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The 5 KPI's that show problems before they happen · Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

• 0:00
  SPEAKER_00: Most owners are trying to fix problems that they can't see.
• 0:03
  SPEAKER_00: Like they're just guessing and shooting at the dark at whatever the problem is.
• 0:07
  SPEAKER_00: In a home service business, there are basically five numbers.
• 0:10
  SPEAKER_00: They're going to tell you how you're doing leads, booking rate, average ticket, closing rate, and number of options.
• 0:17
  SPEAKER_00: And those five numbers are going to tell you most of the problems that you have inside your business.
• 0:22
  SPEAKER_00: We're running a business, so let's focus on what we can see.
• 0:24
  SPEAKER_00: If you take that philosophy to more of your business, it'll start helping you unpack it.
• 0:30
  SPEAKER_00: Things like how you organize your field service management software, how you organize your financials, how you do job postings and marketing management.
• 0:39
  SPEAKER_00: Everything ties back to you have to know the fundamental numbers that run your business.
• 0:45
  SPEAKER_00: You have to know what drives it.
• 0:47
  SPEAKER_00: Because when something breaks, you need to know that that one thing broke.
• 0:51
  SPEAKER_00: I'm John Wilson.
• 0:52
  SPEAKER_00: Over the last 10 years of my life, I've spent it building a$40 million home service company.
• 0:57
  SPEAKER_00: On this channel, we break down how to build your business.
• 0:59
  SPEAKER_00: So let's dive in.
• 1:00
  SPEAKER_00: These numbers show the whole customer journey, which is why they're so valuable.
• 1:04
  SPEAKER_00: How many customers are contacting us?
• 1:06
  SPEAKER_00: Do they like our call center?
• 1:08
  SPEAKER_00: Are they booking?
• 1:09
  SPEAKER_00: How many of them are trusting us with a sale?
• 1:11
  SPEAKER_00: That's our closing rate.
• 1:12
  SPEAKER_00: Are they trusting us with a big number or small number, average ticket?
• 1:15
  SPEAKER_00: And did we do a good job presenting to them and building trust, which is number of options?
• 1:20
  SPEAKER_00: It walks you through the whole customer journey, and then that's going to get reflected later in your financials with rising revenue and strong gross margin.
• 1:28
  SPEAKER_00: Pinpointing these five numbers also helps you identify which part of your business do you need to fix.
• 1:34
  SPEAKER_00: If I know I need 20 leads a day and I'm at 10, I know that I have a leads problem.
• 1:39
  SPEAKER_00: But if I'm getting 20 leads a day and revenue's still not moving in the direction that I want it to be, then I probably have a closing rate, booking rate, or average ticket problem.
• 1:47
  SPEAKER_00: You just start solving from there.
• 1:48
  SPEAKER_00: Is my average ticket lower than what I expect?
• 1:51
  SPEAKER_00: Is my closing rate lower than what I expect?
• 1:53
  SPEAKER_00: What you expect can just be your average.
• 1:55
  SPEAKER_00: It's always a good rule of thumb to ask your peers, research and find what should my average ticket be?
• 2:01
  SPEAKER_00: What should my closing rate be?
• 2:02
  SPEAKER_00: You can also just use your own history for the last 30, 60, 90 days to inform you on what your average ticket should be.
• 2:10
  SPEAKER_00: This should be easy to find.
• 2:12
  SPEAKER_00: We had people come in for our breaking five workshop here a few weeks ago, and we gave this simple assignment.
• 2:18
  SPEAKER_00: I want you to go find and tell me how many phone calls you got last week.
• 2:23
  SPEAKER_00: Half of the room could not find how many phone calls they had in an hour.
• 2:28
  SPEAKER_00: This should be easy to find.
• 2:29
  SPEAKER_00: It should be hitting you in the face.
• 2:31
  SPEAKER_00: And if it's not, then what you need to be thinking about is do I have the right technology in my business so that the information is easy to access?
• 2:39
  SPEAKER_00: You have to know this information immediately.
• 2:43
  SPEAKER_00: The owner thinks it's one problem, but the numbers say it's something else.
• 2:47
  SPEAKER_00: Someone saying, Hey, like I'm actually gonna go bankrupt in 30 days.
• 2:50
  SPEAKER_00: Like this was a real call I had.
• 2:52
  SPEAKER_00: Turns out his guys were extremely busy, literally could not have handled more leads.
• 2:57
  SPEAKER_00: But leads is the first thing that people go to because it's the thing that's outside of their control.
• 3:02
  SPEAKER_00: But really, it it was something totally different.
• 3:05
  SPEAKER_00: We found out his average ticket was$300 and it should have been$1,200.
• 3:11
  SPEAKER_00: He was fully within his power to fix this problem.
• 3:14
  SPEAKER_00: And they got up to 800, which was a huge improvement in a very short amount of time.
• 3:19
  SPEAKER_00: Another area that I see is, oh my gosh, we need more leads.
• 3:23
  SPEAKER_00: And what they say is, well, like we're getting all these calls, we just don't have enough on the board.
• 3:28
  SPEAKER_00: So we start diving in a little bit more, and hey, their booking rate's bad.
• 3:31
  SPEAKER_00: The first thing I have them do is I want you to go listen to 10 calls that came into your call center.
• 3:37
  SPEAKER_00: They call me back a few minutes later.
• 3:39
  SPEAKER_00: They don't have a leads problem, they have a booking problem.
• 3:42
  SPEAKER_00: They're getting all the leads that their business needs, they're just choosing not to book them.
• 3:46
  SPEAKER_00: Again, very liberating, very within your control.
• 3:49
  SPEAKER_00: KPIs help drive the business every day.
• 3:52
  SPEAKER_00: How many calls do we get?
• 3:53
  SPEAKER_00: How many calls do we book?
• 3:54
  SPEAKER_00: What was our average sale?
• 3:55
  SPEAKER_00: How many do we sell in the field?
• 3:57
  SPEAKER_00: What was our number of options?
• 3:58
  SPEAKER_00: You should be running a daily huddle with your team where you talk about those five things every day because that tells you what do we have to get done, what's the mission.
• 4:06
  SPEAKER_00: With KPIs, is you start tracking more and more inside your business.
• 4:10
  SPEAKER_00: An easy thing to overcorrect on is tracking everything.
• 4:14
  SPEAKER_00: So you have to make sure you're tracking the right thing that gives you the most information.
• 4:19
  SPEAKER_00: Something like marketing ROI over the last 30 days.
• 4:22
  SPEAKER_00: That is like five different measurements rolled up into one, summarized, and it's kind of beautiful.
• 4:26
  SPEAKER_00: So make sure you're tracking the things that actually matter and you're not just creating noise inside your organization.
• 4:32
  SPEAKER_00: A big question we get is how often should you be checking these numbers?
• 4:36
  SPEAKER_00: One is you need to be able to check it within 10 seconds at any time.
• 4:40
  SPEAKER_00: But two, you should have a daily meeting and talk about yesterday's numbers and month-to-date pacing.
• 4:47
  SPEAKER_00: Once a week, you should be talking with your leadership team.
• 4:50
  SPEAKER_00: And every week you deep dive for 30 minutes on those numbers and check the health and work on how we can make them better.
• 4:57
  SPEAKER_00: If you only look at these numbers monthly or quarterly, that's too much lag in between performance and improvement.
• 5:03
  SPEAKER_00: If last week was bad or trending bad, then I can make a difference right now.
• 5:08
  SPEAKER_00: And if I track it week over week and day over day, then I have a lot of data and suddenly I can start to see trends.
• 5:13
  SPEAKER_00: So you can solve real business moving, needle moving problems.
• 5:17
  SPEAKER_00: As you develop your scorecard and you're measuring these five to ten things, it is important to help share that throughout the whole organization.
• 5:24
  SPEAKER_00: Your score should be on the wall.
• 5:25
  SPEAKER_00: Everyone should know what the target is, they should know what they're contributing to that target.
• 5:29
  SPEAKER_00: This should be a publicly displayed scoreboard.
• 5:32
  SPEAKER_00: You should be sharing your dashboards and sharing your KPIs and coaching to them.
• 5:37
  SPEAKER_00: We're expecting a thousand dollar average ticket, you're at 300.
• 5:40
  SPEAKER_00: How do we help you get there?
• 5:41
  SPEAKER_00: And this is how you start building a real business is you start measuring the things that matter and holding people accountable to those things.
• 5:49
  SPEAKER_00: One of my favorite metrics is number of options.
• 5:53
  SPEAKER_00: Because what number of options tells you is it's roughly going to tell you if average ticket and closing rate are on track.
• 6:00
  SPEAKER_00: That one number can summarize a ton of information.
• 6:03
  SPEAKER_00: Is the manager leading good training?
• 6:05
  SPEAKER_00: Is this team member receiving the training?
• 6:08
  SPEAKER_00: Are we running an effective sales process?
• 6:10
  SPEAKER_00: Are we running a good process inside the home?
• 6:13
  SPEAKER_00: All of that information is wrapped up inside the number of options.
• 6:18
  SPEAKER_00: I think the most valuable metric for field performance and manager evaluation is how many options on average do you present?
• 6:27
  SPEAKER_00: And how many options does your team present on average?
• 6:30
  SPEAKER_00: So you have to open up the dialogue so you can discover the pain point and present them with the options to solve that pain point.
• 6:37
  SPEAKER_00: That one metric, number of options per opportunity, is one of the most valuable in your business.
• 6:43
  SPEAKER_00: KPIs and leading by the numbers are how you stop building a business based on your gut.
• 6:48
  SPEAKER_00: And it's how you start driving the business forward basing on the fundamentals of the business.
• 6:53
  SPEAKER_00: And this is how you hire people, hold them accountable, and build a$40 million business.
• 6:58
  SPEAKER_00: Early on in our journey, we drove scorecarding in from the book traction and we drove average ticket and conversion rate.
• 7:05
  SPEAKER_00: We started measuring that stuff.
• 7:06
  SPEAKER_00: I could probably still find it from eight or nine years ago because we were measuring it very early on.
• 7:11
  SPEAKER_00: And it was us measuring it so early that helped us get control of those numbers instead of them controlling us.
• 7:17
  SPEAKER_00: We took control of it, we took control of the training, we improved those numbers day after day, year after year.
• 7:23
  SPEAKER_00: And 10 years later, we 40 times the business because we understood the things that drove it and we continually beat them in.
• 7:30
  SPEAKER_00: The real goal for KPIs as you drive it in is to solve problems fast.
• 7:35
  SPEAKER_00: I expect this number to be X.
• 7:37
  SPEAKER_00: If it's not, let's go solve it.
• 7:39
  SPEAKER_00: If booking rate drops, I know that I'm going to struggle in the rest of the business.
• 7:42
  SPEAKER_00: So I have to go attack it.
• 7:43
  SPEAKER_00: I need to go.
• 7:44
  SPEAKER_00: That's not a leads problem.
• 7:45
  SPEAKER_00: That's a scripting problem or a call center training or maybe technology.
• 7:48
  SPEAKER_00: There's something going on there.
• 7:50
  SPEAKER_00: But if what if I thought it was leads and I spent a week trying to solve a leads problem, but really it was call center training?
• 7:56
  SPEAKER_00: The more you measure of the important stuff, the easier it is to isolate that problem.
• 8:00
  SPEAKER_00: And the faster you can isolate, the faster you can solve.
• 8:03
  SPEAKER_00: If you like what you heard, remember to like and sub.
• 8:06
  SPEAKER_00: And if you want more of my thoughts, check out ownedandoperated.com.
• 8:09
  SPEAKER_00: We've got a great newsletter.
• 8:10
  SPEAKER_00: We have a podcast.
• 8:11
  SPEAKER_00: I'm active on LinkedIn and X, where we share this stuff all the time.
• 8:15
  SPEAKER_00: Links to all of those and more are inside the description below.