A brief instructional segment describing five key performance indicators (KPIs) for HVAC service departments and their industry benchmark targets. The KPIs covered are: service labor percentage (≤20%), parts/materials cost (≤18%), service gross margin (≥62%), average calls-to-replacement-lead (benchmark ~10), and target service-department mix for residential add-on/replacement businesses (~25% of total sales). The presenter emphasizes using these measures as actionable benchmarks to identify efficiency, pricing, training, or business-mix issues.
What gets measured and recognized gets repeated and improved. Hey Titans. All right, today we're going to dig into H Vac Service Department KPIs. What should you be measuring and what are they? What's the number you should be shooting for? So number one, here we go. Service labor percentage. What should the percentage of your labor be versus your total service sales? Well, the industry benchmark is 20% or under. We can use that KPI as a gauge to see how we're performing. So if you start to measure your labor and you see that, oh man, my labor percentage is 35, 40%. Well, you know, maybe we got an efficiency problem here. Maybe maybe we're our pricing is off. Maybe, maybe our techs aren't closing on things whenever they're going out there. So you know, it could be a performance problem as well. So that's the beauty about these KPIs. They give you a benchmark, you can see what they are and then you can take action to improve them. Number two, your materials or your parts cost and they should be 18% or less. Easy enough. So as a general rule there, if you look at your P and L and you see H vac service department parts and it's greater than 18%, you know you got a problem, you know you could have a problem. At least it lets you know so you can dig into it. Alright, the third thing is your service gross margin percentage. So we know that if our labor was at 20% or less and our parts are at 18% or less, then our gross profit percentage should be 62% or greater. If it's not now, we at least know and we can start to track this and take massive action to improve it. Alright, the number fourth thing, your average number of calls to replacement lead. So this means that we send a technician out. How many times do we have to send them out on a service call before it should turn into an H VAC system replacement lead? And the industry benchmark is 10. So obviously sometimes depending on the age of the system, that may be lower or maybe a little bit higher. But if it's significantly off, we may know that we have a training problem and we need to really start educating our techs on how to do the tech generated lead or the turnover. All right, and the last one, this is for a typical add on replacement H Vac residential company. What percentage of your service department should that be of your total sales? Well, that's 25% of your total sales. That should be your business mix. If you're the typical residential add on replacement company. If you look up and your Service sales are 50% of your total sales, that may be okay. But at least you know that's that, hey, this is our business mix. But it also could mean that, oh man, we're really good at fixing things and we're not very good at offering system replacements. And therefore, that's why our business mixes off. So take these KPIs, use them for what they are, try to improve them. They're a benchmark. Set the benchmark for your company and see how you can improve them. And you know what? Because here's what we know. What gets measured and recognized gets repeated and improved.
