Residential HVAC Manufacturing Industry: KPIs
The common key performance indicators (KPIs) for residential heating, ventilation, and air conditioning (HVAC) manufacturing contractors in the US include revenue per employee, sales or revenue per salesperson, and the number of maintenance and service agreements among others. These and other findings are outlined below.
HVACR Business KPIs
- HVACR Business is an industry resource for residential heating, ventilation, and air conditioning manufacturing contractors in the US.
- HVACR Business categorizes KPIs under three major categories: Operations and Sales, Marketing and Advertising, and Gross Margins.
- Operations and Sales category: Revenue per co-worker ranges from $120,000 (acceptable) to $130,000 (good) and up to $140,000 (excellent).
- Service agreements per $1 million retail revenue ranges from 1,000 (acceptable) to 1,200 (excellent).
- Revenue per service-agreement customer ranges $750 (acceptable) to $850 (excellent).
- Installations for a two-man crew should have annual sales of $750,000 (acceptable) to $1 million (excellent).
- Service-agreement annual renewal rate should range from 80% (acceptable) to 90% (excellent).
- Marketing and Advertising category: Annual percentage of revenue spend on advertising should range from 4% (acceptable) to 2% (excellent).
- Response to direct mail advertising should range from 2% to 4% for customers and 0.25% to 0.75% for non-customers.
- Gross Margin category: Annual service agreements should range from 35% (acceptable) to 45% (excellent).
- Annual diagnostic and repair service should range from 55% (acceptable) to 65% (excellent).
- For a complete list of HVACR KPIs, see the document here.
HVAC Learning Solutions KPIs
- Mike Moore, Training Director at the HVAC Learning Solutions, outlined 4 KPIs for HVAC residential manufacturing companies.
- First is revenue and revenue growth which measures the company's sales performance.
- Second is the departmental performance of the company in terms of service and installations.
- This includes number of call backs, completion time, service process and others.
- Third is the HVACR company's operational performance which should ideally cost less than 30% for selling, general and administrative expenses (SG&A).
- Fourth is the company's profitability which measures bottom-line performance by sales percentage.
- Moore also outlines 10 KPIs for HVAC companies in general.
- The top 5 KPIs include one-day installs , SG&A, HVAC business model , ethical culture , and revenue per employee.
- Secondary KPIs include gross profit per man day , performance and financial statement numbers , maintenance agreements , gross margin , and service & maintenance revenue.
Lennox HVAC KPIs
- Lennox Stores operates a network of over 180 stores providing HVAC equipment, parts and services.
- Lennox identified several important KPIs for HVAC businesses to succeed.
- These include financial statements percentages, number of sales for each salesperson and revenue for each technician.
- Revenue for each installation crew as well as per employee are also counted as key performance indicators for HVAC businesses.
Common 3-5 KPIs
- Based on a cross-reference analysis of the resources above, common KPIs for residential HVAC manufacturing companies include the following:
- Revenue per employee/co-worker (Moore, Lennox and HVACR Business) that should be in the range of $120,000to $140,000 yearly.
- One-day install or installations (Moore and HVACR Business) that should achieve annual sales of $750,000 to $1 million.
- Gross margin (Moore, Lennox and HVACR Business) varies for companies but BDO's top 50 HVAC companies had an average gross margin of 32.9%.
- Maintenance and service agreements (Moore and HVACR Business) should achieve 1,000 to 1,200 maintenance service calls per technician and at least 80% service agreement renewals per year.
- Sales or revenue per salesperson (Moore, Lennox and HVACR Business) should be between $900,000 to $1.35 million per year.