Top 10 Critical KPIs for Contractors: Part 2
Is Your Business Focused on the Right Numbers?
Not all metrics are created equal—and if you’re tracking the wrong ones, you could be missing key opportunities for growth. Real success comes from measuring what truly impacts your bottom line.
In this week’s episode, Next Level Business Coaches Bob Larkin and Darrel Yashinsky dive into the core KPIs that matter most for contractors. They’ll show you how to cut through the noise, focus on what counts, and use data to drive better decisions, streamline operations, and fuel long-term success.
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00;00;00;00 – 00;00;11;09
On today’s show, we’re going to wrap up the top ten KPIs for residential Hvac contractors and.
00;00;11;11 – 00;00;29;29
If you’re efficiency is higher, your prices are going to be more competitive. Example is $30. Tech at 75% efficient would give you a lower charge. It using the same formula B $181.
00;00;30;01 – 00;00;55;01
Strategy. Your set your efficiency at 50%. If your efficiency proves please, please keep the profit. Don’t lower your price to your customer. Just a bit of a caveat here. This formula does not does not allow for service agreement discounts. Service agreements are a great part of your business. We can talk about service agreements at length, a very important part of your business.
00;00;55;03 – 00;01;30;19
This formula does not allow for the service agreement discounts. You can find further information in the Best Practice library section 5.5 on, your service agreement and your service pricing. So, 5.6 actually service agreement, Bob, reputation management is yours. All right. KPI number five, reputation management. You know, this is how consumers judge you. The number one item consumers use for a buying decision is your reputation.
00;01;30;21 – 00;02;00;12
We must respond to all negative reviews. Don’t let a negative review sit out there without a response. Customers will see that. And that’ll be one of the biggest turn offs that you can face. A strategy would be a ten questions survey on every install. And you really want to see where you’re hitting 95 out of 100 on these surveys.
00;02;00;14 – 00;02;07;13
And 4.75 stars on Google reviews.
00;02;07;16 – 00;02;39;21
Make the process simple one. Click on the phone or link. Ask for it on every call. Rank and reward your techs. The KPI 4.75 stars for Google Reviews. This is an opportunity for marketing. 2000 reviews is the recommended target. But hey, let’s just make this simple. Everybody’s got these different size. How about 500 reviews per 1 million insights?
00;02;39;23 – 00;02;50;11
Right, Darrell, you’re up KPI six sales closure rate okay. Let’s talk about it.
00;02;50;13 – 00;03;05;06
Our success everywhere must be measured. Selling success. Obviously one of them KPI is 60%. Key performance indicators 60% or greater. So what are we talking about here?
00;03;05;08 – 00;03;35;24
Industry average 42%. Now blended between marketing and tech generated leads. Where are your leads coming from? We want your technician generated leads to be 75% or greater. In other words, 100 leads coming in from technicians. You’re going to sell 75 of them, and your marketing leads should be 35% or greater. Close. This begs a whole other question around what happens when you’re not closing.
00;03;36;00 – 00;04;03;19
And, we can start when we’ll talk to you about that again. One on one conversations. Your monthly KPI will vary based on seasonality. We hear in. Not a typically good time for our industry, but what can we do to help improve the KPI this time of year? Well, back to point one. You got to look at what your costs need to be and your overhead needs to be to look at your, seasonality.
00;04;03;21 – 00;04;30;03
I’ve got a very successful number, in the northwest, who applies this process of this? If he can keep his teams rolling this time of year, he will be successful. The fact of nominally successful in a peak season, the strategy works and we teach it to you. Okay. All right, Darrell, you’re still up. KPI number seven.
00;04;30;06 – 00;04;55;02
All right. Your average gross profit per sale per day. Interesting start, interesting KPI. He’s got the buttons. Not me. He’s he’s the low on other. We don’t want to get trapped in average ticket discussions. Your average ticket really doesn’t matter if you don’t know your costs.
00;04;55;05 – 00;05;16;05
We want to go back to the budgeting and understand this gross profit dollars per crew discussion again 2500 per day per crew KPI number one. Here in the in the presentation today or $1,000 per month minimum a thousand per tech is the target KPI.
00;05;16;07 – 00;05;41;05
All right. KPI number eight revenue to go there. That’s on my list. Right okay. Revenue. The goal that’s on their fine service set revenue for each department. Individual KPIs. What are your departments. Well, you do that on replacement. You do service, you do maintenance. What else do you do? If it’s more than I don’t know, Bob. What do you say?
00;05;41;05 – 00;06;07;19
100, 150,000 should be a separate department. What do we break off departments? Yeah, that’s probably a good one. Okay, so we want to say 100 hundred and 50,000. Yeah. So, if you’re more than 100,000 in a specific area, you know, it’s a separate column, right? On, on your department’s one to track it monthly, at minimum. Now, when you look at each department, right, so you’re doing some add on replacement, you’re doing some service, you’re doing some maintenance, you’re doing new construction.
00;06;07;19 – 00;06;24;15
And by the way, Bob and I won’t tell you, don’t do new construction. There’s a whole strategy that you can employ around new construction that that makes it not terrible. Okay. If you’re just going to go in and do new construction below bid low, bid little bit, and you’re going to do it in July. No no no don’t don’t.
00;06;24;19 – 00;06;55;20
But this time of year, if you can pick it up and help seasonality, there’s a rationale that can be discussed around that. We could talk about that again privately with you. So we roll department revenue up into total company revenue. And we’ve got a fantastic budgeting tool in section 4.5 of the contracting university library. With this, it’ll take you some classes, the videos that are attached to that, we ask you to watch the videos, then give Bob or I a call and we can walk you through the budgeting tool.
00;06;55;20 – 00;07;21;08
In fact, we run courses, in November. December, with this are three day courses on this tool. Hi, I’m Daryl, you shensky. I am Bob Larkin. Many of our contractors meet with us monthly. And you chances are I’ve met with us monthly. We found that members have deeper and greater needs. So we came up with next level coaching, which is we meet a lot more often.
00;07;21;10 – 00;07;42;25
And there is accountability to deal with some of the issues of money growth, finding employees, having an exit strategy to get off this roller coaster. These are the issues the contractors want answers to, and we can provide those answers. The next level coaching. When you join next level coaching, you’re going to find solutions that are easy to implement and logical.
00;07;42;28 – 00;08;05;11
Most importantly, we hold you accountable to specifics. So we’re going to meet twice a month and have specific to do’s. And with those specific to dos. We’re going to discuss and dive into your financials in a very granular way. You’re going to have a clear budget, will be able to establish pricing. We’re going to help you create leadership programs to build your people.
00;08;05;14 – 00;08;31;01
We’re going to help you find people. You may think of differing ways to engage employees that will keep them more involved by joining next level coaching. So if you’re interested in making more money, growing your company, finding good employees, and developing an exit strategy, give del on our call. We’ll be happy to talk to you about next level coaching, and we’re going to see you on the next level.
00;08;31;03 – 00;08;39;23
KPI number nine service Agreements.
00;08;39;25 – 00;08;50;10
KPI for not number of service agreements that you could have is 1000 service agreements per 1 million in sales.
00;08;50;13 – 00;08;58;26
1500 service agreements for 1 million in annual revenue is best in class.
00;08;58;29 – 00;09;29;22
And we want to see 50% of demand service calls converted to service agreements. And here’s the most important service agreement. Options should be offered 100% of the time on all demand calls. Hey, Bob, I’m going to be who should be? I’m going to interrupt one. I’m sorry, who should be, involved in the service agreement selling process? Everybody to me.
00;09;29;24 – 00;09;47;13
I can have a little rule of my company, you know, three strikes. In other words, the CSR is on the phone with a homeowner. I wanted to ask him, do you own one of our service groups because we have a 15% discount or whatever it is. And I will make sure you get this on this service call.
00;09;47;15 – 00;10;05;18
They say no. Okay. That’s fine. When the service gets to the job, the ask again, do you own one of our service agreements? We have a 15% discount government. And all these other benefits. If they say no, that’s fine. Okay. Diagnosis. The problem is process to repair. We asked one more time. Hey, I can give you a discount off of this.
00;10;05;20 – 00;10;32;06
You’ve asked three times, and I think that. And there was no pressure in any of that. And I think that is vitally important. And I was going to say, think about it. If in your company you had 1000 service agreements for $1 million in your annual revenue, how would that change your life? Right now? To me, all good things happen with service agreements.
00;10;32;09 – 00;10;56;06
Our closing ratio goes up. Our marketing and advertising game go down, and I’m going to steal one of Daryl’s lines here. One of the keys to this business in this industry is get someone on a service agreement, put your arms around them and love them to death. That really is one of the keys. The more agreements you have is, a stronger your business become.
00;10;56;07 – 00;11;25;10
Particularly this time of year gives you a whole wealth of marketing opportunity to speak to people, to send them communication, to even offer. If you are slow to even offer them a complimentary safety check this time of year, you’ve got heating running in the North. If you are getting gas fired, it’d be an opportunity for you to go in and do a safety check for customers, making certain that everything’s operating safely, particularly when we have snow and Bob doesn’t know what this stuff is.
00;11;25;10 – 00;11;46;10
You know, snow falls in the winter in the north. So, so when you’ve got side vented, side vented, units that you’ve sent out of the side, oftentimes snow accumulates up when you get windy, blowing snow and blocking the the vent termination causes, furnaces, Bob furnaces to think that you’re on in the winter. You know, the, he’s from Georgia.
00;11;46;11 – 00;11;52;10
What does he know, in fact, that the only like is is as a glass.
00;11;52;12 – 00;12;08;10
All right, no problem. Let’s go on, defend himself. Don’t feel bad. He can defend himself. He’ll get me. Oh, yes. Oh, yes. Our number ten. Service and maintenance. Lead turnover.
00;12;08;13 – 00;12;41;19
Not mine. Yours? Yes. Yours. That’s mine. Specific service and maintenance calls. Technician lead. Closure KPIs, 75%. Think about that when you get a technician. Lead turnover KPI for closing, that is 75%. That is much higher than marketing leads. Companies that get fired. Bob. Why? Why? Technician leads higher lead. Well, like I said, we have gotten someone on service government.
00;12;41;19 – 00;13;10;09
We put our arms around and we love them to death. We’ve developed a relationship with that customer. They already trust us and that is the key. It is much easier to close the sale to a customer, when you have that relationship. And that’s how you do it. The service agreements, companies that hit the service agreement KPI have lead closure rates of 83%.
00;13;10;11 – 00;13;36;11
So here’s your KPI. We’re saying one out of 15 service have made this call. Should equal a replacement lead. And I know you’re looking at that and you’re thinking that’s a big number. But think about it. I wrote to me, this really goes into educating our customers and having a window. When is it time to repair? When is it time to replace conversation with your customers?
00;13;36;13 – 00;13;46;08
And if the average life expectancy of a heating and air system is what they’re all 13 to 15 years? Yeah.
00;13;46;10 – 00;14;24;29
This KPI could be, you know, should be being met and it is being met. So there are the top ten KPIs that we have. But we got a bonus KPI for you. The KPI minimum 15% pretax profit. Best in class 20% in that. No this is after you’re going to pay yourself right, Bob. Absolutely. But so we can in next level coaching we can help you get here.
00;14;25;01 – 00;14;53;01
We have help clients through this next level coaching program get to these 15% and 20% nets. It can be done. And we’re here to help you. So when we’re talking about 15% pre taxes after you paid yourself this after all the bills are paid. We want to help you achieve this. In fact I’ll slow down for a moment and say this.
00;14;53;04 – 00;15;19;22
You should look at profit almost like it is a bill that you’ve got to pay in your company, much like you got to pay utility bill. You got to keep the lights on. If you run your company and think of profit in that manner, it’s literally a line item. Profit has to be paid. It is necessary for you to continue your business, to continue to grow your business, to pay your people well, to pay your people more.
00;15;19;24 – 00;15;43;22
Our business, as we said, is our people. To be able to grow our businesses only comes from profit. Well, how are you profitable in this business? It’s by filling your days throughout your year. So this time of year it is. Day was the 10th day, the 10th, 11th. Wasn’t it? The 11th? Yep. The 11th. So you we’ve had ten working days.
00;15;43;22 – 00;16;09;18
We’re on day ten. Where are you at in New Year? Do you have a plan? Where should you be? January 31st. Where should you be in February 28th? Oh, there’s a leap year next year, at least this year. Think 29. The Olympics are this year. We have to take a look at this business and distill it down to the day to be able to help you reach your annual goal.
00;16;09;18 – 00;16;33;19
If you reach your daily goal, you’ll reach your week. If you reach your week, you’ll reach your month. If you reach your month, you’ll hit your quota. If you hit your quota, you’ll hit your year. Let’s go through a quick, top ten review of. Okay, so here they are. The top ten KPIs for AC contractors. Number one gross profit per day.
00;16;33;21 – 00;17;09;25
Number two capacity to sell versus actual number three service efficiency. Number four service labor. Right. Number five reputation management. Number six sales closure rate. Number seven. Average gross profit per sale. Number eight. Revenue to goal. Number nine. Number of service agreements. And number ten service lead turnover. And as we said, the bonus KPIs. The KP 15% net best in class 20% net profit.
00;17;09;25 – 00;17;40;06
So there you have it. Awesome content right there, as always. Now, if you like this content, please share it with your friends on Facebook. And if you’re not a member, go ahead and click the button below to get a free 30 day trial of our entire contract university platform. We’ll see you next week. Until then, my friends, bye bye for now.
