You’ll Never Scale Your Home Service Business Until You Understand These 4 Numbers

Welcome to our live event on how to grow a home service business, the growth roadmap. At the end of this video, you're going to know exactly how to grow your home service business, and you're going to have a tool that's going to walk you through exactly how to grow to your next revenue growth number. Real quick, my name is Phil Risher. I'm the owner of Flash Consulting. I figured this stuff out because I used to work at a home service business that was at $3 million and stuck, and ultimately went to $5 million and sold to private equity. And the way that we did it was using this growth roadmap. Um, so let me share my screen and we're gonna go through this, and by the end of this, you're gonna have your own custom growth roadmap as well. All right, let's go here and I'm going to share this. All right, so at my home service business, the owner would look at 4 things: revenue, accounts receivables, jobs run, and schedule fullness, how the schedules look. The problem with this is that these are all lagging indicators. These are things that happened before that now we're looking at revenue to say, are we growing or not? The problem that most home service businesses run into is that they look at revenue and say, what I've done in the past, which is marketing, is either I'm growing or I'm not. Accounts receivable is like, how much money do I have coming in next? Jobs run is, okay, am I running jobs or not? And then are my schedules full in the next couple days? These are lagging indicators of how we feel about the business. The shift is 4 numbers. Number of leads, your booking rate, your estimate close rate, and your average job value. These are the leading indicators that are going to help you actually grow your business. Am I getting leads coming in? What is my booking rate from leads to jobs? What's my estimate close rate? And then what's my average job value? And with lead volume, some may interpret this as customer acquisition costs as well. How do I get leads? How much do I pay for them? And these are the indicators that we're going to look at to forecast growth for your business. It's not just looking at what happened, it's actually looking at what's going to project growth into the, into the future for the business. So what you can control versus what happened, that's the big shift. These things you can control, these things are what happened, and we're going to fight for this. So real quick, if you're live with us in the chat, if you don't mind, do you track your booking rate every month? Yes or not yet? This was a big thing at my home service business of why we need to track booking rate. When I was at Enterprise, which is where I started my career, enterprise, they build operators internally. And one of the things that was big for us was people call us and we need to book them to rent a car. And what we did was I had 4 CSRs, you would call them, or salespeople. And essentially every single call that came in, I'd have them mark a dash on their board or on a piece of paper. And if they booked it, they would make an X and then next they would do a dash. If they didn't book it, they leave it as a dash. And at the end of the day, they would have, let's say, 10 dashes and 2 of them would be X's. So that would be a 20% booking rate, and they would email me their percentage every single day. And the goal was to get to 40% booking rate. 40% at Enterprise was like, okay, this is good. People are not just price shopping us, and, you know, we need to focus on this. At a home service business, when we talk about booking rate, that's the number one thing. Leads coming into the business, which goes to your booking rate— leads need to turn into jobs. And we can talk about getting more leads, and we'll talk about that in, in a little bit. But so Essentially leads are coming in, we need to focus on optimizing to convert everything, and then close rate, an estimate goes out and we need to convert the estimate into a sale. So what percentage do we do that? And then our average job value, these 4 things lead to revenue. So the old equation that we were looking at before, which was revenue starting point to figure out if we're actually growing or not, now is leads, booking rate, close rate, average job value equals revenue. Big shift. Move one number, business grows. Move multiple numbers, growth compounds. And if you can focus on those four numbers to grow your business, you will get the revenue that you want to hit. And that's the exact roadmap that we're going to be building. It's going to look like this. If you want to go from $1.5 million to $2 million, we have a, a three-phase roadmap that we're going to build out, and it's going to walk you through exactly what you need to do to, to figure it out for your business. All right. So Before we do that, we need to know those numbers. So I need you to take a piece of paper next to you and write these numbers down for your business. And if you don't know them exactly, I'm going to kind of coach you a little bit on how to figure these numbers out. But if you don't know them, it's fine. You— I'll go through and like talk you through how to figure these out and at least write them down for whatever you might think that the numbers are. So the first number is your current annual revenue. I'm sure that you know this. Last year, what was your revenue that you did? Let's say it's $1 million, $3 million, $5 million, $6.5 million, whatever it is, write that number down. Number 2, revenue goal. In the next 12 months, what do you want to get to? You should know these numbers. I did $1 million, I want to get to $2 million. Okay, you got the starting points, but pick real numbers. Maybe you haven't set a goal. Pick the goal. Next is total leads generated. Now this is the one that is probably the hardest out of all these to figure out because you get calls that come in You get web forms that come in, you get maybe messages on Yelp, Angie's List, Thumbtack, these other platforms. You get emails that come in from customers and you get leads that come in. However, you don't have a way to capture all the leads that you generated. Maybe calls, maybe forms, but not in totality leads. And if you do, you should be fighting for that number every single month to know the starting entry point for your business. Leads coming into your business is the starting point. So if you get— if you don't know this, here's my recommendation. Calls, you should know the number of calls that you get. And if you don't know the number of calls you get, if you use a call tracking software, you can actually go in and figure this out. So what we did at My Home Services, we didn't have clear numbers like this. We said, okay, in my call tracking software, um, we use, I think, OpenPhone or RingCentral, something like that. We would go in and say the total number of calls that we got Usually about 60% of them were new customers, 40% were customers asking about things. So we took that number divided by 60, that was our call lead number. Then for web forms, we could easily go to our digital marketing company and figure out web forms. And then from the other aggregators, we could figure out Yelp and other places, referrals coming in as well. So we would start with a total leads number. So write whatever number you think that, that might be for $1 million businesses, $5 million businesses. We're going to work backwards to figure out these numbers, but I want you to start with how many leads that you're total, that you're getting. Number 4, your booking rate. A simple way that we talk through this with prospects and clients is if I gave you 10 leads, how many of them would you actually book into a job? A lot of people say, uh, 50%, 60%. Usually if you're under $1 million, you're going to say 80%, 90%. And the reason is because all of your traffic is just warm leads, referrals, and you're going to book every single job. As you go higher up the funnel to colder and colder audiences, your booking rate's going to go lower and lower. And especially if you're answering the phone, it's going to be high. But as you build out a team, what we found is that this number could be around 40, 50, 60%, 30%, 20%. But fighting for this number to know, and this is why number 3 is get the number of leads, because the next thing is a booking rate, is that you need to know the number of jobs. So a simple way to figure this out for your business is you go to your CRM and figure out how many jobs you ran last month. And then you take that and divide it by your number of leads. So jobs divided by total leads, that gives you your booking rate. So your total jobs divide, and then divide that by your number of leads. Next is your estimate close rate. Again, if you don't have these numbers, you can just figure them out. If I gave you 10 estimates, how many do you close? And if you're under a million dollars and you skew more towards just warm audience referrals, it's going to be higher. But as you scale your business, usually it's going to be around 50%, 60%, 40%, 30%, something like that. But the way you figure this out is you go to your CRM and you take your closed number of estimates or jobs, and then you divide that by the estimates that you sent. So sent 100 estimates and I closed 50 of them, that's a 50% close rate. And of course you can break it down by the certain service that you do, whatever, but just holistic numbers, estimate close rate, that's how you get that number. And the last one is average job value. You can say, okay, you know, most of my tickets are going to be $1,200, but if you do like remodeling and it's like $50,000 job and $1,000 job, who knows, you want to get an average ticket. So a simple way to do this is take your total revenue divided by the number of closed jobs or closed estimates. That's going to give you your holistic average job value. The reason that these numbers are important is because these are the levers that you can use to grow. And when I show you this growth roadmap, these are the numbers that we're going to actually plug in. So to give you some benchmark numbers, booking rate, the industry average is 42%. The elite operators, that's— this is from Service Titan report, is at 62%. So industry average 42%, elite operator 62%. You know what your booking rate is. If it falls into this, great. If it's higher than this, usually that means that you need to open up more ad channels. Your pricing's too high or you have too warm of audience that you're not going to be able to scale. And by warm audience, I mean you're just getting referrals, word of mouth, people that have used you before. Of course you're going to book those people, but as you scale your business, it's going to get colder and colder people. Next is your estimate close rate. So a healthy range is 40 to 60%. The reason why most close rates fall is slow speed to estimate, no follow-up system, no financing options, weak trust presentation. Growth isn't always a marketing problem. Sometimes it's a sales process problem, and we're going to talk about that as well. All right, so let me share this tool so that way you can, uh, see what this looks like. All right, I'm going to put this tool down below. It's our growth roadmap. We built it out for you, and you basically plug in your numbers, and then it's going to show you how to grow. Before you plug in your numbers, I'm going to walk you through what this looks like. So let's say that you're a $1.5 million home service business and you want to get to, let's say, $2 million. Your per— your booking rate, this is going to be straight from the numbers that you said. That's a lot of people skew this higher when I talk to them, especially if they're the ones answering. But let's just say it's 60%, 60% booking rate. And your estimate close rate, usually if someone's really good, I would say they're going to be at like 60%, but let's just call it 50% for this. And then your average job value, let's just say you can pick whatever you want, but let's just say $1,000. Um, you're going to put in your email because we're going to actually send you this growth roadmap, and then you're going to say show my growth plan. All right, so going from $1.5 million to $2 million, this is exactly what you said. The breakdown based off of your numbers right now is you are getting about 417 leads per month. So with your close rate, your booking rate, your average ticket, you're getting 417 leads per month based off the data that you provided. All things held equal, if you want to go to $2 million, you need 556 leads per month, and that's 139 more leads. That's your lead deficit. So if you wanted to go to $2 million, you would need 139 more leads, and that's going to get you to $2 million. However, there are 4 ways to close this gap. You can get more leads, like get the 139. You can increase your booking rate. You can improve your estimate close rate, and you can increase your average ticket. That's the 4 ways to hit this number. Now down here, it's actually going to walk you through. You're in the average range and 60% is within reach. Let's say that you wanted to increase your, uh, estimate close rate. Follow up within 30 minutes, set up a 14-day nurture sequence, incentivize your team to close estimates, put an expiration date on your estimates. It's going to give you some strategies. Your booking rate has room to improve. 70% realistic. Send an automatic email the moment someone fills out a form. Train your CSRs, right? It's going to walk you through some ideas to help you increase this. Now, the cool thing is a 5% improvement on your booking rate would save you roughly 43 leads a month. Just by increasing your booking rate 5%, you're going to save 43 leads. If you are looking at paying Google for leads, or Yelp or Angie's List or Thumbtack. Let's just say you spend $50 per lead. 50 times 43 leads per month is $2,000 a month that you would need, that you could change that just by getting a 5% improvement on your close rate. Now, the thing that I really like about this tool is it's going to help you figure out how you want to close this gap. So let's say that you want to increase your average ticket to $1,200 and you want to increase your close rate to 55%. Uh, let's just say 56%. Oh, let's say 55%. By increasing your average job value and your estimate close rate, you actually only need 4 more leads a month in order to hit $2 million. But let's say that you went to 56%. Now you're actually going to do more than $2 million and you're going to have a surplus of 3 leads based off of your numbers. And that's literally just by increasing your average job value to $1,200 and your estimate close rate by 6%. This is the power of figuring out how you're going to grow your business and dialing in these numbers. That's why I would recommend fighting for these numbers every single month. This is how you're going to create growth in your business. You're going to have to know your leads number, your booking rate, your estimate close rate, and your average ticket. Those 4 numbers every month, if you just track it and you stick to this and you plug these numbers in, there's no way that you can't grow your business. So the most powerful path combines all of these things. Increase your leads, increase your booking rate, increase your close rate, increase your average ticket. All these things together help you grow. Now, obviously, this is exactly what my business does, is we fill these gaps inside of your, your company. But at the same time, it's, it's more so about knowing the numbers so that way you can architect growth and work with companies that actually help you scale your business. So let's open the tool. You can enter your 6 numbers. I'll put the link down below. You can click the button, put in the numbers, and you can figure out how you're going to grow your business. Real quick though, I want to just go through this. The roadmap is leads. If you do not have enough leads coming into your business, there's 4 ways to get new customers, and I'll talk about that in a sec. Your booking rate— you need to book the, the correct amount of people into jobs. Close rate, average job value. So how do you fix these? If you don't have enough leads, you need to run paid ads, you need to post free content, Paid ads is the fastest way to do it. Free content is the slowest way to do it. You need to build referrals systems in your business. So you need to find complementary service to send you leads. This is like if you do HVAC, you find plumbers, electricians to send you leads. This is the another, it's a slow way to do it at first, but once it gets ramped up, it's very fast. At my home service business, we were doing $3 million when I started. About $1.5 million of that was referral system. The rest was SEO and Google Ads and Yelp and some other ad platforms. If your booking rate's low, you need to train your CSRs and build a script. Speed to answer, call scripts, missed call recovery. Like you need to make sure that you have systems in place to get every single lead to book into a job. If you have a low close rate, evaluate your sales process, come up with financing options, follow-up systems, speed to estimate. How quickly are you following up with these estimates and making sure that people are incentivized to close estimates? If it's just on the business owner to try to close them, you get busy and things fall by the wayside. Average ticket, introduce a good, better, best option for, for what you do. Bundle and upsell services, include memberships, and then have indoor air quality add-ons or just in general add-ons to whatever you do. This was a big lever for our home service business. All right, so the old way is tracking revenue, AR, jobs run, let's do more than last year as how we want to grow. Gut feeling, running more ads just to run more ads. Revenue feels random. The new way is leads, booking rate, close rate, average ticket, reverse engineering from the 4 growth inputs. Tool shows the exact levers to fix first, not just gut feeling. Tracking these numbers on a monthly basis. Fix the weakest numbers in the chain. Revenue's predictable and compounding. This is exactly why you want to look at the numbers that are going to help you scale. So your action checklist, know your 4 growth numbers. I keep saying this because it's so important. Know your leads, booking rate, close rate, job value. That will architect growth in your business. Pull your numbers and enter them into the roadmap, but pull the numbers and know the numbers of what's going to help you scale. Identify your single weakest lever. I can't stress this one enough. I talk to business owners and they don't know how to grow their business. And the reason is because they don't know those numbers. Because if they knew, my booking rate's down, I need to go and fix that. My lead quality or lead count is down. I need to go fix that. My estimate close rate is down. I need to go fix that. My average ticket's down. I need to go fix that. It will give you what you need to fix in your business to architect growth. But a lot of people don't know what numbers to start with, and so they just feel like, oh, I need to go hire another marketing company or pay some more ads. Set a benchmark target for the levers. Assign one action this week to move that number. Track it weekly, not monthly. If you track these numbers and you know them every single week and it rolls up into a month, it's very easy to go and fix things. So I hope this video was helpful. If you like content like this, be sure to hit like and subscribe. I'll put that roadmap down below, and I'll see you in the next video.