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How to Measure HVAC KPI (Key Performance Indicators)

HVAC KPI (Blog Cover)

What is HVAC KPI?

An HVAC KPI or Key Performance Indicator is a measurable value or metric demonstrating an HVAC company’s progress toward essential business objectives. KPIs help business owners track their company’s trajectory over a defined period.

KPIs for HVAC Companies

It’s a new year and a unique opportunity to assess your HVAC company and identify areas for improvement. For many business owners, that means examining HVAC KPIs. For clarity purposes, KPI stands for key performance indicators.

Key performance indicators help businesses track progress and identify areas for improvement, which can ultimately lead to a more profitable company.

KPIs are the factors of your business that don’t lie. They will tell you how your business performs and how much you are netting when all is said and done. 

Remember that every business is different and that yours may have specialized key performance indicators depending on various factors. Some critical questions include: how much you spend on advertising, your workforce, and the types of services you offer.

The following list is an excellent general guide for HVAC companies.

HVAC KPI Graphic

Basic Income 

Basic income is the first HVAC KPI you have to measure. Sales revenue is the amount of money you earn from service and product sales. Basic income does not include taxes, customer acquisition costs, or other deductions. 

Your number should give you a good idea of whether you have any slow seasons or service spikes. This knowledge is good to have in general because it will help you anticipate when your customers will need service and when you can lower/raise service prices. 

Finding this primary income number should be relatively straightforward if you keep a good record of all your invoices. Just add up the amount you made on each invoice for last year, and boom, you have your sales revenue number. 

Basic Profit Margin

Your basic profit margin, or gross margin, is what you make after deducting the service cost. To find your basic profit margin, follow this formula: basic income – the cost of providing service / basic income. The figure you come to is how much profit you make before tax. 

If the number you arrive at is low, then some changes must be made. Try taking stock of your supply use. Remember only to calculate supply costs when using supplies on the job instead of calculating the bulk price when all your supplies come in.

You can also think about where you might be able to upsell some of your products or services. Smart bathroom fixtures are a growing trend, so now is the best time to get experienced with them so you can include them in your services. 

Variable and Fixed Costs

You deduct both fixed and variable business costs from your basic income (Number one on our list). Fixed business costs should include a set monthly cost, like rent, insurance, and marketing.

Additionally, HVAC contractors’ variable prices usually include supply orders, fuel for service vehicles, and employee salaries. 

The general rule of thumb is that you should keep your variable and fixed business costs under 30% of your total basic income.

You may save money monthly by closely tracking supplies, looking at service routes and areas, and calculating your marketing and advertising ROI.

Advertising and Marketing

You need to ensure that you are getting your money’s worth from any investment in advertising and marketing. Your customer acquisition cost should not exceed what your average customer spends on your services.

If it is, consider curbing your efforts towards customer retention rather than recent customer acquisition. You may also want to shift towards local organic SEO. 

HVAC Marketing KPIs

Business KPIs are essential for contractors, but marketing KPIs help you focus on your promotional strategy. Most successful HVAC companies understand how their marketing works and how they can improve it each year.

The team at HVAC Webmasters specializes in digital marketing for heating and cooling contractors. Over our decade-plus in the industry, here’s what we’ve found to be the top KPIs for HVACR businesses.

Cost Per Click

Typically, consumers think of cost-per-click (CPC) related to PPC advertising. CPC is indeed one of the best PPC metrics. However, keep in mind that organic SEO provides a much lower cost-per-click.

You can track organic CPC by dividing your monthly retainer by your monthly organic clicks. 

Percentage Traffic Increase

Google Analytics represents a valuable tool for HVAC KPIs. You can track your HVACR website on Analytics and watch your monthly traffic grow.

Your monthly traffic growth lets you know how well your website is performing. Depending on your starting point, you should expect early gains near the 150 percentile. 

Branded Searches

One of the most underrated KPIs for HVAC marketing is branded searches. You can measure branded searches using Google Search Console, SEMRush, or MOZ. Google provides the most reliable data and can also outline the impressions and clicks for those branded searches.

A branded search is any search query that implies the user is searching directly for your brand name. It might be something like JimBob’s HVAC Services or JimBob’s AC Services San Antonio. Any combination counts.

Cost Per Lead / Call

Another metric some HVAC companies like to track is the cost per lead or phone call. In most cases, a phone call and a lead are the same thing. You can set up Google Tag Manager to track phone number clicks on your mobile website.

Similarly, you can use call tracking software to monitor the number of calls coming from your website or marketing efforts. Calls should increase along with traffic; any call drop can indicate a problem.

HVAC Webmasters Helps With KPI

Here at HVAC Webmasters, we are all about helping you beef up your bottom line. We do our part with lean, effective marketing strategies, especially for HVAC contractors. Talk to us today and get the most from your HVAC advertising and digital marketing investment.