Data-Driven Decisions: Top KPIs for Shop Success

Used correctly, data is one of the most powerful tools in your shop. It can serve as the basis for all key decisions, and support the difficult ones with factual information rather than relying solely on gut instinct.

Knowing how a team is performing could lead to additional training, new processes, or personnel changes. Seeing a product’s profitability — up or down — could tell you it’s time to step up marketing or discontinue the offer. A spike in conversions of in-house products could justify beefing up your team, while a lack of conversions could argue for keeping a close eye on the business to see if you need to cut hours or let someone go. Data could be just the proof you need to justify an investment in software or a new machine.

Numbers don’t tell the whole story however, and you still have to leave room for human judgment. But if you’re not tracking your numbers systematically and intentionally, you’re missing out on a key ROI indicator.

Data helped our Signarama shop save a surprising amount in non-billable installation hours by showing us a factor we probably wouldn’t have considered without data tracking.

We were experiencing issues with our profitability on installations, so we began tracking re-work, time on site, drive time, and other key indicators. It became clear that we had numerous opportunities for improvement. One of the data points that stood out was that our team members were stopping by a popular home improvement store a few times a week, spending valuable time on these unplanned stops. A few minutes here, a few minutes there — how much could they matter? Quite a lot, as we found when we started tracking the unplanned visits. We went from 139 stops in 2021 to 32 visits in 2022, and only 13 in 2023, saving an estimated 150 non-billable installation hours — about $25,000.

Everyone should be tracking the basics — revenue, expenses, profit, and category-specific sales — but you can get an even more robust sense of your shop’s health with less obvious data points like revenue and profit per employee, sales conversion rates for new vs. repeat customers, average annual revenue per customer, cash flow, and accounts receivable. These are especially valuable for determining new trends and opportunities.

Company culture is also important enough to track. Use surveys and average tenure and turnover rates to gauge employee satisfaction and monitor engagement programs you implement to improve these factors.

Putting Data to Work

One of the most common mistakes businesses make in this area is not that they fail to track things, but that they fail to track the right things. Before counting a single number, decide why you need it. For example, what can/should you expect from a production manager or designer? What will you measure to determine whether they are giving you the outcomes you want, and how will you measure them?

Whatever your KPIs are, they should be monitored at varying intervals and by department to gain an accurate picture of where your business stands and where it’s headed. At our Signarama shop, we have daily, weekly, monthly, quarterly, and annual metrics, and each functional team (sales, design, production, fabrication, and installation) has their own KPIs they track at least weekly. We then have monthly and quarterly all-team meetings where we share the data and celebrate successes.

Don’t just look at what works — look even harder for projects that aren’t making the impact you want, or that you think a specific team or individual should be making. And when roles or responsibilities change, be sure to adjust your KPIs. For example, we recently increased the minimum we want a production manager to handle, from $500,000 to $750,000, because we had hired an administrator to do all the permitting and an estimator to handle the larger, more complex estimates. That freed up a big chunk of the manager’s time to manage production.

Seeing Clearly

It is so important to know how your business is trending and if you are headed in the right (or wrong) direction, but it’s not just a numbers game. There are circumstances and other factors that should also be considered, and you can’t change direction because you got one bad number. Success never runs in a straight line — you have to expect some bumps and valleys, and know when to stay the course or when it is time for a change.

Having a vision, goals, and KPIs allows an owner/manager to have peace of mind. When you know where you want to be and track your progress along the way, you can sleep at night knowing you’re headed in the right direction and making progress to get where you need to go. Metrics allow you to celebrate success with your team and realize when you need to pivot and make changes.

Many entrepreneurs possess great instincts that helped them launch their businesses; metrics and KPIs will enable them to reach the next level.