Tags: kpis, core kpis, profit planning
Introduction
We all know KPIs are more than just business jargon, but what exactly IS a KPI? In this article, we’ll explore the concept and take a brief look at MaidCentral’s 12 Core KPIs.
What are KPIs?
A KPI is a measurable value that shows how well a business is doing in reaching its goals. To put it plainly, it’s a number that lets us know how well (or poorly) we’re doing in a given area. In addition, they can help guide us and paint a clear picture of our business, its trajectory, and its challenges. You can think of your KPIs as the storytellers of your business
Having the right KPIs handy helps us make data-driven decisions and steer our company towards its goals. As cleaning business owners, we come across a ton of KPIs. ‘Annual Employee Absenteeism’, ‘Quality Score’, ‘Number of OSHA Recordable Incidents’, to name just a few.
Data points are everywhere you look. This can make it tricky to sort out which metrics are worth truly focusing on.
Remember: not every KPI holds equal value. While some are situationally important, others represent the beating heart of a growing company!
MaidCentral’s 12 Core KPIs
MaidCentral has done the hard work of choosing the best KPIs for growing a residential cleaning company. They’ve come up with a set of twelve KPIs that, when managed correctly, can help any cleaning company grow with meaningful intent. We refer to these 12 KPIs as Core KPIs because they show the highest contribution to growth and profitability.
In 2024, MaidCentral will focus on one Core KPI each month. They will provide in-depth information through Webinars, Videos, and other resources. Here, we’ll briefly cover each Core KPI, giving you a basic idea of the story each is trying to tell.
Note: Of the 12 Core KPIs, there are six that we always want to drive UP ↑ and another six that we want to drive DOWN ↓
1. Bill Per Cleaning ↑
This is your average bill rate for jobs. Higher priced jobs will drive this KPI up, and vice versa. Bill Per Cleaning is important for your revenue and is directly related to your “Payroll % to Revenue”, another important metric.
2. Quotes Per Week ↑
This is how many quotes you give out per week, and represents part of your sales pipeline. You can use this KPI to get an idea of your sales and marketing efforts. If your company has many Leads but few Quotes, there is untapped business potential being wasted.
3. Close Rate Per Week ↑
Of the total quotes you give out each week, what percentage of those quotes will become recurring customers? Close rate is a classic KPI that any sales driven industry will want to track. This KPI gives us insight into our Sales team’s efficacy, our online marketing presence and can be improved by making it as easy as possible for Leads to convert themselves.
4. Cleanings Per Home Per Month ↑
This is the average number of times your company cleans each home each month. Most of the time, this number ranges from between one and two. This KPI is a good indicator of the distribution of service frequencies among your clients.
5. Revenue Per Technician Per Day ↑
This KPI represents the average amount of revenue generated by each technician in a single day. It provides valuable insights into the productivity and efficiency of each individual technician. Increasing a technician’s daily revenue can lead to better job opportunities and minimize the risk of labor limitations on growth.
6. Rate Increase Per Year ↑
This KPI represents the annual adjustment in your service rates. Regular rate increases help maintain competitive prices. They also help offset the rising costs of doing business.
Cleaning companies often make the mistake of not raising prices for existing customers. This can cause low prices for cleaning services, making it difficult to pay employees well and make a profit. Understanding what rates are acceptable in your geographic region is critical in forming your rate increase strategy. Research and create a plan to rate increase clients who haven’t had seen one in a year, every month from now on.
7. Direct Payroll % to Revenue ↓
Direct Labor Payroll is the money that is paid to technicians for cleaning homes, as opposed to pay that goes to office staff or other activities not directly related to billable work. This KPI is crucial for evaluating the financial health and efficiency of the business. Driving this number down by even a few points can have a massive impact on your profits by the end of the year.
8. Customer Attrition Rate Per Month ↓
This KPI shows the percentage of customers who stop using our services each month. Consistently high attrition rates can undermine the long-term sustainability of the business. By tracking attrition, we can better predict revenue fluctuations, plan for dips, and implement strategies to acquire new clients.
9. Skip Cleanings Per Day ↓
This KPI measures the number of scheduled cleaning appointments that clients cancelled or skipped on a given day. This metric helps us see how skips are affecting our business, and lets us make proactive changes, like adjusting schedules, hiring more staff, or giving extra training to cleaning teams.
10. Absentee Rate Per Day ↓
Absentee Rate Per Day represents the percentage of scheduled workdays in which our cleaning staff members are absent. This KPI is important because absenteeism can cause gaps in service, which directly affects customer satisfaction and retention. Additionally, high absenteeism may be indicative of underlying issues related to employee satisfaction, health, or work-life balance.
11. Technician Turnover Per Year ↓
Technician Turnover Per Year shows the percentage of cleaning staff who leave our company in one year. High annual turnover rates may indicate deep seated issues with employee satisfaction, work environment, or management practices. High staff turnover can impact the reliability and quality of our cleaning services. This, in turn, may lead to unhappy customers and a loss of business.
12. Operating Expense Per Month ↓
Core costs of running the business, also known as ‘fixed costs’. Includes space and office expenses, sales and marketing expenses, and salaries of the office staff.
The money you spend on your Support Team, Marketing, and Tech Stack greatly affects how well your company does. Wasting time and resources on non-productive operating expenses can hurt profits in a financially significant way!
Also important to note that underspending on operating expenses can also have an adverse impact on profits. The key to maximizing profit is not to just cut expenses, but to make purchases where the value exceeds the cost.
Run Lean! Be frugal and seek value wherever possible.
Other Important KPIs
Choosing other KPIs should be a thoughtful process! Remember the following guidelines when choosing your own KPIs to focus on:
- 1. Align with Business Goals: Your KPIs should reflect what you aim to achieve. Focusing your efforts on irrelevant tasks could lead to a financial loss.
- 2. Make it Measurable: If you can’t measure it, you can’t manage it – Simple, which segways nicely to:
- 3. Don’t use too many KPIs. Start with the most important ones and add more if needed. This helps you stay focused on business goals and reduces the time needed to create KPIs and reports.
Monitoring KPIs and Usage
Regularly monitoring your KPIs is as important as selecting them. If you use MaidCentral, go to the Company tab and find the Core KPI report. It shows and calculates all 12 Core KPIs along with your payroll data when you finish the week.
Once you have your KPIs, you can share them with your team and begin to use them to inform your strategy. If you’re not a MaidCentral user, use this link to book a demo.
The focus is not about good or bad numbers; The focus is on continuous improvment. The first step towards improvement is being aware of your KPIs. The second step is deciding what you will do about it.
Many existing tools can help you use your KPIs. These tools provide you with custom growth forecasting, but they can be expensive and tedious to configure. Luckily, if you are a cleaning business owner, MaidCentral actually has built a free, one stop shop for all your Growth Forecasting needs.
Just head over to app.maidcentral.com/tools where you can make a free account and input your Core KPIs to see how small changes can make a big impact.
Conclusion
KPIs aren’t just a set of numbers; they’re the vital signs of your business. By choosing and monitoring the right KPIs, you’re able steer your residential cleaning business toward sustained growth and success. Make an action plan, stick to it, and leverage your own data to map out the future you want to build.
Additional Resources
For those interested in diving deeper:
- Join the conversation on Facebook – facebook.com/groups/maidcentral
- Free Growth Forecasting Tools – app.maidcentral.com/freetools
- MaidCentral Blogs – maidcentral.com/blog
- Book A Demo With Me! – app.maidcentral.com/austin
