Knowing them is critical to boosting revenues
Key performance indicators (KPIs) are statistics that provide useful business information you can track and study so you can make important decisions with greater confidence. For home services businesses like yours, there are four KPIs that are particularly important – the actual cost of leads, the percentage you’re able to convert into booked calls, the percentage of those calls customers cancel, and your average revenue per job. We’ll look at each of them.
Average cost of leads
Do you know the actual cost of leads you’re receiving through each marketing channel? If not, how can you compare the effectiveness of each? By dividing what you invested in a particular tactic by the number of leads it generated, you’ll arrive at the cost per lead. Now, you have to keep in mind that some marketing channels with higher per-lead costs are still valuable, because they’re part of your branding efforts that increase familiarity with your business.
Percentage of booked calls
Determining this KPI involves the simple matter of looking at the total number of lead calls you receive in which your customer service reps (CSRs) can schedule an appointment. If you get 200 calls in a week and schedule 140 new appointments, that’s a 70 percent rate. (Service Titan’s standard for a lead call is one where someone is on the phone with your company for at least 60 seconds.)
Cancellation rate
Typically, booked customers cancel appointments when you’re unable to get to them as quickly as they’d like. They call around and find a competitor who can get there more quickly. Say a quarter of your booked appointments end up cancelling. That tells us two things. First, you don’t have sufficient capacity to meet the demand in your market, so a quarter of what you’re spending to get leads is being wasted. Second, consistent cancellations suggest you’re trying to make as many appointments as possible without considering the potential profitability associated with each.
Booking for profitability demands more effort on the part of your customer service reps. During the initial conversation with a customer, your CSRs need to devote a little extra time to better understand the situation. A repair call on a two-year-old system that’s still under warranty is likely to generate far less profitability than a call about a 20-year-old system, because the older system is a prime candidate for a replacement installation. By giving more profitable appointments priority service, your CSRs can ensure that their customers who cancel will have a smaller effect on the bottom line.
Average revenue per job
It’s what old-timers call the average ticket. You received a call and dispatched your tech. How much did you earn? Was it your $59 tune-up special that generated exactly $59? Or the same special that also sold a one-year maintenance plan membership at $329? Or the customer who requested a tune-up for a 25-year-old 80% furnace and just bought a high-end replacement? Knowing how much you make on an average call helps you forecast business more effectively and accurately. And, when you do things like analyze your average call data by your technicians, you’re likely to discover significant differences between those who are reluctant to open their mouths on a call, and those who display a genuine interest in the customer’s life.
Data helping you make strategic decisions
When you know your cost per lead, the percentage of booked calls, your cancellation rate, and your average revenue per job, it’s easy to calculate how many leads you’ll need to obtain to reach your targeted sales level. Put another way, you’ll be able to determine exactly how much more you need to spend on lead generation to achieve the desired level of sales.