookkeeping, but I’m not even sure to be honest with you what I mean by that”.
And then when we said, “If you’re not going to get it from an accounting professional, who are you going to get it from”? Their answer was, “Well, hopefully you guys”. And so that was essentially how we first started thinking about this.
So we took a step back and said, why don’t we build a platform and invite (Pro Advisor) bookkeepers onto this platform. It’s not Intuit employees, we’re not competing in the industry. This is a platform to connect with the other 40 percent and not the 60 percent (that already have a bookkeeper or accountant). What we will do is, we will honour the fact that they’re not looking for an accounting professional and we think that QuickBooks can help them.
DigitalFirst: What does this look like from the bookkeeper’s perspective?
Preece: We will send you a laptop, , we’ll give you all the technology, we will train you (on our processes) – you already know QuickBooks because you’re a Pro Advisor. You can work as little or as much as you would like to. You can work from your own home. And then when I as a customer log into QuickBooks and I say, hey, I’d like some on demand help, then Sholto is one of the – over time – thousands of people who are these on demand professionals in QuickBooks helping with setup or basic bookkeeping.
DigitalFirst: How much will this cost?
Preece: They are paying QuickBooks for that service. And we are testing prices from $200 to $400. We’re still testing pricing. And then we will pay you by the hour for the time that you spend on the platform. It’s still TBD on exactly what the economics of it are going to be.
What we’re trying to do is expand the opportunities of small businesses working together with the accounting profession. We’re basically saying to Pro Advisors, if you want to participate on this platform, it’s an opportunity to earn more revenue. You obviously don’t have to. We don’t think it’s competitive, we actually think that we’re helping you connect with people that weren’t looking for you in the first place.
DigitalFirst: What happens when a business needs more than basic bookkeeping?
Preece: When they outgrow the needs of QuickBooks Live we will recommend they connect with an accounting professional in the same way that we always have done.
DigitalFirst: With QuickBooks Live who would you say owns the customer?
Preece: Yeah, it’s a great question and it is QuickBooks, it is Intuit. I know it’s not the answer that everybody wants to hear, but it’s the honest answer and here’s why that’s important. I get the question, by the way, every time I speak in front of a group of accountants on this, DigitalFirst.
Accounting professionals initially say, this is great because (they think) I can add a new client to my client base. And I have to explain to them that the small business said they weren’t ready for an accountant or a bookkeeper. So if it turns out I’ve got my own CPA firm and I’m more than happy to help you with your payroll and other needs, we’ve now essentially broken the initial promise from just minutes earlier. Which is, I’m not ready for a CPA but I do want a QuickBooks accounting professional to help me.
So the promise to the accounting professional is it’s a revenue opportunity, it’s not a client opportunity. The client opportunity is still on the other platform (the Find a Pro Advisor Directory).
DigitalFirst: So you don’t plan on using bookkeepers who are 100 percent QuickBooks Live?
Preece: Yeah, exactly. And frankly, it’s up to them. We have the benefit of having already done something similar for two years in Turbo Tax in the U.S. with Turbo Tax Live.
In the US unless you file your tax return, you don’t pay (for the TurboTax software). Millions of people get to a place in their tax return where they lose certainty and confidence to complete it on their own. Their only option is to go to a tax professional and probably pay $300, which is what they didn’t want to do.
So we introduced Turbo Tax Live which is about $80. And it says, If you need help from a CPA, press the on demand button now, and boom, they’re on your screen (via video conferencing).
What we learned from those accounting professionals – and there are several thousand and they’re Pro Advisors as well – the vast majority of them have an existing practice. Turbo Tax Live is about excess capacity. This is about earning some more money on a Saturday morning. Say they’ve got a more junior member of their staff and that they put them on this for ten hours a week.
So they have their regular practice and this is incremental to it. That’s what we found most people do.
Now, I’m sure there’s always one or two people that from a lifestyle standpoint, will enjoy the fact that you work as much as you want or as little as you want. You work the hours you want. I’m sure over time there’ll be some people that will like that approach, but most of them have their own practice.
DigitalFirst: Whatever price you choose for this service, whether it’s $200 or $400, you’re anchoring the price for bookkeeping services. What impact do you think that will have on market rates out there for accounting and bookkeeping services when Intuit, with 80 percent market share in the US, comes out and says, “This is the price for basic bookkeeping”? That will obviously have a knock-on effect for that 60/40 split and there will be cannibalisation.
Preece: Two answers to that question, Sholto. One is, I genuinely believe that the vast majority of the people that are using this service were not about to find an accounting professional. Because again, they are the same people that said, I don’t want that right now. So I honestly think this expands the number of people who are looking for that expert help, because once they get a little taste of it they realise the value of it. So I genuinely think this is more accretive than dilutive in terms of growing the pie.
Regarding price anchoring, we will have tiers. We won’t launch with tiers. We’re going live June 3 in the U.S., so two weeks from now. Our first price point is only going to be $400.
Many bookkeepers today offer services for less than $250. And so I would argue that at the moment, we’re probably on the high end of it and that’s what we’re going to launch with on June 3.
Now, what I would love to have over time, and we almost certainly will, is two or three different offerings in the line-up. So there might be a $200, there might be a $400, there might be a $700 (package). What we need to learn is the utilisation and the expectations for each of this. This is kind of half of the problem. When we say basic bookkeeping, everybody has a different definition.
We’re being very deliberate with our words. We’re saying it’s “Do it with me”. When people go to a normal accounting professional, it’s “Do it for me”. If Sholto, I work with you, I would tell folks, “I work with Sholto, he’s my guy”.
This isn’t one of those experiences. This is where you might have a small team who are industry experts but it’s less about having your guy or your woman.
I think there are many things that are different and so the fact that we’re coming out the gate with $400 (in the US) proves that we’re not trying to undercut anybody.
DigitalFirst: I know that some American firms are using Filipino bookkeepers to lower costs. Is a Pro Advisor in the Philippines able to work for this service?
Preece: Well, now you have asked the question that nobody else has. To be honest, we haven’t really thought about it. The intent is that it is in-country. So when we launch in Australia, the intent is that we are servicing Pro Advisors based in Australia. That is the intent. We will have to make sure that there isn’t leakage, so to speak.
DigitalFirst: One of the things I’m interested in is you’re putting the Intuit brand up there. A brand that’s worth a lot of money and you guys do everything at very high quality. How do you ensure that bookkeepers working for QuickBooks Live deliver on that brand promise?
Preece: We have the benefit of a couple of years of at least similar learnings down in the Turbo Tax division. But let me answer the question directly. First of all, there will be a sort of an intake process. We’ve already got many, many people that have asked to be added to a list (in the US).
Not all Pro Advisors will get this opportunity. And in Turbo Tax, far more Pro Advisors want to do it than we have had do it. The reason is that there is certification beyond the current Pro Advisor certification. We have to add this (for Bookkeeping Live) over the next weeks and months.
And some of the certification is around how you engage with a client. It’s not just knowledge of QuickBooks Online, you have to have empathy, you have to a little bit of what we expect from our own folks who represent our brand everyday and work for us.
Then, there is training. It takes six weeks to get somebody up to speed with our onboarding, and that’s after we’ve sent you the laptop, the technology and the headset. We’re going to do test calls with you.
Once you’re live on the platform, there is a feedback loop that we will get from customers. There are also things like background checks which is clearly something that everybody has to go through. So there’s the background check, the certification, six weeks of training and the feedback.
It’s fairly rigorous. The thing that makes me feel at least good about this is that on the Turbo Tax side we’re up to about three to four thousand accounting professionals. Who, again, most are pro advisors. The Net Promoter Score (a customer satisfaction survey) is off the charts.
We have not seen those issues of negative brand issues. And 90 percent of the Pro Advisors came back the second year to participate on the platform. So not only was it a positive experience for customers, but equally important to us, it was a positive experience for the Pro Advisors.
DigitalFirst: It’s interesting that you’re providing this training. Given the high standard that Intuit sets, even if I’m not going to do QuickBooks Live, an accountant may want to see what the training is like and it’d be great if my staff did it. It would become a baseline for a quality bookkeeping service.
DigitalFirst: I’m interested in, mechanically, in how this works. Is it like with ODesk where you’re monitoring bokkeepers’ screens so you can record when people are working? You’re just copying that infrastructure from Turbo Tax Live, right?
Preece: Largely, yes, is the answer. We built something which we call a virtual expert platform. So if you heard us say VEP internally, that’s what we’re talking about. There is technology called Smart Look that gives me authorisation to see your screen (and take control of the mouse). So it’s a completely closed platform for all the right privacy reasons. With the authorization from the user, immediately that Pro Adviser is there on screen (in a video chat window).
I can point things out to you, make changes, navigate around your screen for you. I can even do things offline as well.
One of the interesting things we found with tests of small groups of customers is that a good chunk of the work happens offline. So you will ask some questions, we’ll be on video, I will then actually work on that offline for an hour and then in our next scheduled meeting I will tell you what I’ve done or what I fixed.
DigitalFirst: If you’re delivering a bookkeeping service with a Net Promoter Score that is “off the charts”, it will be a bit jarring when the business needs to move to an accounting firm that doesn’t have whole teams focused on customer experience. Won’t it create dissonance when the business has an amazing technology experience with video support to best-effort phone support from their local accountant?
Preece: The best way I can answer that question is that a lot of the reason why somebody is going to that accounting firm is the relationship. I’ve used accountants in the past. I can tell you their names, I can tell you where their offices are, and it’s because I want to sit there for forty five minutes and ask my questions and look them in the eye and have a relationship. Honestly, I’m probably willing to pay more for that.
This is a different service. You’re doing it on your own and now somebody’s helping you. There are great accountants out there and we’re never going to be that personal, face-to-face service. People have to obviously make the choice that’s right for them.
DigitalFirst: Inevitably it will force a lot of firms to pick up their game. If the business goes to an accounting firm that will send a manila envelope full of forms in about two weeks time, the customer is not going to be impressed.
Preece: I think you’re probably right, and frankly, I hope you are. All of our jobs, at the end of the day, are in servicing small businesses. And so if as a result of this, small businesses get better service from accounting professionals, I actually think that’s a win around the board.
DigitalFirst: What is the biggest risk for Intuit in rolling out this service? How are you testing the price and making sure businesses won’t need more support than your fixed fee? Would you sell bookkeeping on an hourly rate?
Preece: The biggest risk for us is, what is the consumption? We’ve had 200 small businesses in a test for the last two months (in the US), so we have a pretty good idea of what the consumption is.
Which is why we have an idea of the $400 price point. We believe in the value pricing, not hourly pricing. That said, honestly, I am fascinated to see if we end up there. I can’t promise you that we won’t change the price because if people start consuming 20 hours a month on a platform where they’re paying $400, we’d have to raise the price or limit the consumption.
If you go the limit the consumption path, the numerator that makes the most sense to me is time. But if we do that, we’re running against what we have said is value pricing. So the short answer is, we’re not selling hours at the moment. We’re selling an on-demand service where we don’t even talk about hours. But maybe that has to change.