Proper Procedures Matter

KPI tracking, communication, and delegating are service business essentials

Regular tracking of Key Performance Indicators (KPI) are the most valued method for determining the financial condition of a service business. We also know the importance of clear communication and proper delegation of duties to any business, large or small. We spoke about these essential practices with Jeff Plant, Head Coach Team Lead and Training with Business Development Resources, LLC., to iron out some KPI-related questions.

Contracting Business (CB): Jeff, are some KPIs more important than others in the HVAC business setting? If so, what are those, and how must they be interpreted?

Jeff Plant (JP): It is important to keep an eye on the basics. I encourage my clients to never lose focus on these things when it comes to service and replacement.

For service:

• Make sure you are hitting your forecasted daily call count goals.
• Review average ticket revenue daily.
• Review the total daily revenue for the department and per technician.
• Monitor daily billing efficiency. How many hours are billed daily compared to how many hours worked?

For replacement:

• Monitor lead count daily.
• Monitor average sales price daily.
• Monitor total daily sales revenue.
• Monitor labor efficiency. How many hours did an installation require compared to how many hours were bid?
• Monitor Gross Profit Per Man Day (GMPD) goals.

CB: What are the red flags related to the most important KPIs?

JP: Use these KPIs to expose the red flags to determine and forecast shortfalls daily. KPIs are only helpful if you use them. Review them regularly—daily for many—and then course correct as needed.

CB: Clarity helps to eliminate confusion. Where is the clearest communication most needed in service businesses?

JP: Everywhere and at all times, it is important to ensure that communication goes beyond words and that we are actually connecting the team to the task ahead with clear communication and defined expectations. Written processes, pictures, and videos all support clear communication. Spending the time to learn more about your members and their goals and motivations provides the connection that leads to the most effective communication and team production.

CB: In what ways does poor communication harm a business?

JP: Poor communication leaves too many gray areas for the team to interpret improperly. If the team is not clear on the communication, they may make their own assumptions, which may be the ones you do not want or never intended.

Clear communication can be achieved when the company’s culture is consistent, and each team member knows how they contribute to the whole of the company. It is also good practice to have team members recite the expectations back to you once you communicate with them.

CB: What are some business procedures some are still doing on paper that are proven time wasters?

JP: In sales, some companies still prepare proposals in paper format, which can cause inconsistencies in the proposal deliverable. It is also very difficult to store these paper documents in a database where they can be easily accessed for future review.

In service: Billing service calls on paper creates some of the same issues as above, with additional issues such as inconsistent billing. Some techs work faster than others, so the billing can be different based on tech efficiency. There is also the challenge of inconsistent invoice totaling due to improper total additions. Digital formats take math out of the equation.

In the office: In-office billing to clients and inventory tracking, which can be done much more easily with electronic systems.

CB: Are there things the owner can hand off to the team that they are doing but are keeping them from working ON the business?

JP: Owners need to start trusting their teams to implement things. They still get too involved, thinking they need to have all the answers and implement all the systems in the company, which causes bottlenecks for them and their teams. Delegation is a learned skill. Owners can start by identifying the tasks they perform with the highest value and then working to spend more time on these tasks.

They must build a plan to delegate tasks to others to free up their time. Successful delegation is done to a plan. Who is the appropriate person to take on the task? What training, tools, and instruction will they need to succeed? When do they need to complete the task?

The answer to the question of what tasks to delegate will differ for each owner, but if they do not free up their time to work ON the business, their company will never reach its true potential.

About the Author

Terry McIver is the editor-in-chief of Contracting Business magazine and director of content for ContractingBusiness.com.

Read the full interview with BDR Lead Head Coach & Trainer Jeff Plant on page 18 of Contracting Business!