How KPIs Can Revolutionize Your Service Business Performance: Insights from Top Business Coaches
As a service business owner, you know that success is all about delivering high-quality services that meet your clients’ needs. But how do you measure your progress and ensure that you’re meeting your goals? That’s where KPIs come in.
KPIs, or key performance indicators, are measurable values that indicate how well your business is performing. By tracking KPIs, you can identify areas where you’re excelling and areas that need improvement.
In this article, we’ll cover some of the most common KPIs recommended for service businesses by business coaches, provide examples of how to measure them, and explain how they can help you improve your business.
- Revenue Growth
Revenue growth is one of the most important KPIs for any business, but especially for service businesses. It measures how much your business is growing year over year, and can give you a good indication of your overall health. To calculate revenue growth, simply subtract last year’s revenue from this year’s revenue, divide that number by last year’s revenue, and multiply by 100.
Example: Your commercial cleaning business had revenue of $100,000 last year and $120,000 this year. Your revenue growth would be calculated as follows: ($120,000 – $100,000) / $100,000 x 100 = 20%.
- Customer Acquisition Cost
Customer acquisition cost (CAC) measures how much it costs your business to acquire a new customer. This KPI is important because it helps you understand how much you can spend on marketing and sales to acquire new customers without cutting into your profits. To calculate CAC, simply divide your total marketing and sales expenses by the number of new customers you acquired during the same period.
Example: Your construction waste removal business spent $10,000 on marketing and sales last quarter and acquired 50 new customers. Your CAC would be calculated as follows: $10,000 / 50 = $200.
- Customer Lifetime Value
Customer lifetime value (CLV) is important because measures how much revenue you can expect to generate from a single customer over the course of their relationship with your business. This important KPI is often overlooked by business coaches, but it helps you understand the long-term value of your customers, and can help you identify areas where you can improve customer retention. To calculate CLV, simply multiply the average customer value (ACV) by the average customer lifespan (ACL).
Example: Your plumbing business has an ACV of $500 and an ACL of 3 years. Your CLV would be calculated as follows: $500 x 3 = $1,500.
- Customer Satisfaction
Customer satisfaction is a KPI that measures how happy your customers are with your services. This KPI is important because it can help you identify areas where you’re excelling and areas where you need to improve. There are many ways to measure customer satisfaction, including customer surveys, online reviews, and customer feedback forms.
Example: Your electrician business has an average rating of 4.5 stars on Google Reviews.
- Employee Utilization
Employee utilization measures how much of your employees’ time is spent on billable work. Business coaches focus ion this KPI because it helps you understand how efficiently your employees are working, and can help you identify areas where you can improve productivity. To calculate employee utilization, simply divide the number of billable hours worked by the total number of hours worked.
Example: Your commercial cleaning business has 5 employees. Last week, they worked a total of 200 billable hours and 100 non-billable hours. Your employee utilization would be calculated as follows: 200 / 300 = 66% utilized. Too low and you are losing money, too high and you have staff burnout. Every business is different, but our business coaches generally aim for 75-80% which provides a good work balance and allows time for training and other administrative activities.
A good business coach will identify areas of improvement, and then work collaboratively with the client to set goals and develop strategies to achieve them.
A business coach can also help service-based businesses improve their customer service and client experience. By analyzing customer feedback, a coach can identify areas of improvement and develop strategies to enhance the customer experience. This can result in increased customer satisfaction and loyalty, as well as positive word-of-mouth referrals.
Another area where a business coach can help service-based businesses is in improving their KPIs (Key Performance Indicators). KPIs are measurable values that demonstrate how effectively a business is achieving its key objectives. Examples of KPIs for service-based businesses include customer retention rate, response time to service requests, and job completion time.
By working with a business coach, service-based businesses can develop customized KPIs that align with their unique business objectives. The coach can also provide guidance on how to track and analyze these KPIs, as well as develop strategies to improve them over time.
Let’s take a look at an example of how a business coach could help a service-based business improve their KPIs:
Imagine a plumbing business that is struggling with a low customer retention rate. After analyzing customer feedback and conducting a review of the business’s operations, the business coach determines that the main issue is a lack of communication with customers.
The coach works with the plumbing business to develop a strategy to improve communication with customers, such as implementing a customer feedback survey after each service call and ensuring that customers are informed of any delays or changes to their service appointment.
Over time, the plumbing business is able to improve their customer retention rate by 25%, leading to increased revenue and profitability.
In addition to improving KPIs, a business coach can also help service-based businesses develop and implement effective marketing strategies. This can include analyzing target markets, developing compelling messaging, and identifying the most effective channels for reaching potential customers.
By working with a business coach, service-based businesses can gain the tools and strategies they need to achieve their goals and grow their business. Whether it’s improving customer service, developing effective KPIs, or implementing a marketing strategy, a business coach can provide the support and guidance necessary to succeed in today’s competitive business environment.
In conclusion, service-based businesses face unique challenges that require customized solutions. By working with a business coach, service-based businesses can gain the expertise and support they need to achieve their objectives and grow their business. From improving customer service to developing effective KPIs, a business coach can provide invaluable guidance and strategies that can lead to increased revenue, profitability, and success.
If you think a your business could benefit from a business coach book a free 15 min consultation – we will discover what you are looking for and you can decide if we are a good fit to help.