The Magic Number
What do you track on a daily basis? Probably the revenue brought in is first on the list. The money does pay the bills, but that is not all you should be tracking. Below are some items you should be tracking daily, weekly, and monthly.
Close Rate: That is the relationship between the jobs that you went to and the jobs where you did not do the work. If you went to 10 jobs, and did 9 of those jobs, you have a 90% close rate. 85% is a good target. If you close rate is not good, don’t waste your money on more advertising because you are not taking advantage of what you currently have. This number can show who needs help dealing with the customers and providing the better service.
Call Backs: That is when a customer calls with an issue over your previous work and they are not satisfied. This is a black and white number; if you go back for any reason, it is a call back. It’s not a warranty or anything else. Pure numbers lead to reliable information about your business. Don’t create any gray because you don’t want to face the facts. The number of call backs is divided by the total number of jobs completed. If you did 10 jobs and had 1 call back, you have a 10% call back rate. 5% or less is the standard.
Job Count: How many jobs do you do on a daily, weekly, and monthly basis? Why is that important? Job count can tell you when to hire the next technician. Job count can tell you if you are making your daily and weekly goals. Job count can determine how much of the plumbing market in your area that you have. Plus, job count can be a very simple way to determine if you made money for the day.
Ticket Average: Divide the revenue by the number of jobs completed to get the ticket average. As an example, $3,500 invoiced is divided by 7 jobs completed equals a $500 ticket average. $500 just so happens to be the national average for a residential plumbing service technician. Increase you ticket average and your sales increase. It also indicates how effective the technician is communicating with the customer and fulfilling their needs.
The Daily Number: Hopefully, you have worked with someone to help you determine what your break-even point is for your business. The break-even is the point at which you have done enough business to pay all the bills and overhead before any profit is made. If you are tracking the information above, you can determine if you made money by the job count. If your break-even is $1,000 a day and your ticket average is $500, when you do your third completed job, you have made money for the day! This should also let you realize how the close rate and a call back can hurt you in achieving your goals.
I had a client a few years ago, who had a two-story office. The downstairs was the parts and equipment area, and upstairs were the offices. In the dispatch room they had a large brass ships bell hanging on the wall. Their Daily Number was 30 (at the time they were doing about $5 million per year). When the techs completed number 30 for the day, the dispatcher would ring the ships bell and everyone in the building knew they had reached their goal of the day. What is your daily number? You really need to know.
If I can help you enhance your business, contact me at ThePlumbersCoach.com. This is what I do all day, every day!
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