Even after 12 years in the North American market, Xero still sees itself as a challenger brand and it begs the question, how different are they?
In the 20 years I have covered the accounting profession and related technology, you realize that accounting platfoms are inherantly not all that different from one another. The exception is in the details: The UI, the speed at which functions process, how it handles integrations and so forth. In this sense, Xero is not all that different, so why have they been so challenged here in North America?
One of the reasons, from my viewpoint and recalling when they first arrived in 2010, was their approach to their base of accountants. Xero has long used accountants and bookkeepers not as a channel, so much as advocates for their product. This has been their success in all of the markets they have been in, but for North America.
When they first came here, then CEO and co-founder Rod Drury took swipes at its key competitor Intuit and their QuickBooks product. While some bookkeepers had been frustrated with the product and company, they did not appreciate the approach from the then newcomer and the negative impact has only more recently stated to shake off.
As I mentioned previously, Xero has 3.3 million subscribers globally, 336,000 of which are in North America (they do not break out by country, so it is unknown exactly how many are in the US or Canada, respectively). This is a year-on-year growth of 19 percent in this market, clearly an improvement for the company.
What could also help them remain “different” is their current approach, or rather, if they practice what they preach. Country head Ben Richmond boldly claimed Xero would never compete with its accountant base, and much prefers them as partners and advocates.
“We have been measured in our approach to the North American market, we want to build out the partner channel better and we are in the communities we want to be in,” said Richmond. “We are taking the best of what we’ve done globally and applying it here. We put accountants at the center of our product decisions, but we know can’t just say ‘we’re amazing, come chat to us.’ We are still building our brand here and we need accountants to know that we don’t see them as a reseller or “channel,” we have been methodical about how we build out [into the market].”
So while Xero, like many accounting platforms, continues to struggle with things like bank feeds and reconciliations, the approach Richmond laid out could be refreshing news to accountants who took umberage with Intuit’s “direct” offerings of TurboTax Live and QuickBooks Live. That is, if Xero does honor that promise. It will also continue the narrative that, perhaps, Xero is indeed different.
They also realize that it’s no longer an “us vs. them” or “green vs. blue” competition in the accounting market, there is plenty of room for both to grow and play nicely in the same sandbox.