Ideally, the decisions you make in your business should be based on empirical evidence.

I hope that, based on previous columns about constructing balance sheets and P&L statements, you now are convinced that clear and concise information is as important as getting a handle on how many actual productive, or billable, hours your business generates. You can establish an accurate dollar-per-billable-hour overhead figure, which in turn is the only thing that allows you to calculate a reasonable selling price for your labor. You better be sitting down when you figure out how much it really costs you to operate your business.

This month, let's tackle another key area that can help put an end to the guessing games that take place in your business. You want to know how often the phone rings and what information you can garner from those conversations.

Typically, your customer service representative (CSR) simply tells you the phones are ringing off the hook and the crews can't keep up. So you go out and add a new service tech and truck, with all of the attendant tools and materials.

Resist the temptation to make such major decisions based on hearsay. Find out what's really happening in your business. Start tracking calls. You will be surprised to learn that, as a startup or modest-sized company, you don't even need a fancy computer to do so. (Although having one sure helps!)

The CSR's Role

For each employee in your organization you should have at least one statistical benchmark to track how that person is performing. With service techs, it's relatively easy to measure sales, jobs and callback. It's not much more difficult to keep track of CSR performance. All you need is a columnar pad or preprinted form resembling the one recreated on the following page.

The key measure of your CSR's performance is his "conversion rate," or how many calls he converts into service calls. The CSR's job is to snare those original inquiries and turn them into revenue-generating business. Not only that, but the information gathered here will be useful for marketing, truck scheduling, staffing, future computer programming and more.

There are several steps to this process:

1. List the call types that come in, broken down by plumbing, heating, cooling, drains and any other kind of work you may handle. Break them down further into subcategories. Under plumbing, for instance, you may want to isolate water heaters, disposers, kitchen faucets, lav faucets, bath faucets, etc. Establish as many subcategores as you can.

2. Put a hash mark in the column under "Calls Taken" for every call that comes into the office inquiring about that type of service.

3. If a service call gets scheduled, put a hash mark under the heading "Calls Scheduled."

4. If a scheduled call is converted into a "Work Done" call, where repairs or installation actually were performed, put a hash mark under that heading.

5. Keep track of male and female callers to provide good information for use in future marketing programs.

6. Critically, you want to establish a section for tracking response to Yellow Pages and other advertising.

7. Total the columns.

Knowledge Gained

This deceptively simple form provides a wealth of information to guide key decisions about your business. Let's take a look at it:

1. Type of calls coming in. Naturally you want to know what percentage of your business comes from plumbing, heating and all the other areas.

2. Calls taken converted into calls scheduled. This is the CSR performance measure, telling you whether your CSRs are doing their utmost to sell the job. Top-notch CSRs ought to be able to convert upwards of two-thirds of all calls that come in.

3. Calls scheduled converted into work done calls. Usually this will tell you how your service techs are doing converting calls they get into billable calls. Sometimes, though, a poor conversion rate here may signal your CSRs aren't doing a good enough job explaining to customers how you operate.

The raw numbers in themselves will tell you very little. What you need to look at are trends and relationships in the numbers.

Are there more or fewer calls coming in than during the same time period last year, as well as year-to-date?

Are there measurable improvements in the numbers following a direct mail or telemarketing campaign?

How do your CSRs compare in their conversion rates? If one converts 75 percent of calls into sales and someone else only 50 percent, it's a good sign that some training is in order for the inferior performer.

For that matter, how much do CSR results improve as a result of telephone training? This helps you evaluate the caliber of the trainer or consultant. On the other hand, if most CSRs improve after training but one or two don't, maybe the problem is not with the trainer but the trainees. Maybe they aren't paying attention. Maybe they don't have what it takes.

Statistics (Almost) Never Lie

The numbers will show you what's really happening on the frontlines much better than those "gut feelings." They will tell you when to ignore comments such as, "We're really swamped so we need to hire another service tech," and "No one calls for plumbing anymore."

In a system like the one just recommended, your CSRs are responsible for gathering their own data. Doesn't this leave open the possibility that they might fudge the figures to make themselves look good?

Ultimately, everything must rest on sound management controls. If one CSR has a conversion rate well above everyone else's, that tells you she is either a spectacular performer or perhaps cheating by not recording all incoming calls. It's not too hard to catch the cheaters. For one thing, phone bills provide independent records of incoming calls.

Think of that old Abe Lincoln adage - "You can fool all of the people some of the time, and some of the people all of the time, but you can't fool all of the people all the time." Sooner or later, top performers and inferior ones reveal their true selves, no matter how much they try to disguise themselves.

Ideally, all the decisions you make in your business should benefit from empirical evidence. Gut feelings are useful in pointing you in the right direction at times, but before you commit to a precise path, you need good, clear data to guide the way.