The 5 KPI's that show problems before they happen

**John Wilson** (0:00)
Most owners are trying to fix problems that they can't see. Like, they're just guessing and shooting at the dark at whatever the problem is. In a home service business, there are basically five numbers. They're gonna tell you how you're doing. Leads, booking rate, average ticket, closing rate, and number of options. And those five numbers are going to tell you most of the problems that you have inside your business. We're running a business, so let's focus on what we can see. If you take that philosophy to more of your business, it'll start helping you unpack it. Things like how you organize your field service management software, how you organize your financials, how you do job postings and marketing management. Everything ties back to, you have to know the fundamental numbers that run your business. You have to know what drives it, because when something breaks, you need to know that that one thing broke. I'm John Wilson. Over the last 10 years of my life, I have spent it building a $40 million home service company. On this channel, we break down how to build your business. So let's dive in.
These numbers show the whole customer journey, which is why they're so valuable. How many customers are contacting us? Do they like our call center? Are they booking? How many of them are trusting us with a sale? That's our closing rate. Are they trusting us with a big number or small number? Average ticket. And did we do a good job presenting to them and building trust, which is number of options? 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. Pinpointing these five numbers also helps you identify which part of your business you need to fix. If I know I need 20 leads a day and I'm at 10, I know that I have a leads problem. 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. You just start solving from there. Is my average ticket lower than what I expect? Is my closing rate lower than what I expect? What you expect can just be your average. It's always a good rule of thumb to ask your peers, research, and find what should my average ticket be? What should my closing rate be? 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. This should be easy to find. We had people come in for our Breaking Five workshop here a few weeks ago, and we gave this simple assignment. I want you to go find and tell me how many phone calls you got last week. Half of the room could not find how many phone calls they had in an hour. This should be easy to find. It should be hitting you in the face. 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? You have to know this information immediately.
The owner thinks it's one problem, but the numbers say it's something else. Someone's saying, hey, like, I'm actually going to go bankrupt in 30 days. Like, this was a real call I had. Turns out his guys were extremely busy, literally could not have handled more leads. But leads is the first thing that people go to because it's the thing that's outside of their control. But really, it was something totally different. We found out his average ticket was $300, and it should have been $1,200. He was fully within his power to fix this problem. And they got up to $800, which was a huge improvement in a very short amount of time. Another area that I see is, oh my gosh, we need more leads. And what they say is, well, like we're getting all these calls, we just don't have enough on the board. So we start diving in a little bit more and, hey, their booking rate's bad. The first thing I have them do is, I want you to go listen to 10 calls that came into your call center. They call me back a few minutes later, they don't have a leads problem, they have a booking problem. They're getting all the leads that their business needs. They're just choosing not to book them. Again, very liberating, very within your control. KPIs help drive the business every day. How many calls do we get? How many calls do we book? What was our average sale? How many did we sell in the field? What was our number of options? 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. With KPIs, as you start tracking more and more inside your business, an easy thing to overcorrect on is tracking everything. So you have to make sure you're tracking the right thing that gives you the most information. Something like marketing ROI over the last 30 days. That is like five different measurements rolled up into one, summarized, and it's kind of beautiful. So make sure you're tracking the things that actually matter and you're not just creating noise inside your organization.