The Criminally Overlooked KPIApril 20, 2023
In the past couple decades, our industry has focused on the key performance indicators (KPIs) that determine success, such as revenue, gross margin, profitability, labor rate, and equipment rate. By comparing these KPIs with their own financial statements, businesses can determine whether their numbers are in line with industry standards. However, in recent years, companies have been looking beyond these KPIs to understand what could make them thrive instead of survive. Through extensive research and working with some of the best companies in the country (including two companies in California generating $50 million in revenue last year), a new KPI has been identified as a game-changer in the industry.
I’ve traveled over a million miles in the past decade, always looking for innovations. And recently, we’ve discovered the overlooked KPI that has been turning struggling companies into highly profitable ones. I am excited to have been a part of this project and now I teach contractors how to identify and fix this KPI.
Major Coup and Recoup
The KPI in question is the rehash rate. It’s okay if you’ve never heard of this or even if you’ve ignored it, because I’m sure that will change soon. The rehash rate is the percentage of deals recovered out of lost sales. This means that for every lost sale, companies are not just letting the customer walk away and giving up on them, but instead they are implementing an organized process to follow up with them to recoup the sale. The successful companies are focusing on the rehash rate and have found ways to increase it. While most businesses only focus on their close rate and average sale, the rehash rate is what makes the difference to revenue and profitability.
I’m sure you honor the data from most KPIs, including the close rate, sold rate, and the average sale. However, the most important number to your bottom line is the rehash rate. Increasing this number alone has been an eye opener for many companies, including the two California companies I mentioned.
Making the Call
Let’s look at the nuts and bolts for a moment. For example, if a comfort consultant makes eight calls per week, that amounts to about 416 calls per year. If the close rate is 40%, that means the consultant sold 166 deals with an average ticket of $10,000, equating to $1.66 million. Nothing to sneeze at, right?
However, the lost rate is 60%, which means 249 leads are lost. In this example, the average is $400 per lead; that’s $100,000 in wasted marketing money. And that’s just one comfort advisor. What if you have two comfort advisors? What if you have four? The numbers can be staggering when you multiply those results by the number of advisors.
The key to a successful business is not just focusing on the 40% of leads that were converted, but also the 60% that were lost. The rehash rate is the percentage of those lost leads that can be recovered. The goal should be a 20% rehash rate, which means 50 new deals can be made out of the 249 that were not original sales. If each deal is worth $8,000, this can lead to recovering $400,000 in total lost revenue. And when your rehash rate increases, it automatically decreases your cost per lead, meaning you free up some lost marketing money.
Ignore at Your Own Risk
The lost rate and the rehash rate are KPIs that are often overlooked. By focusing only on the close rate, companies miss out on the opportunity to retry the leads they lost. To maximize their business, companies should not ignore this. Unfortunately, not many companies measure these metrics, so we developed the app “Rehash Leads” to help automate the rehash process. What does it do?
The app actually automates the entire rehash process for you. All that needs to be done is to take your lost leads and drop them into the system. The leads are automatically funneled into marketing campaigns that entice them to make a purchase. It may include discounts and other incentives to further motivate them and ways to tip the scale in our favor to gain the sale. We hear amazing feedback from our customers who work with it.
In our line of business, most of our targeted customers are ones who are in the market to purchase. How many of those buyers bought from your competition? Does that matter? Of course it does. What are they doing differently to gain the sale you lost? Is it related to price, service, branding? Someone from your business should be working diligently to figure that out.
We know one way is to increase the rehash rate. By measuring and improving it, companies can turn lost leads into revenue. And couldn’t we all use more revenue?