Top 5 KPI’s Your Home Service Business Needs to Track in 2022
If you are looking to scale a home service business then you need to be tracking certain key performance indicators, or KPI’s, to ensure that your business is on the right track.
What is a KPI?
A KPI, acronym for key performance indicator, is a metric that measures how projects, individuals, departments or businesses perform in terms of strategic goals and objectives according to Monday.com.
Different types of KPI’s
There are different types of KPI’s, but the most common ones in home service businesses are:
-Number of sales
-Sales closing percentage
-Number of new customers
-Number of repeat customers
-Customer satisfaction score
-Customer callback rate
-Employee retention rate
Which KPI’s should you be tracking?
The KPI’s that you track should be aligned with your business goals. For example, if your goal is to increase revenue, then your KPI’s should focus on metrics that will help you measure and achieve that goal such as number of sales or gross margin. If your goal is to close more sales you should track the number of leads and closing percentage.
How to track KPI’s
There are various ways to track KPI’s. The most common method is to use spreadsheets, but there are also specialized software programs that can help you track and visualize your data.
If you decide to track your KPI’s using spreadsheets, the first step is to create a separate spreadsheet for each KPI. Then, you need to input the data manually or import it from other sources such as your accounting software.
Once you have all the data in one place, you can start analyzing it and look for trends. You can also use formulas to automate some of the analysis. For example, you can use a formula to calculate the average customer satisfaction score over time.
Specialized KPI tracking software
There are various KPI tracking software programs on the market that can help you track, visualize and analyze your data. Some of the most popular CRM’s in the home service industry that track KPI’s are HouseCall Pro, Jobber, ResponsiBid and ServiceTitan to name a few.
These software programs make it easier to track KPI’s because they offer features such as real-time dashboards, data import from multiple sources, and automatic calculation of formulas. They also allow you to share your KPI’s with others in your organization.
No matter which method you choose to track your KPI’s, the important thing is to start tracking them today. KPI’s are a valuable tool that can help you measure and improve the performance of your home service business.
Top 5 KPI’s to track per division of M.A.P.S
Each area of your business should be tracking its own KPI’s. We are going to break the areas down into Marketing, Admin, Production and Sales.
The top 5 marketing KPI’s to track are ROI (return on investment), ROAS (return on ad spend), CAC (customer acquisition cost), CLV (customer lifetime value) and marketing qualified leads to sales qualified leads ratio.
Return on investment is probably the most important marketing KPI. ROI measures how much revenue is generated from every dollar spent on marketing efforts including the people, tools, gas, etc. You may look at the cost of yard signs, but you also have to pay someone to put them out, the gas in the vehicle, etc.
Return on ad spend refers specifically to the amount of money spent on specific advertising campaigns. This usually includes Google Ads and Faccebook Ads.
Customer acquisition cost is the average amount of money your company spends to acquire a new customer. If you spend $10,000 on marketing and gain 100 new customers, your CAC is $100.
Customer lifetime value is the total amount of money a customer will spend with your company over their lifetime of being a customer. This metric can be improved by adding services, getting your customers to hire you more often, and increasing their average sale.
Marketing qualified leads to sales qualified leads ratio breaks down the difference between a MQL and a SQL. A marketing qualified lead is a lead that based on research is more than likely to become a customer. A sales qualified lead is ready for engagement by your sales team.
The top 5 KPI’s for the administrative area of your business are scheduling capacity efficiency, total calls, call to answer rate, average call length and accounts receivable.
Scheduling capacity efficiency refers to how full your admin is keeping your schedule. If your technician has the capacity to produce $2,000 a day then it is very important that your admin is keeping that schedule full.
Total calls refers to the total number of calls your admin is fielding in a day.
Call to answer rate is the number of calls answered compared to the number of calls that came in. Using call software such as Grasshopper makes it easy to track these metrics.
Average call length is important because your admin needs to be efficient on calls. Calls that are too short can mean that the client did not book a job and calls that are too long may cause other calls to be missed.
Accounts receivable is the amount of money your company is owed for open invoices. Cash in the bank is key and it is your admins responsibility to make sure that this number does not get out of hand. 26% of payment delays are caused by incorrect information on invoices according to this article. (Pro tip: Residential services should never have accounts receivable)
The top 5 KPI’s for your production team are hourly production, callback rate, customer reviews or satisfaction, safety and attendance.
Hourly production rate is the amount of revenue that each team member produces per hour. This can be improved through training, equipment and simply by tracking it.
Callback rate is the amount of jobs that you receive complaints on and your team has to return to the jobsite. Callbacks are very costly to home service businesses and need to be avoided.
Customer reviews are extremely important to home service businesses for a few reasons. First that are a way to know that you are doing a good job and your customers like your service. The second is the social proof that comes along with having reviews on your business listings.
Safety: Another critically important KPI. Unfortunately, we’re a marketing company, not a safety company. But if you’re interested in learning more about safety and certifications, check out my good friend Mike Draper’s company, Expert Safety Services.
Attendance is a struggle in home service businesses so it is important to track and enforce. If you have a full schedule and 2 technicians call out your company is both losing money and upsetting customers.
The top 5 sales KPI’s to track are your closing percentage, average ticket, leads generated, number of upsells and revenue created. In fact, the reason we’re called ClickCallSell is because the marketing company can generate the clicks and calls, but without a good sales process, you’ll never grow! We get more clicks and more leads for our clients. You have to close them!
Closing percentage is the number of deals won over the number of estimates given. If your salesperson gives 10 estimates and closes 6 deals, the closing percentage is 60%. This number will vary depending on the industry you are in.
- Formula: Total Booked Jobs / Total Estimates
Average ticket is found by taking the total revenue created for a specific time span and dividing that number by the number of jobs completed or widgets sold.
- Formula: Pick any date range, then… Total Sales / Number of Jobs
Leads generated refers to the number of leads your salesperson is generated on their own, not by marketing campaigns from the company.
Number of upsells is how many times your salesperson is selling the customer services above what they originally inquired about. If you are a carpet cleaner and a client asks for their living room carpet to be cleaned but you add the sofa, that is an upsell.
Total revenue created is just that, the total amount of revenue that salesperson brings in during a specific time period.
So what is your first step now that you know all of this information? Starting small is our best advice. Pick one area where your company is struggling and begin to track the data. That way, you can make data driven decisions to make improvements.