HVAC Key Performance Indicators: 6 Tried-and-True Measures for Success

Running an HVAC service business can be daunting, and in competitive markets like HVAC, you need to know how to keep the finger on the pulse of your operation. Tracking tried-and-true key performance indicators (KPIs) helps HVAC business owners zoom in on key metrics to assess where their company succeeds, where it can improve, and what measures need to be taken to ensure it thrives.

In this post, we cover the top 6 HVAC KPIs that directly affect your profit margins, specifically: 

1. Sales Revenue

2. Gross Margin

3. Monthly Profit & Loss

4. Service Metrics

5. Customer Retention

6. Advertising ROI

After that, we’ll explain how our software solution, ServiceTitan, helps residential and commercial service businesses, including HVAC, track and improve important KPIs. To see how ServiceTitan can help you track KPIs, streamline your operations and grow your HVAC business, sign up for a free demo now.

KPI #1: Sales Revenue

Sales revenue is simply how much money is coming in from the sale of your services (and any products you may offer). This is a foundational metric, essential for any company in the HVAC industry to stay in business, hire staff, adjust inventory, and so on.

Look for trends in your sales revenue. Do you experience spikes or slow periods during certain seasons? Do you know when customers tend to call for HVAC system maintenance or air conditioning repair? Distinguishing and anticipating these trends can help you maintain competitive pricing and make long-term financial decisions to ensure profitability in your bottom line.

Increase revenue by equipping technicians with effective strategies for upselling in the field. 

Keep customers in the know if the life cycle of their hot water heater or heat pump is nearing its limit, for best system efficiency and energy performance. 

Customers concerned with their energy consumption or the energy efficiency of their systems may be open to upgrading their HVAC equipment for optimal operational performance and energy savings.

KPI #2: Gross Margin

You can calculate the gross profit margin using this formula: 

Gross Profit Margin =  (Sales Revenue – Cost of Providing Services) / Sales Revenue x 100

The gross profit margin (expressed as a percentage) can help you track the growth of your HVAC business. This percentage represents the amount of every dollar from your sales revenue you retain as profit. A high percentage translates to good efficiency, but a low percentage indicates a need for increased productivity.

Track expenses and properly apply them to your bookkeeping every month. Remember not to close out your month’s numbers until accurately assigning the expenses to the services provided over that time period. Part of this includes tracking materials used from your inventory only when they are used for booked jobs (rather than calculating an incoming stocking order as one large expense for the month).

KPI #3: Monthly Profit & Loss

To determine your monthly net profit (or loss), fixed and variable operating costs need to be subtracted from your gross profit.

Fixed costs are regular costs you pay every month:

• Rent

• Utilities

• Staff salaries

• Advertising

Variable costs are unexpected costs that may fluctuate month-to-month, like fuel usage, repair services at your office, and so on. Subtract monthly fixed and variable costs from your revenue to calculate your company's profit. 

If you find your total costs eat up a significant part of your profits, determine where you can save money every month. 

Try to keep the total cost of operations (fixed + variable) below 30% of your revenue.

KPI #4: Service Metrics

To maximize productivity (and profit), your technicians should complete jobs in one visit. 

Some service metrics to consider include:

• What is your first-time fix rate? 

• How long does it usually take for your techs to perform a certain install? 

• How many service calls can your techs complete in one day? 

• How often do you sell [a particular service] each month? 

• What is the revenue of your average ticket? 

• What is the close rate of each of your techs?

For Weldon Long, President of Wright Total Indoor Comfort, the key metric was revenue per lead. As Long told Contracting Business: 

Use benchmarking to track tech performance or customer buying trends, so you know how you compare in the industry. Over time, you’ll find the most valuable key service metrics for measuring the success of your business.

KPI #5: Customer Retention 

Does your HVAC company inspire loyalty among customers? Returning customers can dramatically increase an HVAC business’s revenue. Use customer service surveys or simple asks on the day of service to gain insight on how many customers keep coming back to your service.

Net Promoter Score, a tool used to gauge the loyalty of customers, asks them to answer a simple question on a scale of 1-10, “How likely are you to recommend [this company, this product, this experience, this representative] to your friends, family or business associates?” 

Customers who score between 0 and 6 are unlikely to give you repeat business while customers who score between 9 and 10 are likely to be promoters of your business or service.

If you find that your business is subsisting on many one-time, low-scoring customers, look at your customer service practices or implement retention campaigns (such as discounts) to bring customers back.

KPI #6: Advertising ROI

If you make the effort to invest in advertising—whether online, radio, print, TV, or elsewhere—make sure you measure the return on your investment. Customer surveys and CSR/tech inquiries to customers help you understand where new customers are coming from and nix costly advertising campaigns that may not be effective.

If you run various online ads (social media such as Facebook, Google PPC, Yelp paid listings, etc.), make sure you know which platform customers are using when they encounter your ads. To calculate your advertising ROI, divide the returns (revenue) resulting from the campaign by the cost of the campaign.

You can use ServiceTitan's Marketing Pro to leverage customer data and track marketing campaigns, so you can focus on strategies that generate the most revenue.

(We’ll talk more about Marketing Pro below.)

How ServiceTitan Helps HVAC Business Owners Track Key Performance Indicators & Grow Their Business

ServiceTitan is a field service management software designed to streamline HVAC (and other service) businesses. Specifically, ServiceTitan focuses on two areas that will directly help:

1. Tracking specific KPIs to gain insights into how your business is doing and what can be improved.

2. Growing your business by assisting with executing marketing campaigns and tracking ROI.

Note: We have several resources that will help you formulate a marketing strategy and execute your plan. First, we have an entire section on marketing practices in our Contractor Playbook which explains all the effective marketing activities you can set in motion. Second, you can download our ebook, “The Ultimate Guide to KPIs”, where we talk to industry experts about the value of KPIs and measurable metrics for any home or commercial service business.

ServiceTitan Helps You Track HVAC KPIs with In-depth Reporting 

As we’ve mentioned in this article, setting meaningful KPIs is one part of the equation for creating a thriving HVAC business. Tracking and measuring your company’s performance against those KPIs is critical in planning and refining your marketing campaigns to grow your business. 

ServiceTitan’s dynamic dashboard lets you filter dozens of KPIs so you can track how your business is doing. Because you can monitor every marketing campaign, job, technician, and CSR, in real-time, you gain deep insights into what’s working, and what’s not. 

KPIs include:

• First-fix response times

• Number of calls per day per technician

• Number of memberships expired/canceled/renewed

• Number of leads generated by a Google Ads campaign

• Number of jobs booked per CSR/technician

• Revenue generated from each advertising source

• And more

You can track revenue and trends by sorting data by date range or type of business and then drill down further into service requests, types of service, response times, technician, etc., to see exactly what’s driving revenue.

For example, you could track how many new air conditioning units your company has installed in the last quarter, and then filter the data to see what the average spend was, how many of those customers have taken up service agreements, where those customers are located, which technicians carried out the work, and how long the installations took, on average. This information can flag the customers who should be included in a direct mail campaign to encourage them to book a service or take out a membership agreement with you.

This granular information allows HVAC businesses to see where they should be focusing their efforts to drive further revenue.

Track Ad Campaign Performance 

ServiceTitan’s Marketing Scorecard allows you to track your ad campaigns and monitor how many calls—and how much revenue—each campaign has generated. You can drill down into the type of jobs booked as a result of a specific campaign. 

The ServiceTitan Heat Map—areas of the map highlighted in green—symbolize areas where you’ve generated the most revenue. This way, you know where to spend your ad dollars to see the biggest return. 

Note: You can also use Service Titan’s heat map to view job locations. This helps you see which job locations are growth areas for your business, and which are not, so you can adjust your marketing activities accordingly.

Track Employee Performance

You can also track technician and CSR activity using ServiceTitan’s scorecards. 

Technician scorecards give business owners real-time updates on generated revenue and memberships sold for each technician. The CSR scorecard allows you to review incoming calls, conversions, and other CSR metrics when customers call your business. 

Again, viewing the data at a granular level gives you valuable insights so you can provide coaching, if needed, to keep your team agile and productive.

ServiceTitan Helps You Grow by Optimizing Your Marketing Activities 

Deciding on which KPIs you want to set and track is one step toward growing your HVAC business. Having a laser-focused marketing strategy, defining your target audience, and executing and tracking your campaigns, are what will really have an impact on your business.

ServiceTitan’s Marketing Pro is an all-in-one automated solution that uses your customer data to target specific profiles to bring in more leads and bookings. 

Email Marketing

With Marketing Pro, you can create “hyper-targeted” email marketing audiences based on the customer information already held within ServiceTitan. The information automatically updates in real time so you can “set and forget” audience lists and be confident that the data is always up-to-date.

For example, you can home in on customers who are due to replace aging equipment or update their memberships. Or, you can focus on customers who have yet to respond to an estimate by sending them a reminder with a phone number to call and make an appointment. 

Another example is to email a seasonal discount offer on a maintenance contract to customers for whom you’ve carried out new installations, but who have not signed up to an ongoing service contract. These types of campaigns mean you can contact customers who may have gone “cold” and convert them into revenue. 

Emails are easy to design and deploy. Choose from our range of email templates, adjust the text to fit your campaign, and deliver to your chosen audience. 

Targeted emails means higher open rates and more calls coming in, all equating to an increase in ROI. With ServiceTitan, you can also monitor the ROI for each campaign by tracking the email performance and the revenue attribution. 

Megan Bedford, who runs Mugyver Consulting to help small HVAC businesses, says: 

Direct Mail

As well as a suite of email templates, we also have a library of postcards HVAC businesses can choose from to execute their direct mail campaigns. 

Set-up takes minutes. Simply choose your design, adjust the text, then print and mail your postcards to your chosen audience. 

Direct mail campaigns cost a flat rate per postcard, so you only pay for the exact number that you send. 

As with the email campaigns, with ServiceTitan, you can track the results of each campaign so you can see exactly which ones are driving revenue.

Bill Highsmith, Jupiter-Tequesta Air Conditioning, Plumbing & Electric says:

Online Ad Campaigns

You can connect ServiceTitan to Google Analytics and Google Ads so you can gain insight into the ROI of your digital ad campaigns and see how your ads are performing with respect to actual jobs and revenue. Aligning your data in this way helps you decide which ads are performing well and which ones might need adjusting or ditching, even down to keywords and ad groups. 

You can also use ServiceTitan’s dynamic call tracking feature—which allocates a unique telephone number to every ad source—so each campaign’s performance can be tracked from start to finish and attributed to calls, bookings, and revenue. 

Ready to Set Up and Track your KPIs with ServiceTitan?

Setting and tracking KPIs helps you keep your finger on the pulse of your HVAC business and understand which areas need your attention.

Use ServiceTitan's cloud-based software to track specific KPIs in real time. Set benchmark goals that make sense for your company and use our marketing features to set your business on the right track for growth.

To see how ServiceTitan can help you set up and track KPIs for your HVAC business and streamline your operations to increase revenue, sign up for a free demo.