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The Importance Of Key Performance Indicators (KPIs)

Originally published: 03.01.07 by Jackie Rainwater

The Importance Of Key Performance Indicators (KPIs)

Tracking KPIs gives immediate feedback on performance.

At Peachtree Heating and Air Conditioning, the Atlanta-based $18-million (more than $20 million expressed in 2006 dollars) residential and light commercial “retail” company I operated from 1990 until 2002, we developed, carefully tracked, and used critical Key Performance Indicators (KPIs). In addition to certain financial information, we used KPIs on a daily, weekly, and monthly basis to help our operations be sustainable, predictable, and highly profitable. Any variances to our performance standards were immediately identified and promptly corrected in order to minimize negative effects to our growth and profitability goals.

Since we dealt exclusively with home-owners and light-commercial building owner-occupants, 100% of our business was retail. Of course, if we had participated in the residential and/or light-commercial construction business or dealt with renters, we would have developed and used business benchmarks critical to those business segments.

Let’s take a look at the KPIs we used that are applicable to the residential and light-commercial diagnostic and repair service, maintenance, replacement, and add-on air conditioning and heating, accessory, and IAQ retail business. They are listed on the Key Performance Indicator table.

KPIs are a highly useful tool; however, while using KPIs and financial information is vitally important

in operating a successful hvac business, we must never overlook the extreme importance of maintaining the right culture in our company (see my June through December 2006 HVACR Business articles on company culture). A passion for taking care of customers and co-workers always will be priority No. 1 in my view. The old football-coaching axiom for winning football games goes, “It’s not the Xs and the Os—it’s the Bills and the Joes,” is equally applicable to running a winning hvac company.

Jackie Rainwater is a 46-year veteran and former owner of Peachtree Heating and Air-Conditioning in Atlanta. He built his businesses on service agreements. 

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