What KPIs should service-based businesses monitor to ensure lasting success?
For service-based businesses, people are the powerhouse. And top performers are able to empower their people to do the jobs they were hired to do more effectively and efficiently. Helping cement perceived and actual value in the mind of the client before, during, and after any engagement.
Achieving this requires the careful application of modern technologies to both relieve the pressure of administration from your people, and to effectively track performance. As a service-based business, you’ll have a huge array of potential factors to measure in the pursuit of performance optimization. And the first step to improving your operations is to select the ones that are most relevant to your success.
What are the keys to professional service success?
In conjunction with Service Performance Insight, we’ve identified 4 broad drivers for professional service success.
We believe that these drivers should be the basis for any list of KPIs in the service-based industries.
1. Generating growth and winning more business
Winning new business is an ambition for most service-based companies. But more than that, it’s actually necessary to ensure peak performance. In 2019, the number of bids won by the best PSOs (the top five percent) was 5.97 out of every 10 — that’s 23 percent higher than the rest.
This doesn’t necessarily mean that their sales teams are just that much better – it’s an indication of many underlying processes working smoothly behind the scenes. Winning business isn’t just about the sale – it’s about knowing where to compete. Knowing how to ensure your resources are effectively utilized in order to deliver a good service to all your clients without running your people ragged.
In the complex landscape of the modern world, doing this requires the assistance of technology – in the form of automated processes and complete visibility over how every utilizable hour is being spent in your business.
This is especially true in an environment where more and more sales and marketing activities are happening remotely. Success in this area depends on a more structured approach to building pipeline and backlog, winning more bids, and ensuring project profitability.
2. Attracting, retaining and optimizing your talent
The competition for talent has been steadily increasing for the last two decades. And it’s becoming even harder to compete as remote working models force businesses to seek out new ways to recruit, develop, and retain great people.
More than ever, the experience your employees have at work will determine not just their willingness to stick around, but their productivity and utilization. (As their ability to connect and collaborate with your company will be based almost solely on the technology with which you equip them.)
3. Achieving project delivery excellence
Poor project performance is a silent killer of both productivity and profitability. With profit margins dependent on executing within tight margins and clients expecting more than ever, improving is a necessity – and increasingly difficult.
Leading PSOs are deploying modern, integrated professional services automation software and an ERP for professional services to help them break down silos while delivering control and 360-degree, real-time visibility over project plan, schedule, cost and budget.
As we all adjust to the reality of the world after 2020, we expect that project delivery will change radically – incorporating new technologies like cloud-based PSA software. Consultants will manage projects from one source of data and submitting time and expense sheets electronically.
4. Maximizing financial performance and billing with precision
The leading PSOs recorded 26.5 percent net profit in 2019, and made more revenue per employee, billable consultant and project than the rest.
All of these top-performers use a commercial financial and accounting solution integrated with PSA software.
For optimal cashflow planning, it’s vital to have graphically visual insights into future cashflow positions with just a few clicks. And streamlining billing and collections processes — for example, by improving invoice accuracy through automated billing — to reduce disputes, avoid delayed payments and shorten daily sales outstanding (DSO), is also now more critical than ever.
So what does this mean for your business?
Within these four domains of success, we’ve identified sixteen KPIs that really matter to professional service businesses.
Discover what they are – and how Unit4’s solutions can help you to keep on top of them. Download our interactive eBook – How Service Firms Win – now. And start making the decisions across every part of your business from management to finance to frontline consulting that’ll effect how your company performs for the next twenty years today.