Tracking the Top 7 KPIs for Successful Janitorial Businesses

Introduction

Every successful janitorial business needs to track the right Key Performance Indicators (KPIs) to ensure they stay competitive in the market. Without tracking these KPIs, business performance can suffer and profitability can be significantly reduced.

This blog post will cover the top seven KPI metrics janitorial store owners should track and calculate for their business. These seven metrics are cost of goods sold, inventory turnover, customer acquisition cost, customer retention rate, average order value, gross margin, and revenue growth rate. sales.

By the end of this article, readers will have a better understanding of each KPI, the importance of tracking and calculating them, and how to do it.

Cost of Goods Sold

Definition

Cost of Goods Sold (COGS) is a measure of the total cost of acquiring inventory used to generate a store’s sales. This includes the cost of buying, manufacturing, or otherwise obtaining inventory, as well as any associated costs such as shipping and handling.

Benefits of Tracking

Tracking the cost of goods sold can help a store owner better understand the profitability of their business. By understanding the cost of producing and selling a product, a store owner can make decisions to increase profits by reducing the cost of goods sold or increasing the selling price.

Industry Benchmarks

Cost of goods sold is usually measured as a percentage of sales. Industry benchmarks vary by store type, but typically range from 20% to 40% of sales.

How to calculate

Cost of goods sold is calculated by subtracting the beginning inventory balance from the ending inventory balance and adding the cost of any inventory purchased during the period.

Calculation example

For example, if a store had a beginning inventory balance of ,000, purchased inventory during the period of ,000, and had an ending inventory balance of ,000, the cost of goods sold would be calculated as follows:

Tips and tricks

In order to accurately calculate the cost of goods sold, stores must ensure that their inventory records are accurate and up to date. Additionally, tracking the cost of goods sold can help identify areas of potential savings and enable competitive pricing.

Stock rotation

Definition

Inventory turnover is a performance metric used to measure how effectively a janitorial boutique manages its inventory. It is calculated by dividing the total cost of goods sold by the average inventory balance.

Benefits of Tracking

• Tracking inventory turnover can help a janitorial shop identify areas where inventory levels are too high or low, and can also help predict future demand.
• It can help identify areas where the shop may be overstuffed or underfilled.
• It can also help identify where inventory may need to be reorganized to ensure inventory levels remain consistent.

Industry Benchmarks

The industry average for janitorial supply stores is typically between two and three rounds per year. However, this may vary depending on the type of products sold and the size of the store.

How to calculate

Inventory turnover is calculated by dividing the total cost of goods sold by the average inventory balance. The formula is:

Calculation example

For example, if a janitorial supplies shop has total sales of 0,000 and an average inventory balance of ,000, the inventory turnover would be 5 (100,000/20,000 = 5).

KPI Tips and Tricks

• Regularly monitor inventory turnover to ensure inventory levels remain consistent.
• Conduct regular reviews of inventory levels to identify areas where actions may need to be rearranged.
• Analyze inventory turnover data to better understand customer demand patterns.

Customer acquisition cost

Definition

Customer acquisition cost (CAC) is a key performance indicator (KPI) used to measure and evaluate the cost of acquiring new customers. This metric is used to identify the amount of money a business spends to convert a potential customer into a paying customer.

Benefits of Tracking

Tracking CAC is beneficial for businesses as it helps them identify the amount of money spent on acquiring new customers. Additionally, CAC can provide insight into the effectiveness of the customer acquisition strategy, as well as the overall return on investment (ROI) of marketing and advertising efforts.

Industry Benchmarks

The average CAC between industries varies, but is generally between and 0. It is important for companies to compare their CAC with industry benchmarks to ensure that they are spending an appropriate amount on customer acquisition.

How to calculate

CAC can be calculated by dividing the total cost of customer acquisition (such as marketing and advertising costs) by the total number of customers acquired over a given period of time.

Calculation example

For example, if a business spent ,000 on marketing and advertising in one month and acquires 10 customers, their CAC for the month would be 0.

Tips and tricks

• Be sure to track CAC over time to get an accurate picture of the effectiveness of the customer acquisition strategy.
• Compare CAC to industry benchmarks to ensure the company is spending an appropriate amount on customer acquisition.
• Focus on reducing CAC over time to maximize ROI.

Customer retention rate

Definition

Customer retention rate is a metric that measures the percentage of customers who remain loyal to a business over a period of time. This is an important metric to track because it helps companies understand how good their customer service and engagement strategies are and how well their products and services meet their customer needs.

Benefits of Tracking

• Helps identify customer satisfaction levels.
• Provides insight into whether customer service and engagement strategies are working.
• Can help identify areas where customer service and engagement strategies need improvement.
• Provides a quantifiable measure of customer loyalty.

Industry Benchmarks

The customer retention rate varies by industry, but the average customer retention rate across all industries is typically between 70-80%.

How to calculate

Calculation example

For example, if a janitorial boutique had 100 customers at the beginning of the month and 10 new customers during the month, and 90 customers at the end of the month, the customer retention rate would be calculated as follows:

KPI Tips and Tricks

• Regularly monitor the customer retention rate so that changes can be identified and addressed quickly.
• Focus on improving customer satisfaction by providing excellent customer service and regularly engaging with customers.
• Analyze customer data to understand what motivates customers to stay loyal and what makes them leave.
• Encourage customer feedback and use it to improve products and services.

Average order value

Definition

Average order value (AOV) is a key performance indicator (KPI) that measures the average revenue generated from each transaction. This is a valuable metric for tracking the success of a janitorial supply store and evaluating the effectiveness of marketing campaigns, promotional activities, and sales strategies.

Benefits of Tracking

Monitoring average order value helps janitorial shop owners identify customer preferences, adjust pricing, and optimize marketing efforts. This KPI is also an important tool for evaluating the overall performance of a business. Tracking it over time gives insight into customer spending trends and allows store owners to adjust their strategies accordingly.

Industry Benchmarks

The average order value of janitorial supply stores varies widely depending on the size of the business and its customer base. Small stores may have an AOV of to , while larger stores may have an AOV of 0 or more.

How to calculate

The average order value is calculated by dividing the total revenue generated by the workshop over a given period by the total number of orders placed during this period. The formula is:

Calculation example

For example, if a janitorial supplies shop generated ,000 in total revenue from 200 orders in a month, its average order value would be 0. This can be calculated using the formula above:

Tips and Tricks for Tracking

• Calculate the average order value for different customer segments to determine which segments are the most profitable.
• Track the average order value over time to see if there are any trends or changes in customer spending.
• Compare average order value to industry benchmarks to measure your store’s performance.
• Analyze drivers of average order value, such as promotions, discounts, and product mix.

Gross margin

Definition

Gross margin is an important profit metric used to measure a company’s profitability. It is calculated by subtracting the cost of goods sold (COGS) from total revenue and dividing it by total revenue. The resulting figure represents the percentage of total revenue a business earns after deducting the cost of goods sold.

Benefits of Tracking

Tracking gross margin is a key way for janitorial store owners to understand their business performance. By tracking this KPI, owners can identify areas of strength and weakness in their operations. This can be used to inform decisions on pricing, inventory management and cost reduction initiatives.

Industry Benchmarks

The average gross margin for janitorial supply stores is typically around 50%. This may vary depending on the type of products sold and the size of the business.

How to calculate

Calculation example

For example, if a janitorial supplies shop has total sales of 0,000 and cost of goods sold of ,000, the gross margin can be calculated as follows:

Tips and tricks to maximize KPIs

To maximize gross margin, janitorial shop owners should focus on improving efficiency, reducing costs, and increasing sales. Here are some tips for doing so:

• Optimize inventory management to reduce COGs
• Review pricing and adjust accordingly to maximize revenue
• Focus on customer service to increase customer loyalty and repeat business
• Analyze competitors to stay competitive

Sales growth rate

Definition

Sales growth rate is a measure of the rate at which sales increase or decrease. It is calculated by taking the total sales generated in a particular period and comparing it to the same period in the previous year. The resulting percentage reflects the growth or decline in sales over that period.

Benefits of Tracking

By tracking the rate of sales growth, the concierge shop can measure its performance in the market and understand how the business is changing over time. It can help identify areas of strength and weakness within the organization, identify trends and predict future sales.

Industry Benchmarks

The industry benchmark for sales growth rate varies depending on the particular industry and the current state of the economy. Generally, the average sales growth rate for businesses is around 2-3%.

How to calculate

The sales growth rate is calculated using the following formula:

Calculation example

For example, if the janitorial supplies shop had total sales of 0,000 in the current period and total sales of ,000 in the previous period, the sales growth rate would be calculated as follows:

Tips and tricks to improve the KPI

• Analyze sales data to identify any seasonal trends.
• Segment customers and target those most likely to buy.
• Focus on increasing customer retention and loyalty.
• Increase marketing and advertising efforts.
• Improve customer service.
• Introduce new products and services.

Conclusion

The seven KPI metrics outlined in this blog post are essential for all janitorial supply store owners to track and calculate for their business. By tracking and calculating these metrics, store owners will be able to identify areas for improvement, stay competitive in the market, and ensure the highest level of profitability possible.

By having accurate data on each KPI metric, store owners can define and adjust their business strategies to align with their customers’ needs. Ultimately, this will ensure a successful business that is profitable in the short and long term.