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Columns

Measure To Maximize Results

By Kenny Chapman
August 1, 2011
A system for tracking and assessing performance will show you where your company stands.



Many business owners I coach place a large amount of faith in the concept of hope as a strategy. I hate to break it to you, but hope is not a strategy. In fact, hoping for results belittles the power you possess to create the business you truly desire.

Let me give you an example. I can hope that I’ll improve my golf game, but will that help me play better? I highly doubt it. I can hope all day long that my business will improve, but that won’t get me anywhere either. Golf and business share some other strong similarities. We can benefit from their comparisons. In both, you must keep score and track your performance. This score is a combined measurement of all aspects of your game and if one aspect is weak, your overall results suffer. The key is to know your desired result (score), then identify and focus intently on aspects that require improvement.

When I’m speaking at a live event, I’ll often ask the audience, “If we were playing golf together and both scored even par 72, did we shoot the same round of golf?” This question is often answered with a combination of confused expressions and head nods. The fact is, we earned the same score, but used different methods to get there based on our individual strengths and weaknesses. You might have hit more fairways than I did, I might have hit more greens in regulation or you might have had fewer putts than I did. Only by measuring every statistic and focusing on each individual aspect of the game will we recognize our strong points and identify which areas need improvement.

The same strategy can be directly applied to your business.

I recently purchased a new golf putter and a very interesting thing happened to my putting game. It improved tremendously! In fact, I began to count how many putts I had hit in a given round. I had never tracked my putting before, but as I focused on that specific aspect of my game, my results literally improved overnight. You will experience similar dramatic improvements in your business when you begin to focus on the exact areas that need improvement and begin to measure them.

Control through knowledge

There is power in measurement because you gain control through knowledge. Instead of hoping to make money this month, wouldn’t you rather know exactly what it takes to make that happen? As the old saying goes, “You can’t manage what you don’t measure.” This is true in all aspects of your company. The concerning fact is, most contractors don’t effectively measure some of the most crucial aspects of their businesses.

What are the areas of your business that need to be focused on and measured? Do you track and manage your conversion rates in the field and on the phone? Are you tracking flat-rate tasks per call and billable hours vs. payroll hours? There are multiple ways to manage a business, but if you don’t have a system for tracking and measuring performance, you will never know exactly where you stand.

In our companies, we must pay attention to four key areas, regardless of business size or type: financial, operations, customer service and training. We all understand the importance of a strong financial measurement system, but few contractors use the information it generates to drive their companies forward. Highly successful companies set a clear monthly budget and then consistently compare true financial results to budgeted numbers throughout the month.

Similar budgeting and measurement processes should be utilized in each key area of your company based on the essential elements of your specific type of work. As key financial indicators, you might track sales, labor percentages, gross margins and net profit. In operations, you might track how many phone calls are required to meet a budgeted sales number. As you record your performance, you will develop a database of numbers that can be plugged into simple equations. For example, if you need three paying calls per day per truck, use your previous numbers to determine how many phone calls are needed to accomplish that goal.

Let’s say your office converts 80 percent of inbound phone calls into booked service calls. You also know that work is typically sold on 75 percent of the calls that you roll a truck to. Therefore, you can calculate that at least five phone calls are necessary to generate three paying calls per day. Five phone calls at an 80 percent conversion rate equals four service calls. Four service calls at a 75 percent conversion rate equals three paying calls.

You can apply similar equations to each area of your company that requires measurement. For example, one aspect of customer service can be measured by simply tracking and examining your repeat client percentage. Many companies also make follow-up customer calls to ensure that clients are fully satisfied and will remain or become repeat customers.

Specific, measurable goals

I've trained people on customer service and sales for many years in this industry. I’ve found that owners will typically send technicians to a sales school without a specific result in mind. This is more of that “hope” strategy than an understandable, measurable goal that a technician can strive for.

What if you want your technicians to improve their conversion rate by 10 percent? This would mean they could close one more job on every 10 tries. No big deal, right? What if their average job ticket was $500? That would mean that over the course of a month, they could generate an additional $4,000 (based on four calls per day, 20 days per month, closing 10 percent more calls).

You can see how quickly small adjustments will positively impact your organization, but you must measure your information in order to properly manage it. As my great friend and mentor Frank Blau taught me, tracking the numbers is essential, but managing the percentages is how you make money. (OK, Frank also taught me a little about golf.)

Let’s agree to remove “hope” from our vocabulary when it comes to the game of business. Instead, measure what’s important, make necessary adjustments and continue to create the company you truly desire.

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Chapman

Kenny Chapman, "The Blue Collar Coach," is an award-winning industry coach and trainer, as well as founder of The Blue Collar Success Group, a business-development organization for in-home service contractors. He is the author of In-Home Sales Acceleration and The Six Dimensions of C.H.A.N.G.E. and specializes in helping business operators become true business owners. Visit Kenny's website for free sales and leadership resources, or call 877-968-2244 to see how Kenny and the BCSG team can help you improve your company and better your life.

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    • PMC COLUMNS
      • Dave Yates: Contractor’s Corner
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      • Kenny Chapman: The Blue Collar Coach
      • Matt Michel: Service Plumbing Pros
      • Scott Secor: Heating Perceptions
  • ENGINEERS
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    • PME COLUMNS
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      • John Seigenthaler: Renewable Heating Design
      • Lowell Manalo: Plumbing Essentials
      • Misty Guard: Guard on Compliance
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    • THE GLITCH & THE FIX
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