Owning and operating any small business is grueling work, and it requires juggling many moving parts. One of the most important factors of keeping your business on a positive trajectory is by measuring key performance indicators, or KPIs.
In such a competitive industry as HVAC, understanding which KPIs to track can provide valuable insight into areas that your company succeeds and areas that may need more of your attention. Harness the information from these KPIs to build a stronger business moving forward.
Why Do KPIs for HVAC Businesses Matter So Much?
You may associate tracking HVAC key performance indicators with heightened pressure or added stress to your organization. However, consider KPIs as a guiding light toward success, as they are a helpful tool that can guide your team in the right direction.
If a particular KPI isn’t met, this shouldn’t induce a sense of failure in your employees, rather, it can help them identify areas that may need more attention. As a business owner, you can also consider investing in training and other helpful tools if you’re noticing KPIs aren’t consistently met.
KPIs for HVAC businesses are important because:
- They motivate your staff to reach a common goal, instilling a sense of teamwork and camaraderie
- Keep the interest in all areas of your business high
- Help keep staff accountable and reliable throughout their workflow
- Improve productivity and efficiency
- Reflect on areas of the business that are doing well and areas of the business that need additional attention
9 Key Performance Indicators for HVAC Businesses
Zero in on the following metrics to help keep your HVAC business on track toward success.
1. Customer Retention
Customer loyalty is a huge benefit to your HVAC business, as repeat customers can have a significant impact on your revenue. Whether you need to send questionnaires to customers about your services or other methods of following up, do whatever you can to stay top of mind.
Reflect on how many of your customers are repeat customers and use this data to drive relevant campaigns moving forward. You may find that you need to spend more resources on following up with customers and understanding what they liked and didn’t like about your services.
2. Gross vs. Net Profit
Are you aware of your HVAC industry profit margins? If not, this is something you’ll want to start paying attention to immediately as it can provide insight into how much you need to charge for your services.
Rather than focusing on gross revenue that doesn’t factor in your cost to provide a product or service, instead focus on net revenue to better understand your finances. Tap into this data to hone in on what you should be charging to hit a certain profit threshold.
3. Operating Costs
Running your HVAC business takes a lot of money and resources. Don’t turn a blind eye to all of the costs you face when running your business, including vehicle maintenance, office supplies, and other costs you may encounter that aren’t related to the products or services you offer.
Any costs that aren’t closely tracked can significantly derail the financial projections of your HVAC company. As a general rule of thumb, always keep track of every penny going in and out of your business.
4. Job Locations
Easily boost productivity by taking on jobs within the same general area. You can make it a point to target certain geographical areas with high populations to keep productivity levels as high as possible. This is an example of where the right dispatching software can automatically optimize routes on your behalf.
Between the right planning and the right software, you can cut down on wasted driving and wasted time between appointments.
5. Response Time and First-Time Fix Rate
Another KPI for HVAC businesses is response time and first-time fix rate. The quicker your team can arrive at the job site, the more jobs they’ll be able to take on. For example, your admin team may have a policy that states they must respond to queries within 10 minutes.
In addition to customer response time, keep track of first-time fix rates to determine how efficiently your technicians are using their time on the job.
6. Employee Production
Each employee you hire is a direct representation of your business, so all of your employees must be hard-working and efficient with their time. Consider keeping track of how much time each employee spends on the average service call. Factor in production time, travel time, and any other time that may go untracked.
There is always a level of variance when it comes to how long each job takes, but you likely have a general understanding of how long each task takes. Knowing the most efficient way to schedule appointments can result in the least amount of wasted time and money for your business.
7. Service Metrics
Service metrics can help you understand the types of jobs you’re bringing in and the accompanying revenue. Examples of service metrics include:
- The average revenue amount from one completed job
- Revenue per lead
- The number of service calls your techs can perform in one day
- How often a particular service is sold in one month
The above benchmarks provide insight into your customer buying trends and lay a foundation for your HVAC business’ future success.
8. Advertising ROI
If you’re investing in advertising, you want to make sure what you’re spending will be returned and then some. Understanding where your customers are coming from and why they chose your services can help you tap into continued success in the future.
For example, if you’re running paid ads on platforms such as Google Ads, Facebook, or even Instagram, calculate your ROI by dividing the returns (revenue) from the campaign cost. Keep track of which platforms are performing the best to continue pouring money into the appropriate channels.
9. Monthly Loss & Profit
Having a pulse on your monthly losses and profit can help you avoid year-end panic. Fixed costs include rent, utilities, staff salaries, and advertising. To determine your monthly numbers, take your fixed and variable costs and subtract them from your profit.
If your total costs are eating too much into your profit, look at areas of your business that you can cut back on each month.
Conclusion
Did you know that serviceminder.io has the capabilities to track your desired KPIs in real-time? This makes it easy to set and tweak goals, so your HVAC company always knows where it stands.
Book a demo with us to learn more about all of our capabilities!