The 5 KPI's that show problems before they happen

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