Do you know how your trade business compares to others providing the same services and in the same region? Is revenue and call volume up, or did you experience some economic turbulence over the last year that you’re still trying to overcome?
While unprecedented weather and a sluggish economy created problems for some in the trades, a recent survey shows ServiceTitan users had solid revenue growth over the prior year.
“The average revenue growth across all the areas that we service here was 23%,” says ServiceTitan’s Director of Customer Relations Chris Hunter. “Right now, we’re smokin’ in the trades.
» Want to grow your business? Click here to get a demo.
“I know there's the talk of recession and things slowing down and all this stuff. But guess what? Man, we’re essential. We’re still there,” he adds.
Hunter attributes half of that 23% increase in growth to an increase in call volume, and the other half to an increase in techs’ average tickets.
“The demand is clearly there, and it's still coming in,” Hunter says. “So, good news on that aspect.”
Another important discovery from the ServiceTitan survey found companies that maximize the full ServiceTitan software platform experienced double the amount of revenue growth in the past year than those who ranked in the bottom 25% of full utilization.
“What we see is a significant difference between the two,” says Hunter, and it’s what drives ServiceTitan to help more contractors use the full functionality of its software features.
“When we talk about, ‘Oh, you should utilize ServiceTitan or look at your TitanAdvisor score,’ it's not just because we want you to use more features. We truly know that when you do this, you become more efficient. Your revenue growth is more. And it's what you signed up for, right? So, you might as well utilize it,” Hunter says.
One of those important features is the Benchmark Report, powered by Titan Intelligence. In a recent ServiceTitan webinar, Hunter and Deanna Kawasaki, Senior Director of Product, Titan Intelligence, walk through the latest update of the Benchmark Report, take a deep dive into some of the data-driven insights included in each personalized report, and explore what steps you can take to move the needle forward based on an understanding of your company’s performance gaps and opportunities.
>>Don’t have your Benchmark Report yet? Request your copy here.
Please note Benchmark Report is now available for Canada, but not available for Alaska and Puerto Rico.
In this webinar recap, you’ll learn:
What is the Benchmark Report and why is it important?
How businesses considered “like mine” are calculated
Best practices for taking action based on your ranking
What is the ServiceTitan Benchmark Report?
Every ServiceTitan customer can access their own Company Benchmark Report, which shows how your company compares to others in the same region, in the same trade, and with a similar number of technicians—but without identifying any competitor by name or location.
The Company Benchmark Report is produced by Titan Intelligence, a suite of AI tools developed for the trades by ServiceTitan that marries your data with external data and generates insights for your business. The benchmark report simply tells you how well your company is doing, or not doing, as compared to similar companies. Kawasaki, the Titan Intelligence guru, says recent updates to the Benchmark Report highlight important sections to take note of, link out to relevant discussions on ServiceTitan Community, and provide deeper insights on the future outlook for the trades.
For instance, the supply chain appears to be getting back to normal, Kawasaki says. Even though materials may take a little longer to arrive, and they’re definitely more expensive, contractors can secure the materials they need to do their jobs.
“Things like the microchips that are used in the actual HVAC units for Trane, Carrier, Lennox, etc. Those are more available now,” she says.
While the current unemployment rate of 3.4% might be viewed as good news by some, Kawasaki says, the labor market, in reality, is very fragmented. Jobs in the hospitality industry, for example, can be found in abundance, whereas places such as Amazon, Salesforce, LinkedIn, and other tech companies are reducing their staffing by the thousands.
On the brighter side, Hunter says, companies that fully utilize ServiceTitan are discovering the benefits of efficiency.
“We're seeing they're able to do more with less, just by being more efficient, and utilizing the software smarter, not harder,” Hunter says. “And we're also seeing a whole lot of contractors who’ve really tapped into this fragmented labor market.
“Some of these people who went through layoffs…they make incredible employees if you give them the right company to come into and give them the training. Even if they don't have the background for your specific job, they're quick to learn,” he adds.
Consumer credit use
Another thing to keep an eye on during a turbulent economy is consumer credit utilization.
“What this means is that because of inflation, because of high prices, consumers are actually using their credit cards more, so their credit limits are getting lower,” Kawasaki says. “They're maxing out their credit cards faster. And they're using credit for everyday things that they didn't have to use before because their dollar just doesn't go as far.”
The #1 newsletter for the trades.
Home equity lines of credit
Rising interest rates will continue to affect home sales and the prices buyers are willing to pay, but Kawasaki suggests looking for the silver lining.
“Home equity lines of credit” can be that saving grace for both you and your customers, she says, especially when a large replacement purchase depletes their budget.
“Their house has increased in value since 2020 and 2021. And even though the home values have decreased, they haven’t substantially decreased beyond that excess growth they experienced over the last two to three years. “What that means is that customers have equity they can rely on,” Kawasaki explains. Consumer spending
Lastly, pay attention to news reports about consumer spending, as most forecasts show consumers are thinking twice before spending money on big-ticket items. For contractors in the trades, that means customers may want to defer replacements and installations in favor of temporary repairs.
“We saw this behavior start to begin last year, and we're seeing it carry through a little bit this year, with moving from replace to repair,” Kawasaki says. “As we said earlier, the number of calls is still strong and increasing. When things break, customers need the essential services. That's us. So, you're still going to get all the calls, but how do you maximize and leverage those opportunities?”
How the Benchmark Report works
“The Benchmark Report helps you compare to businesses like yours in some key KPI metrics, such as revenue ticket, ticket by install, or ticket by service, and then what your blended mix is between install and service,” Kawasaki says.
Many contractors want to know what their “blended average ticket” should be between install and service, Hunter says, but it’s often difficult to determine.
“I'd love to be able to say, ‘Yes, every company needs to have a $1,200 or $2,000 blended average ticket.’ But guess what? Every business is different. Your mix between service to install, your region of the country, you may offer different trades. There are so many variables.”
For instance, how do you classify an install job? Is it anything with a serial number, must it be a complete system, or is it anything over a certain dollar amount?
“It's really tough just to go off of a blanket number or recommendation,” Hunter says. “But here's what we do know. We know that what gets measured and recognized gets repeated and improved. This is why we do the Benchmark Report.”
If you haven’t already done so, get a baseline view of your most important KPIs, then start measuring your progress against “companies like mine” to recognize areas that need improvement.
“That's the beauty of this thing,” Hunter says. “It compares you to other companies that look like you, have the same business mix as you, so you can really get that apples-to-apples comparison, instead of that number that no one really knows what goes into it.”
In addition to adding Canada to this year’s Company Benchmark Report, Kawasaki says ServiceTitan also changed the formula for calculating install and service tickets against revenue. The formula now excludes $0 jobs, or jobs that look like “minimum appearance” service fees. “We wanted to remove those so that you can actually get an idea of what the install ticket is, rather than blending that average in,” Kawasaki says. “We improved the install and service algorithm to more accurately represent the actual ticket itself.”
As a business owner, Hunter says contractors need accurate revenue data for all areas of the business, and they need to monitor what’s going on with those $0 jobs.
“I mean, we've got recalls. Some people have different things like permits, their maintenance calls, even sales calls,” he says. “There are a lot of things that could contribute to a $0 job, but guess what? Every time I have someone go to a house or to a business, it costs money. So, that $0, it affects things.”
Use the Company Benchmark Report to see how you stack up against other like-minded companies, then dive in to see how you can make incremental improvements. Do you have a workflow issue when it comes to those $0 jobs? Are you incorrectly classifying certain jobs, or do you have performance issues?
And try to determine your own perfect mix between install and service, Hunter says.
“What we see typically in the industry is like a 70-30 mix, as far as 70% of the revenue is coming from the install and 30% from the service,” he says.
Best practices for taking action based on your benchmark report ranking
A key takeaway from this year’s benchmark report, Hunter says, shows a definite shift toward consumers choosing the “good” option over a “better” or “best” option.
“We've been trained to think, ‘Hey, if you give three options, consumers are going to choose the middle.’ That's what we all thought. That's what we all knew,” Hunter says. “But here's what we're seeing. Today's consumers, half of them are choosing your bottom option, 30% are choosing the better, and 20% are choosing the best.”
Why is this important? Because you probably considered that middle option your sweet spot for making profit, and now you need to adjust the “good” price to keep margins in line.
“We need to get our pricing right on the good option,” Hunter says. “You need to protect your margins and make sure you're going in with what you need to do. Because if today's consumer is choosing that—whether it's fear of the future, they're maxed out on their credit card, they're afraid of financing or the interest is too high—we got to be a little bit smarter on the good option with our pricing.”
It also might mean you need to offer better training for techs to understand how to sell the value of “better and best” options, or even offer customers easy financing options to make the decision a little easier.
The bottom line?
“Get your Benchmark Report, and see how you're performing compared to others. What you think might be good, may not be the best,” Hunter says. “But don't settle. It's a mind-set thing. You can do this, learn what is happening out there, set your goals, and let's go after it.”
ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.