Think back three months ago to the start of the year – did you set goals for your business? Of course you did. But how do you know your goals are focused on the right things? That you are monitoring the right numbers?
To help make sure you are on the right track, we’ve put together three questions for you to answer. The end of the quarter is a great time to run a diagnostic check on your company’s performance.
Don’t avoid this exercise just because you are nervous about what the numbers might tell you. A clear understanding of where you stand currently is essential if you want to set realistic goals that will move your business forward.
Here are the questions you should answer about your business:
- What is your revenue per technician?
- What is your ratio of maintenance work to repair work?
- What is your ratio of revenue delivered to revenue available?
A Closer Look at Key Metrics
Let’s take a closer look at each of these questions. Below, I’ve outlined some benchmark data from high performing companies and tips to improve performance for each.
Revenue Per Technician
Technician revenue will vary by specialty. Generally, we see the following annual averages among high performing companies:
- Fire protection technicians (extinguisher): $200k/year
- Fire protection technicians (sprinkler and alarm): $300k+/year
- Mechanical service technicians: $400k/year – $500k/year
All too often, we find commercial service companies that want to improve their numbers but are fixated on too small of a piece of this equation – usually utilization of technician time.
To hit the $400k+ mark, you have to think bigger. How much are you charging the customer? Market leaders can charge more. Are you finding high margin work that doesn’t require as much labor? This includes repair work.
Let’s look at how you can maximize repair work opportunities.
Ratio of Maintenance Work to Repair Work
Tracking this metric shows you where opportunities for generating more revenue may be falling through the cracks. To increase repair revenue, you’ll need to track:
- The number of deficiencies techs are reporting;
- The number of those deficiencies that convert to quotes; and
- Your approval rate on those quotes.
Our data shows that high performing companies convert at these rates:
- Mechanical services: $1 of maintenance revenue to $4 of repair revenue
- Fire protection: $1 of inspection revenue to $1 of repair revenue
For example, a fire protection company performing $5M in inspections should expect to generate an additional $5M in repair work from deficiencies found on those inspections. While a mechanical company performing $3M in inspections should expect to generate an additional $12M in repair work. Think about how that could impact your 2019 earnings.
Increasing Quote Volume
Giving your techs the ability to gather detailed information about deficiencies is a surefire way to increase quote volume. (To learn how one of our customers increased their quote volume by 50% using ServiceTrade, click here.) This means providing technicians with mobile applications so they can go beyond describing deficiencies to showing them – through photos and videos – which can be quickly communicated to your sales staff, who can turn them into quotes.
Increasing Quote Approval Rate
Your quote approval rate is determined by dividing the sum of approved quotes by the total number of quotes sent. For a more in-depth discussion on measuring quote approval, take a look at our previous post on the subject.
We talk to people all the time who say they have a 90% approval rate. But when we dig a little deeper and ask questions, we find they don’t actually know their approval rate. They’ve never measured it. On top of that, they send out a very low volume of cherry picked quotes. If your approval rate is in this range, take a closer look at how you are collecting the data.
Many factors improve quote approval rates, but the top 3 factors that we’ve found are:
- Turn quotes around within 24 hours of finding the problem
- Include rich media (photos, videos, audio) of the issue
- Offer a frictionless quote approval experience in which your customers can view and approve quotes with only a few clicks
By doing these three things, your online quote delivery process will earn a 3x approval rate over traditional quote delivery processes.
Ratio of Revenue Delivered to Revenue Available (Done versus Due Ratio)
Finally, you want to track your done versus due ratio. To calculate this number, divide revenue delivered (or work that is DONE – the amount of planned work completed and invoiced) by revenue available (or work that is DUE – the total amount of work authorized by maintenance contracts or approved quotes.)
Highly productive companies will generally have a ratio around 95-97%. Companies with low productivity will be closer to 75%. For a more in-depth discussion on this metric, read our earlier post on the subject.
Improving Done v. Due Ratio
The first step, and one we see many companies struggling with, is organizing and tracking this information in a manageable way. (Unless they are using ServiceTrade’s QuickSight capabilities.) But once you have a tracking system figured out, you can improve this ratio by prioritizing work related to higher margin contract maintenance, monitoring, inspection and planned repair revenue over unplanned service calls.
Setting Goals for the Next Quarter
Once you have determined your Q1 numbers, you can look to setting goals for Q2. For example, to set your goals for revenue per tech, break down your first quarter revenue by corporate division and by technician. How much revenue per day and how many jobs per day do your best techs drive? How do your best techs handle sending quotes?
Use performance of your best tech(s) as a goalpost for all techs. Once your techs start hitting that number, move it out. Your goal should be to increase revenue per technician 20% per year every year, or approximately 4.5%-5% per quarter.
Even if you don’t like the answers you find, you’ll feel more in control with a realistic snapshot of where you stand on these key questions. Schedule a recurring quarterly check-in on your calendar so that you can compare your performance quarter-to-quarter.
Interested in learning how ServiceTrade can track these metrics and improve your performance? Schedule a demo with us today.