1. Welcome to Financial Series #8 Benchmarking – Your KPI’s

2. Your Hosts for Today’s Conference are: Gary Elekes in Nashville, Tennessee Gary Oetker in Plano, Texas

3. Conference Objectives:  Review the significance of Benchmarks and Key Performance Indicators (KPI’s).  Review key KPI’s by market segment  Review how to use Benchmarks and KPI’s to help evaluate financial performance.

4.  Review why and how to use Benchmarks  Review residential replacement & service commandments  Review residential replacement/service/maintenance and IAQ Direct Cost Models  Review other residential replacement/service and maintenance Key Performance Indicators  Review other business segment benchmarks and Key Performance Indicators Agenda for Conference

5. Definitions Benchmarking: The process of comparing a company’s performance against Industry Standards or Key Performance Indicators (KPI’s). Key Performance Indicators (KPI’s): Critical performance measurements as modeled after successful companies in that particular market segment. Commandments The most important Key Performance Indicators.

6.  They help you evaluate your company operations  They allow you to “ASK” why do we do the way we do and to challenge the existing norms  They help quantity and identify what’s happening in operations to focus efforts on the “RIGHT” changes  They help a company to get focused on the task at hand, which is to get better in a given area?  They help create validity to goals Why Use Benchmarks?

7.  Compare your company to double-digit model companies (by market segment)  Focus priorities on what you want to change  Determine what if anything needs to be reviewed  Operations may need to be adjusted to attain certain goals  Always look at KPI’s in groups. Never get focused too much on one number How do You Use Benchmarks?

8. Initial Insights  Each market segment has its own set of KPI’s  For example: revenue,office support staffing & overhead matrix  No two companies are alike; each has its own Business Mix  For example: A 30% overhead structure will work for a residential service & replacement, but is too high for Residential New Construction  If your company serves multiple market segments, combine KPI’s to evaluate office staffing and overhead

9. Residential Commandments

10. Res. Replacement Direct Cost Model Note – Also watch gross Margin dollars per crew-day In conjunction with the Gross Margin Percentage

11. Other Residential Replacement KPI’s  Revenue per Sales Person  Minimum $600,000, Target $1 million or more  Revenue per installation crew per year (2 man crew)  Minimum $500,000, Target $750,000 or more  Average sale $3,800 or higher  Gross Margin Dollars per crew day (2 man crew)  Minimum $1,200  Target $1,500 and greater

12. Res. Service Direct Cost Model

13. Other Residential Service KPI’s  Revenue per service technician  Minimum $100,000, Target $125,000 or more  Average ticket - $150 or more (total sales divided by total tickets)  Gross Margin Dollars per technician per day  Minimum $185, Target $300 or more  Service Agreement sales – 25% or more of all eligible (less warranty, callbacks and Service Agreement calls  Accessory sale or equipment lead – 20% or more of all eligible calls  First time solution rate – 85% to 90%

14. Res. Maintenance Direct Cost Model Pricing Strategy affects GM% range. Should range from 45% to 60% depending on strategy.

15. Other Residential Maintenance KPI’s  Revenue per maintenance technician  Minimum $65,000 per maintenance technician per year  Gross Margin Dollars per technician per day  Minimum $150  Service Agreement sales – 63% or more of Precision Tune-Ups  Service Agreement renewal rate 90%  Accessory sale or equipment lead – 20% or more of all eligible calls

16. Residential Overhead KPI’s

17. Other Department KPI’s

18. Consider Business Mix When Evaluating Overhead KPI’s

19.  Compare your company to the KPI’s  Make assessment  Decide on a list of issues that are creating the poor company performance  Prioritize this list  Consider meeting with key managers and employees before making changes  Make the list public and allow for commentary  Attain buy-in  Make the changes happen Now What?

20. Q uestions & A nswers