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In today’s data-heavy world, there’s no need to be in the dark about how your business is operating. Numbers tell the true story about what’s happening, so measuring Key Performance Indicators throughout all your departments will provide you with clear, objective intel on performance and the overall health of your business.
KPIs are metrics that gauge activity with significant business impact and keep everyone aligned on what contributes to company growth. There are many different types of important KPIs in the home services industry.
A few baseline KPIs that we encourage all business owners to monitor include:
Net Profit: How well can your company turn dollars into revenue? Your net profit, which accounts for all expenses, measures this. If your revenue isn’t turning into profit, you have a problem.
Operating Expenses: Are you spending more than you’re making? Give your operating expenses a onceover every quarter to determine where you can cut costs and slim down this number. Don’t just let recurring expenses ride. Analyze them for improvement periodically.
Revenue Growth: Did you increase revenue over a specific period? This measurement will indicate your business’ ability to increase average ticket size, generate new customers, close more deals, etc. Growth is a key measure of business vitality.
In addition to these financial-focused numbers, it is still very important to also keep an eye on your customer satisfaction score and customer retention. Maintaining good customer relationships will help you with repeat business and is invaluable for word-of-mouth advertising.
Customer Satisfaction Score: Measured through surveys, online reviews, or general feedback from the customer, this measures how happy customers are with your company and the service you provided.
Customer Retention: Existing customers are easier to maintain than getting a brand-new customer. Monitor how many customers come back for repeat business – in the form of a maintenance agreement or other service.
There are also many different teams within your business that can benefit from KPI tracking, from front-line customer service representatives to techs out in the field. Focusing on these areas can help increase average ticket size and revenue and assist you in identifying weak spots where more training or strategic staffing would be of the most benefit.
One group you definitely want to hone in on for the health and growth of your business is your sales team. Even if you’re a small company without a dedicated sales team, a member of your back-office may be placing sales calls and trying to get more jobs booked.
After all, when sales sell more products and services, you increase your profits and revenue. Knowing this, it’s easy to see why it’s to your advantage to track how well each person who assists with sales is doing so you can see how much revenue they are bringing in for your business.
Focus on the metrics that matter. Sales KPIs will help you measure how closely sales team performance matches your company’s goals and how this performance impacts the overall business. Target KPIs in sales are defined to ensure teams track specific revenue goals. Once you get more comfortable monitoring and interpreting KPIs correctly, you can achieve higher profit, growth and performance levels.
KPIs and sales metrics to consider include the following:
Opportunity Follow-up: Techs are your front line for identifying future job opportunities. When your techs are out in the field identifying potential upsells or new sales on their job sites, these become opportunities for the sales team to pursue. These leads should hopefully be easier to close, with customers already familiar with your business and aware of the service or replacement recommended by the tech. Tracking sales success with these leads is crucial. These are great revenue generators.
Sales Pipeline Revenue: Your sales team should always have an active pipeline of potential customers or deals they are working on. Your sales pipeline revenue reflects the total value of all active opportunities in the sales pipeline. It indicates the team’s potential future revenue and helps identify any gaps in the pipeline that may need attention. You can track and forecast information to see if your company will meet its sales goals for the year using some of these KPIs based on growth or the number of new customers.
Sales Activity/Productivity: Following the number of calls, meetings, and follow-ups made by the sales team provides insight into their level of activity and engagement. These metrics help evaluate their productivity and effectiveness in pursuing leads.
Job Close Ratio: Your sales team can talk to customers all day on the phone, but the important thing is booked jobs and closed deals per sales rep. Here, you will want to examine how many calls your sales team conducted and how many resulted in booked jobs. This ratio should be on the high side.
Average Ticket Size: How well your sales team is doing at selling and upselling is a critical metric. Your sales team’s average ticket size is one way to gauge this. You can also use this data to determine if there is a particular product or service that your sales team is knocking out of the park with selling. If so, consider investing more money into marketing or promotions for this product. If a product isn’t doing well, consider pulling back on marketing or dropping it altogether.
Sales Revenue: This metric provides a good overview of your sales team’s performance and how it directly correlates to your top-line revenue.
Monthly Sales Growth: Month over month or year over year sales growth for your sales team should trend in an upward manner. If you see a lot of up and down or no progress toward improvement, it’s imperative to the health of your business to figure out the why.
Putting a few KPIs in place will help you accurately measure your team’s sales process and productivity and get a clearer picture of how they measure up to your strategic goals. You can also use the data you discover to pinpoint any themes or trends that are emerging.
Make sure your business management software is giving you insight into these valuable metrics to help you make data-driven decisions regarding your business.Paul Carmody has more 20 years of experience as a senior executive in Software-as-a-Service, technology-enabled services, internet infrastructure, and supply chain/manufacturing industries. He has served as a key executive in five successful exits and one IPO. He is currently president of Successware, an Authority Brands company.