Mike Andes, founder of Copilot CRM, explains why service businesses need to track KPIs like close ratio and churn rate. He shows how these metrics drive pricing and hiring decisions, and walks through Copilot's dashboard and upcoming alerts that tell you when to raise prices or cut services.
Questions this video answers
Mike Andes, founder and CEO of Copilot CRM.
November 27, 2023.
Number of accepted estimates divided by total estimates sent (e.g., 3 accepted ÷ 10 sent = 30%).
The number of customers lost each month in a recurring business.
Chapters
Hey, everyone, it's Mike Andes, founder and CEO of Copilot CRM. And today I'm talking about KPIs key performance indicators. These are the numbers you must know in your business. And everyone always says you got to know your numbers. In my opinion, software can do a lot of the numbers for you, so you don't have to do a whole lot of knowing because it is important to know your numbers. But if you have no idea what those numbers mean, they don't do you a lot of good. So inside of Copilot, what we do is keep track of all the most important data for your business. Now, I'm going to talk about two of the most important ones and as close ratio and attrition. Now, close ratio is simply the number of estimates that are accepted divided by the number of estimates that you sent out and that were total. So, for example, if I had three estimates that were accepted divided by the number of estimates that were sent, let's just call it 10. That would mean a 30% close ratio. 30% of the estimates that I sent out were accepted. This number is so, so important. Knowing what the close ratio is allows you to be able to adjust your pricing. It allows you to get to be able to know whether or not all the jobs are getting accepted. And you actually could increase your pricing. Or if the close ratio is too low, you might actually give discounts, you might lower your price in order to close more jobs. And if you don't know your close ratio, it's almost impossible to be able to know what services are selling when, at what time of year. It's very difficult to know whether or not your marketing is working. It's very difficult to know whether or not your pricing is correct. And I think a lot of times people, if they actually knew their close ratio, they'd realize that, oh my goodness, 70, 80, 90% of people are accepting in their estimates. That's absolutely a green light to go raise prices and make more profit. So close ratio, very important. There's a whole bunch of other things that close ratio can determine for your business. Another thing that you gotta know is attrition. Attrition is also known as churn, simply the number of customers you're losing every single month. Now, if you have a recurring business model where you have recurring visits, like mowing, for example, or treatments for a lawn, there's a cleaning services, pool, cleaning, janitorial, all these different home services that I think the gold mine is recurring services. The thing that you got to really track is attrition. The churn, how many customers are leaving every single month? Because you can keep putting, you know, water in the top of the bucket, in the top of the funnel, but if there's a leaky bottom, a bunch of holes in the bottom of the bucket, you're just gonna have to keep pouring them in. And we all focus on getting new customers and getting more leads and spending money on marketing and advertising. What we don't realize is that all of them are simply going to a bucket, and they're all leaving the bottom of the bucket through the holes, and you got to plug the holes. But how do I even. How can I even measure. Like, I got to measure churn in order to be able to know that I have a problem with attrition, that I have a problem with customer service. I have a problem with training my employees. It's causing a bunch of damage cases, and therefore, people are leaving, they're canceling service. And so when there's a spike in attrition, a spike of customers leaving, leaking out the bottom of the bucket, what do you do? Immediately, it triggers you to think, well, what can we. What do we need to fix? What hole in this bucket do I need to plug in order to make sure that. That my business is sustainable and can continue to grow? Because you can, oh, I'll get a lot of. Spend more money on advertising. I got to get more market, get more leads, get more customers. When. If you just plug the holes inside your business that are causing attrition and churn, you wouldn't have to spend the money on marketing. You'd still grow your business. And so ultimately, tracking this number is so important because it ensures that the compound interest of your business growing over time with recurring services continues. So many businesses plateau, they stop growing because what happens is the number of customers coming in equals the number of customers leaving every single month. So inside of Copilot, we've created what we call the KPI cockpit. Yes, Like a plane where you're able to see all the dials and knobs and buttons and the data required to fly the plane. And if you can't know all that information, you're. You're flying blind. You're literally flying without any instrumentation on a plane is like literally trying to run a business without all the KPIs and the numbers inside your business. You've got to know your numbers, and based upon those numbers, you're able to have great decisions inside the business. And this is what we're super excited about with Copilot in 2024 now building what we call 3D notifications. Data driven decisions 3D. What that means is we're going to take all the KPIs and the numbers of your business inside the cockpit and give you meaningful information and recommendations like when to hire people, when to raise prices, what services are most profitable and which ones you should cut. These are things that can absolutely measured in your business. And not only are we going to show you the information inside the KPI cockp. We're going to give you recommendations that are data driven decisions not just based on emotion or what you're feeling today, but rather what the business needs from a numbers perspective.
