What is Benchmarking?
In any business, there is always room to grow. A business should not only focus on how it is currently doing, but also on opportunities for potential growth and how it can differentiate itself from industry competitors. But is there a strategic way to determine all these things and make informed business decisions?
It is possible through industry benchmarking.
Benchmarking is when a business’s performance metrics are compared to the standards within its industry. Industry benchmarking is a smart way to determine the following things:
- The overall health of the company
- How the company is doing compared to competitors
- How the business can improve business performance and operations in the long run
Top 5 HVAC Industry Benchmarks for Service Businesses
In the HVAC industry, a reliable and insightful service management software provides specific performance metrics. The FieldEdge HVAC sales software comes equipped with tools that break down performance metrics into sections and provide data that can help guide future business decisions.
The HVAC industry has many different benchmarks that you can use to measure how well your company is performing. The top 5 HVAC industry benchmarks service businesses should pay attention to are as follows:
1. Unbooked Calls Rate – the lower, the better
High levels of unbooked calls indicate that the business needs to step up its game. Simply stated, for every unbooked call, the business is going to lose two valuable things: money and time.
The goal should be to convert calls into booked jobs. It is unrealistic to assume that every call will become a booked job; however, there are ways to increase the likelihood of booking a job.
- Monitor & Review Calls
You should review calls to go over what was said during conversation that didn’t result in a booked call. This helps you determine what the customer liked, what the customer didn’t like and where you can provide training to improve the quality of service provided to the customer. - Improve Customer Service
Highlight to your dispatchers and CSRs that great customer service makes a big difference. The goal is to get everyone to understand the relationship between great customer service and company growth. Customers are at the center of a business. Without customers, the business will not grow.
2. Service Agreement Renewal Rate – ≥ 80%
It’s an easy concept to understand: the more service agreements you have, the better. A higher number of service agreements shows that the business can consistently generate leads and revenue because a large customer base stands by your business’s quality of work and wants to actively renew services with your business. But with more service agreements comes more responsibility. Service agreements need to be created, executed and renewed constantly.
Service agreement automation allows a business to spend less time following up and more time attracting new customers. Using the FieldEdge software, a business can schedule service reminders via phone, text or email, organize service agreement files and schedule follow-ups for agreements that are expiring soon.
3. Field to Office Staff Ratio – 3:1
To run the business like a well-oiled machine, a business not only needs efficient technicians, but also an efficient office staff. Ideally, the Field to Office Staff ratio is 3:1. So for every three technicians in the field there should be one person in the office supporting them. Good software and efficient practices can make this a reality.
4. Average Ticket Sales per Service Call – ≥ $275
Average ticket sales per service call is the average amount of money spent on a service ticket. When average ticket sales increase, revenue increases. It is related to customer service because the average ticket sale is likely to go up if the technicians can perform a service well, provide product/service recommendations to better serve the customer and offer flat rate prices.
Job performance stats should be reviewed weekly with your technicians to help them understand what they’re doing well and/or what they need to work on to increase average ticket sales.
5. Marketing as a Percentage of Sales – ≥ 6-10%
Marketing spend should be around or more than 6-10% of sales. The importance of marketing must be emphasized because marketing is how a business reaches out to new and existing customers. Business owners need to constantly be thinking about their marketing strategies. Are marketing dollars being spent wisely? Which marketing efforts are the most successful and which are not? Are leads converting into jobs? You should be able to answer all of these questions so you can know how to effectively spend your marketing dollars in the future.
Information such as number of leads, number of booked jobs, number of jobs invoiced, and marketing conversion percentage can all be found on the FieldEdge Dashboard. Taking this information and understanding how the business’s marketing efforts are translating into a larger customer base can help it shape a solid marketing plan aimed at growing its customer base. While referrals are great, to see more results, businesses need to market aggressively if they want to get ahead of their competition.
Conclusion
There are many different field service industry standards that can be used for performance evaluation, so a business should not feel limited by these five benchmarks alone. The key takeaway is that a business needs to constantly evaluate itself and make decisions that positively impact performance metrics. A smart business is one that can understand its strengths and weaknesses and act upon them.
For more information on how FieldEdge can help you reach these industry benchmarks, click here to speak with one of our experts.
Note: Industry stats were collected from and provided by Service Nation Alliance, Inc. and HVACR Business.
