What is HVAC KPI?
An HVAC KPI or Key Performance Indicator is a measurable value or metric which demonstrates an HVAC company’s progress for essential business objectives. Typically, 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 take stock of your HVAC company and find out where you can make improvements. And for a lot of business owners, that means taking a good look at HVAC KPI. For the uninitiated, KPI stands for key performance indicators. These 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. But the following list is an excellent general guide to go off and apply to HVAC companies specifically.
Key Performance Indicators Help Businesses Track Progress in 2021, and help identify areas for improvement which can streamline a more profitable company long-term.
Basic income is the first HVAC KPI you have to measure. Your basic income or sales revenue is the amount of money you are bringing in from all service and product sales. Basic income does not include any taxes, customer acquisition costs, or any other deductions.
Your number should give you a good idea of whether you have any slow seasons or service spikes. And that’s good knowledge to have in general because it will help you anticipate when your customers will need service and when you can lower/raise service prices.
If you keep a good record of all your invoices, finding this primary income number should be relatively straightforward. Just add up the amount you made on each of the invoices for last year, and boom, you have your sales revenue number.
Basic Profit Margin
Your basic profit margin, or gross margin, is what you made after deducting the cost of providing service. To find your basic profit margin follow this formula: basic income – cost of providing service / basic income. The figure you come to is how much profit you are making before tax.
If the number you come to is low, then some changes have to be made. Try taking stock of your supply use. Remember only to calculate supply cost when using supplies on the job instead of calculating the bulk price of 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 incorporate everything with a set cost every month 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 some money every month by closely tracking supplies, looking at service routes and areas, and calculating your marketing and advertising ROI.
Advertising and Marketing
You need to make sure that you are getting your money’s worth from any investment you invest in advertising and marketing. Your customer acquisition cost should not be more than what your average customer is spending 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) as it relates to PPC advertising. And it’s true, CPC is one of the best PPC metrics available. 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 traffic grow each month. You’ll know how well your website is performing by your monthly traffic growth. Depending on your starting point, you should expect early gains near the 150 percentile.
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 things. 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 how many calls come from your website or marketing efforts. Calls should increase along with traffic, and any drop in calls 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 investment in HVAC advertising and digital marketing.