7 Crucial KPIs to Track for Optimal Success as an Electrical Contractor

Welcome to our latest blog post focused on electrical contractors! As someone who has started and run many successful businesses, I know that tracking progress is key to growth. In this article, we will be discussing the top seven KPI metrics that electrical contractors should be tracking for optimal success.

The electrical contractor industry is constantly evolving, and staying on top of key metrics is essential to measure success. An important KPI to track is client satisfaction rate. As of 2021, the average client satisfaction rate in this industry is currently 87%, with top-performing companies achieving rates even higher than that.

• Client satisfaction rate
• Revenue growth rate
• Average project completion time
• Number of repeat customers

Another crucial KPI for electrical contractors is revenue growth rate. This metric provides insight into the financial health of the company and helps forecast future growth potential. In recent years, the industry has seen an average revenue growth rate of 5%.

Whether you're a small business or a large enterprise, understanding and tracking KPI metrics is essential to success. Keep reading to learn more about the top seven electrical contractor KPI metrics and how to track and calculate them.

Client satisfaction rate

In the electrical contracting business, measuring customer satisfaction is a crucial Key Performance Indicator (KPI). Client satisfaction rate is used to measure how satisfied customers are with the electrical services provided by the contractor. It is an essential metric for any electrical contractor who wishes to keep their customers happy and retain them in the long run.

Definition

The client satisfaction rate is a metric that measures the percentage of satisfied customers out of the total number of customers served by the contractor. It is a measure of how well the contractor has met the needs and expectations of their customers. A high satisfaction rate implies that the electrical contractor has provided excellent services to their customers.

Use Case

The client satisfaction rate is a useful KPI that electrical contractors can use to monitor their performance in meeting customer needs. It helps contractors identify areas where they may need to improve and make necessary adjustments to their services. A high satisfaction rate can also give the contractor a competitive advantage by increasing customer loyalty and attracting new customers.

How To Calculate KPI

The client satisfaction rate is calculated by dividing the number of satisfied customers by the total number of customers served and multiplying by 100. The formula is as follows:

Calculation Example

Suppose an electrical contractor served 100 customers in a month, and 80 out of them were satisfied with the services provided. The client satisfaction rate would be:

KPI Advantages

• Helps to improve customer loyalty
• Encourages repeat business
• Attracts new customers
• Identifies areas for improvement in customer service

KPI Disadvantages

• Subjective and can be influenced by factors outside the contractor's control
• Difficult to quantify customer satisfaction accurately
• Does not help in identifying the root cause of customer dissatisfaction

KPI Industry Benchmarks

The client satisfaction rate benchmark in the electrical contracting industry is around 80%. However, this can vary depending on the level of competition in the market and the quality of services provided by the contractor's competitors.

Revenue growth rate

As an electrical contractor, tracking key performance indicators (KPIs) is essential to measuring your business's success. One of the vital KPIs for electrical contractors is revenue growth rate. In this chapter, we will explain what revenue growth rate is and how you can track and calculate it.

Definition

Revenue growth rate measures the percentage increase or decrease in a company's revenue over a particular period. It is used to determine if a business is growing or declining financially.

Use Case

Electrical contractors may use revenue growth rate to identify trends in their financial performance. It helps gauge the effectiveness of their sales and marketing strategies and determine the potential for expanding services or scaling operations.

How To Calculate KPI

To calculate revenue growth rate, use the following formula:

Where:

• Ending Revenue: represents the total revenue at the end of the specified period.
• Beginning Revenue: represents the total revenue at the beginning of the specified period.

Calculation Example

Let's say an electrical contractor had an opening revenue of $50,000 and a closing revenue of $60,000 in the last quarter. The revenue growth rate would be:

Therefore, the revenue growth rate for the last quarter was 20%.

KPI Advantages

• Determines a business's financial health and success.
• Helps electrical contractors identify areas of financial strength and weakness.
• Allows for performance comparison between different financial periods and industry benchmarks.

KPI Disadvantages

• Does not account for seasonality and cyclical changes in revenue.
• May be affected by external factors such as economic downturns and industry changes.

KPI Industry Benchmarks

The electrical contracting industry benchmark for revenue growth rate is 5.5%, according to Electrical Contractor magazine's annual survey. However, it is essential to note that this benchmark can vary based on factors such as company size, location, and market segment.

Average project completion time

As an electrical contractor, one of the most important metrics to track is the average project completion time. This metric is critical as it measures how efficiently your company is completing electrical projects for your clients. Below, is a detailed breakdown of how to define, use case, calculate, advantages, disadvantages, and industry benchmarks of the average project completion time KPI.

Definition

The average project completion time KPI is a measurement of the time it takes for your electrical contractor team to complete a typical project from start to finish. This time should include all stages of the project, including planning, approvals, site work, testing, and inspection. The KPI measurement will usually be given in days or weeks.

Use Case

The use case of the average project completion time KPI is to determine how efficiently the electrical contractor team is completing projects. This KPI is a vital tool for management and planning purposes as it allows you to track improvements over time. It also helps identify areas that need improvement so that they can be addressed before they become larger issues.

How To Calculate KPI

Calculation Example

KPI Advantages

• The average project completion time KPI allows your team to monitor progress and identify improvement areas
• The KPI assists with predicting expected project completion dates
• Improvements in the completion time metric can lead to more competitive pricing and better client satisfaction

KPI Disadvantages

• The average project completion time KPI only measures time and does not take into account project budgets, profits, or other important metrics.
• The KPI can be negatively impacted by factors outside the control of the electrical contractor's team, for example, weather conditions, changes in project requirements, or supply chain disruptions

KPI Industry Benchmarks

The industry benchmark for the average project completion time KPI ranges between 20-60 days depending on the nature of the electrical work and the scope of the project.

Number of Repeat Customers

As an electrical contractor, one of the key performance indicators (KPIs) that you must track is the number of repeat customers. In simple terms, this KPI measures the number of customers who have used your services more than once within a specified period. This KPI is crucial to your business because repeat customers typically spend more, are more likely to refer new customers, and are easier and less expensive to retain than new customers.

Definition

The number of repeat customers KPI is the percentage of customers who have completed more than one transaction with your business over a specified period.

Use Case

The number of repeat customers KPI is essential for electrical contractors who want to increase revenue and profitability. By tracking this KPI, you can determine the loyalty of your customers, identify areas for improvement and optimize marketing strategies to attract new customers.

How To Calculate KPI

To calculate the number of repeat customers KPI, use the following formula:

Calculation Example

Suppose your electrical contracting business had a total of 100 customers within the last quarter. Out of these 100 customers, 40 made more than one transaction during the same period. The number of repeat customers KPI can be calculated as follows:

From the calculation, 40% of your customers made more than one transaction within the last quarter, indicating that your business has a loyal customer base.

KPI Advantages

• It measures customer loyalty and satisfaction.
• It helps to identify potential revenue streams.
• It aids in developing effective marketing strategies.

KPI Disadvantages

• It does not take into account the value of transactions by repeat customers.
• It does not account for repeat customers who refer new customers.

KPI Industry Benchmarks

The average rate of repeat customers for electrical contractors is approximately 30-50%.

Safety incident rate

As an electrical contractor, safety should be your top priority. To keep your employees safe and maintain a secure work environment, it's crucial to monitor safety incident rates. Safety incident rate is a key performance indicator (KPI) that helps businesses measure the number of incidents, such as accidents or injuries, that occur within a specific period.

Definition

Safety incident rate measures the frequency at which safety incidents occur in the workplace. This KPI is calculated by dividing the total number of incidents by the total number of hours worked, multiplied by 200,000. This calculation is used to express the rate per 100 full-time equivalent employees.

Use Case

The safety incident rate is an essential KPI for electrical contractors, as it helps you identify potential hazards and improve safety practices. By monitoring this KPI, you can also measure the effectiveness of your safety programs and implement changes as necessary. Additionally, tracking safety incident rate can help you comply with regulations and reduce liability risks.

How To Calculate KPI

To calculate safety incident rate, use the following formula:

Calculation Example

Suppose your electrical contracting company employs 50 full-time equivalent employees and tracks safety incidents over a period of one year. During that time, you record 10 safety incidents, and your employees worked a total of 50,000 hours.

Using the formula, you can calculate your safety incident rate:

In this example, your company's safety incident rate is 4 per 100 full-time equivalent employees.

KPI Advantages

• Helps identify potential hazards and implement safety measures
• Measures the effectiveness of safety programs
• Reduces liability risks and ensures compliance with regulations

KPI Disadvantages

• Does not account for severity of incidents
• Does not consider external factors that may affect incident rate, such as weather conditions
• May not be applicable to all types of businesses

KPI Industry Benchmarks

The average safety incident rate varies depending on the industry. According to the Bureau of Labor Statistics, the incident rate for electrical contractors in 2019 was 2.9 per 100 full-time equivalent workers.

Training Hours per Employee

As an electrical contractor, keeping your employees well-trained and knowledgeable about the latest industry practices is crucial to providing high-quality service and achieving success. One key metric to track in order to ensure you are meeting this goal is training hours per employee.

Definition

Training hours per employee is a KPI that measures the amount of time your employees spend in training and development activities compared to the total number of employees in your organization.

Use Case

This KPI is useful for identifying areas where your company may be lacking in training and development opportunities. It can also help you evaluate the effectiveness of your training programs and make improvements where necessary.

How to Calculate KPI

Calculation Example

Let's say your electrical contracting firm provides a total of 500 training hours over the course of a year and has a total of 20 employees. To calculate your training hours per employee KPI:

So in this example, your electrical contracting firm averages 25 hours of training per employee per year.

KPI Advantages

• Helps identify training gaps
• Provides insight into training program effectiveness
• Encourages professional development and employee engagement

KPI Disadvantages

• Does not account for differences in job roles or employee experience levels
• May not be applicable to all industries or business types
• May be difficult to calculate accurately if training is done outside of the workplace

KPI Industry Benchmarks

According to the American Society for Training and Development (ASTD), the average amount of formal training hours per employee in the United States is 33.5 hours per year.

Profit margin per project

Profit margin is one of the most important KPIs for electrical contractors. It measures the amount by which revenue from a project exceeds the cost of completing it. By focusing on profit margin, contractors can ensure that they are working efficiently and profitably. Here is a detailed breakdown of this KPI:

Definition

Profit margin per project is the amount of revenue generated by a project that exceeds the cost of completing it. It is calculated by subtracting the total costs of a project from its total revenue and then dividing the result by the revenue.

Use Case

Profit margin per project is a crucial KPI for electrical contractors. It helps them understand the profitability of their projects and whether they are achieving the desired return on investment. By tracking profit margin, contractors can identify areas where they can reduce costs or increase revenue.

How To Calculate KPI

To calculate profit margin per project, use the following formula:

Calculation Example

Let's say you have completed a project with a total revenue of $50,000 and total costs of $40,000. To calculate profit margin per project, use the formula:

Therefore, the profit margin for this project is 20%.

KPI Advantages

• Helps contractors understand the profitability of their projects
• Allows for the identification of areas to reduce costs and increase revenue
• Aids in the development of pricing strategies for future projects

KPI Disadvantages

• Profit margin per project can be affected by external factors such as changes in material or labor costs
• Not an indicator of overall company profitability

KPI Industry Benchmarks

Industry benchmarks for profit margin per project vary based on the type of electrical contracting work being performed. In general, a profit margin of 10-20% is considered to be good for electrical contractors.