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How To Measure Your Service Business To Increase Growth, Quality and Efficiency
30 second summary:
The potential for growing profits in the service and maintenance area of many businesses is significant – and measurement of the service and maintenance business as a business in its own right is the cornerstone to its growth.
In this article, Jim Rathbone considers the 3 key areas that need to be measured in any service business: Growth, Quality and Efficiency.
Measuring your service business is a cornerstone of growing your service business.
Every service business is full of detail. The most important should be measured across the 3 dimensions of service growth, service quality and service efficiency. Goals and improvement activities can then be developed for the area(s) you wish to focus on. This will enable you to better manage the growth, customer experience and cost efficiency.
You may need to develop or enhance your service business reporting and dashboard. Let us consider some of the measurements and KPIs you might track under the 3 dimensions:
1. Service Growth – factors to track include
- Value of maintenance contract base
- Recurring income as % of total sales (e.g. Maintaining, testing, inspecting, monitoring, certifying and remedial service income)
- New maintenance contracts quoted and sold
- Value of maintenance contracts cancelled
- Service works (sometimes called small works or remedials)
- Number of leads
- Number of leads generated by engineers
- Number of quotes
- Conversion rate % quote to order
- Average order value
2. Service Quality – factors to track include
- Annual maintenance contract attrition %
- Cancelled contract value
- Call out 1st time fix rate %
- Number of repeat corrective call-out visits
- Number of outstanding preventative maintenance visits
- Number of goodwill call-outs
- Number of complaints/issues
3. Cost Efficiency – factors to track include
- No of engineer visits per day
- Average revenue per engineer per annum / per day
- Service gross profit %
- Service direct labour %
- Engineer utilisation % on fee earning work
- Number of free of charge (goodwill) corrective call outs
- Number of warranty calls
- Average corrective call out value
In the light of the above, I would encourage you to review your service operations dashboard and reporting system and see which of the above KPIs you should introduce.
Check that you have targets in place for each of the service KPIs.
Confirm that there is clear ownership and accountability for delivering the targets.
Where the actual result is below target, confirm improvement actions are in place and they are sufficient to deliver the target.
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