The 5 KPI's that show problems before they happen

Many small business owners struggle with identifying core issues, often guessing at problems instead of relying on concrete data. This video emphasizes the importance of focusing on measurable key metrics within a home services business. By tracking performance metrics like leads, booking rates, and closing rates, owners can significantly improve their business management and gain clear insights into their operational health.

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John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC

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Transcript

Introduction

SPEAKER_00 0:00

Most owners are trying to fix problems that they can't see. Like they're just guessing and shooting at the dark at whatever the problem is. In a home service business, there are basically five numbers. They're going to tell you how you're doing leads, booking rate, average ticket, closing rate, and number of options. And those five numbers are going to tell you most of the problems that you have inside your business. We're running a business, so let's focus on what we can see. If you take that philosophy to more of your business, it'll start helping you unpack it. Things like how you organize your field service management software, how you organize your financials, how you do job postings and marketing management. Everything ties back to you have to know the fundamental numbers that run your business. You have to know what drives it. Because when something breaks, you need to know that that one thing broke. I'm John Wilson. Over the last 10 years of my life, I've spent it building a $40 million home service company. On this channel, we break down how to build your business. So let's dive in. These numbers

The 5 KPIs Explained

SPEAKER_00 1:01

show the whole customer journey, which is why they're so valuable. How many customers are contacting us? Do they like our call center? Are they booking? How many of them are trusting us with a sale? That's our closing rate. Are they trusting us with a big number or small number, average ticket? And did we do a good job presenting to them and building trust, which is number of options? 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. Pinpointing

Diagnosing Your Business Problems

SPEAKER_00 1:29

these five numbers also helps you identify which part of your business do you need to fix. If I know I need 20 leads a day and I'm at 10, I know that I have a leads problem. 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. You just start solving from there. Is my average ticket lower than what I expect? Is my closing rate lower than what I expect? What you expect can just be your average. It's always a good rule of thumb to ask your peers, research and find what should my average ticket be? What should my closing rate be? 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.

Are You Tracking the Right Data?

SPEAKER_00 2:10

This should be easy to find. We had people come in for our breaking five workshop here a few weeks ago, and we gave this simple assignment. I want you to go find and tell me how many phone calls you got last week. Half of the room could not find how many phone calls they had in an hour. This should be easy to find. It should be hitting you in the face. 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? You have to know this information immediately. The owner

Real Business Examples

SPEAKER_00 2:44

thinks it's one problem, but the numbers say it's something else. Someone saying, Hey, like I'm actually gonna go bankrupt in 30 days. Like this was a real call I had. Turns out his guys were extremely busy, literally could not have handled more leads. But leads is the first thing that people go to because it's the thing that's outside of their control. But really, it it was something totally different. We found out his average ticket was $300 and it should have been $1,200. He was fully within his power to fix this problem. And they got up to 800, which was a huge improvement in a very short amount of time. Another area that I see is, oh my gosh, we need more leads. And what they say is, well, like we're getting all these calls, we just don't have enough on the board. So we start diving in a little bit more, and hey, their booking rate's bad. The first thing I have them do is I want you to go listen to 10 calls that came into your call center. They call me back a few minutes later. They don't have a leads problem, they have a booking problem. They're getting all the leads that their business needs, they're just choosing not to book them. Again, very liberating, very within your control. KPIs

Running Daily KPI Huddles

SPEAKER_00 3:50

help drive the business every day. How many calls do we get? How many calls do we book? What was our average sale? How many do we sell in the field? What was our number of options? 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. With KPIs, is you start tracking more and more inside your business. An easy thing to overcorrect on is tracking everything. So you have to make sure you're tracking the right thing that gives you the most information. Something like marketing ROI over the last 30 days. That is like five different measurements rolled up into one, summarized, and it's kind of beautiful. So make sure you're tracking the things that actually matter and you're not just creating noise inside your organization. A big question

How Often to Review Your Numbers

SPEAKER_00 4:33

we get is how often should you be checking these numbers? One is you need to be able to check it within 10 seconds at any time. But two, you should have a daily meeting and talk about yesterday's numbers and month-to-date pacing. Once a week, you should be talking with your leadership team. 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. If you only look at these numbers monthly or quarterly, that's too much lag in between performance and improvement. If last week was bad or trending bad, then I can make a difference right now. 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. So you can solve real business moving, needle moving problems. As

Building a Company Scorecard

SPEAKER_00 5:18

you develop your scorecard and you're measuring these five to ten things, it is important to help share that throughout the whole organization. Your score should be on the wall. Everyone should know what the target is, they should know what they're contributing to that target. This should be a publicly displayed scoreboard. You should be sharing your dashboards and sharing your KPIs and coaching to them. We're expecting a thousand dollar average ticket, you're at 300. How do we help you get there? 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. One

The #1 Field Performance Metric

SPEAKER_00 5:50

of my favorite metrics is number of options. Because what number of options tells you is it's roughly going to tell you if average ticket and closing rate are on track. That one number can summarize a ton of information. Is the manager leading good training? Is this team member receiving the training? Are we running an effective sales process? Are we running a good process inside the home? All of that information is wrapped up inside the number of options. I think the most valuable metric for field performance and manager evaluation is how many options on average do you present? And how many options does your team present on average? 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. That one metric, number of options per opportunity, is one of the most valuable in your business.

Stop Running on Gut, Start Running on Data

SPEAKER_00 6:43

KPIs and leading by the numbers are how you stop building a business based on your gut. And it's how you start driving the business forward basing on the fundamentals of the business. And this is how you hire people, hold them accountable, and build a $40 million business. Early on in our journey, we drove scorecarding in from the book traction and we drove average ticket and conversion rate. We started measuring that stuff. I could probably still find it from eight or nine years ago because we were measuring it very early on. And it was us measuring it so early that helped us get control of those numbers instead of them controlling us. We took control of it, we took control of the training, we improved those numbers day after day, year after year. And 10 years later, we 40 times the business because we understood the things that drove it and we continually beat them in. The real goal for KPIs as you drive it in is to solve problems fast. I expect this number to be X. If it's not, let's go solve it. If booking rate drops, I know that I'm going to struggle in the rest of the business. So I have to go attack it. I need to go. That's not a leads problem. That's a scripting problem or a call center training or maybe technology. There's something going on there. 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? The more you measure of the important stuff, the easier it is to isolate that problem. And the faster you can isolate, the faster you can solve. If you like what you heard, remember to like and sub. And if you want more of my thoughts, check out ownedandoperated.com. We've got a great newsletter. We have a podcast. I'm active on LinkedIn and X, where we share this stuff all the time. Links to all of those and more are inside the description below.