In the commercial janitorial services industry, closely tracking your business’s performance is key for maintaining top-notch service, pleasing clients, and fueling growth. Key Performance Indicators (KPIs) are vital benchmarks for evaluating business effectiveness and guiding decisions. In this article, we’ll explore five essential KPIs crucial for any janitorial business, explaining how to calculate and understand each one.
1. Customer Retention Percentage
Calculation: (Number of Customers at End of Period – Number of New Customers) / Number of Customers at Start of Period X 100
The customer retention percentage shows the percentage of clients who keep using your services over time. High retention means satisfied and loyal clients, which are crucial for ongoing success. To calculate your percentage, subtract the number of new clients acquired during a certain period from the total number of customers you had at the end of that period. Then, divide that by the total number of customers you had at the start of the period, and multiply by 100 to get a percentage.
Suggested Target – Greater than 95%
2. Direct Labor Cost to Revenue Ratio
Calculation: (Total Direct Labor Costs / Total Revenue) X 100
This ratio tells you how much of your revenue goes toward paying team members directly involved in providing services in your customer’s facilities. This includes all types of pay – regular wages, overtime, holiday pay, etc. It’s important because it shows if your direct labor costs are eating up too much of your revenue. To find it, divide your total labor costs by your total revenue, and then multiply by 100 to get a precentage.
Suggested Target – Less than 55%
3. Overhead Cost to Revenue Ratio
Calculation: (Total Overhead Costs / Total Revenue) X 100
The overhead cost to revenue ratio reveals how much of your revenue is spent on things like managerial and administrative wages, facility costs, indirect vehicle expenses, and other business expenses NOT directly related to providing services to customers. To find it, divide your total overhead costs by your total revenue, and then multiply by 100 to get a percentage.
Suggested target – Less than 25%
4. Percent of Proposals Won
Calculation: (Number of Proposals Won / Total Number of Proposals Submitted) X 100
This percentage tells you how successful you are at turning proposals into actual customers. It shows the effectiveness of your message, proposal content and pricing strategy. To calculate it, divide the number of proposals you won by the total number of proposals you submitted, and then multiply by 100.
Suggested Target – Greater than 40%
5. Number of Customer Site Visits
Calculation: Count of site visits per customer
Customer site visits are important because they let you check in on the work at your customers’ facilities. It’s showing your clients that you care about them and want to make sure they’re happy with your services. Plus, site visits allow you to remain connected to your team members, which should help to reduce turnover and improve your employee experience.
Suggested Target: Depends on the size of your customers – larger customer receive more frequent site visits.
Keeping track of these five key KPIs gives you valuable insights into how your janitorial business is doing. By regularly checking on these numbers, you can spot areas where you’re doing well and where you need to improve. This helps you make smarter decisions that can lead to long-term success for your business.
