Tracking key performance indicators (KPIs) is critical for running a successful janitorial business. These metrics give you a clear picture of your company’s performance and provide the data needed to make smart decisions for growth and profitability. Here are four essential KPIs every janitorial company should monitor:
1. Customer Retention Percentage
Customer retention measures how well you keep existing clients over time. Calculate it by dividing the number of customers retained during a specific period by the total number of customers at the start of that period. A high retention rate reflects strong relationships and consistent service, while a low rate may signal issues like poor communication or inconsistent quality. Strive for a retention rate of 95% or higher to remain competitive in the industry.
2. Direct Labor Cost to Revenue Ratio and Budget to Actual Labor Hours
Labor is the largest expense for janitorial companies, so keeping an eye on this KPI is essential. To calculate, divide your total labor costs by your total revenue. Ideally, labor should account for 50%-60% of revenue. A higher ratio could indicate inefficiencies, underpricing, or scheduling problems. This ratio should be reviewed monthly, while daily monitoring of actual labor hours against budgeted hours is a must to catch and address issues early.
3. Job-Level Costing
Job-level costing measures the profitability of individual contracts. Compare the revenue from each job to its total costs, including labor, supplies, and equipment. This analysis helps you identify which jobs are profitable and which might be costing more than they should. By tracking this KPI, you can adjust pricing, improve processes, and make better decisions about the contracts you take on.
4. Opportunities to Provide Proposals
To grow your business, you need a steady stream of opportunities to submit proposals to potential clients. This KPI reflects the success of your sales and marketing efforts. Track lead indicators like website visits, email engagement, and customer interactions to measure how effectively you’re generating prospects.
Focusing on these four KPIs ensures your janitorial company runs smoothly, remains competitive, and drives sustainable growth. Regularly tracking and acting on these metrics will position your business for long-term success in a demanding industry.
