The Top 7 Metrics You Should Be Tracking as a Home Improvement Business Owner – If You Really Want to Grow Your Business

A lot of contractors talk a big game about scaling their home improvement business to the “next level”. But when you ask them about their key performance indicators (KPIs) – they seem lost. 

It is hard to blame them because technology has historically lagged behind in the home improvement industry. Businesses have had to piecemeal software together, run multiple Excel spreadsheets, and enter formulas, and sometimes, they still can’t get the numbers they need to operate efficiently. 

That’s why it’s critical for home improvement businesses to arm themselves with detailed reporting that can tell you what’s working and what’s not. Once they have that, they can know where to focus their time and money to grow the business faster and more profitably.

If you have lofty goals for your home improvement business, keep reading to find out the top 7 metrics you should be tracking. 

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1. Customer Acquisition Cost (CAC) 

You hear it often these days – “Leads are so expensive!” As a result, it can be tempting to hyper-focus on Cost Per Lead (CPL). CPL measures how much it costs to generate a lead (someone who shows interest – fills out a form, calls in, etc.).

CAC, on the other hand, measures how much it costs to acquire a paying customer.  It’s the total you’re spending – ads, sales commissions, marketing tools, events, all of it – to land one new customer. 

If your CAC is too high, your profit margins will start to shrink. And worse, you might be scaling something that’s not actually profitable. 

The fix? Start tracking CAC by lead source. If you’re paying $400 to get a $10,000 job through one channel and $2,000 for the same job from another, you know where to double down (and which marketing channel to cut). 

Many home improvement CRMs do not track CAC for you. If you have to pull out spreadsheets and do the math yourself, the calculation is:

‍They don’t know what their leads are costing them. They’re not sure which marketing channels are working. And they have no clue if they’re actually making money on a job until weeks – or even months – later.

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2. Net Sales per Lead Issued

Another metric that’s hard to find in most contractor CRMs is Net Sales per Lead Issued (NSLI). While some home improvement salespeople may want to brag about their closing rate, the business owner should be focused on NSLI. 

This number shows how much revenue you’re pulling in for each lead handed to your sales team. If it’s low, you’ve either got a quality problem with your leads, a closing problem with your salespeople, or both.

If you want to grow your home improvement business while maintaining healthy profit margins, NSLI is a critical KPI. 

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3. Appointment Set Rate

With leads for home improvement reaching sky-high costs, it’s essential that as many of those leads as possible turn into set appointments. This is your appointment set rate. 

If you’re paying a fortune for leads – but your appointment set rate is low – it may be time to scale back your advertising spend while you fix the source of the issue. If your call center, admin, or CRM is blocking leads from turning into set appointments, that will drain your profitability and make it impossible to compete in your market. 

Tracking your appointment set rate regularly will help you determine if you need a new call center script, a better-trained admin, or a CRM that better supports “speed-to-lead”.

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4. Demo Rate

Once the appointment is booked, your CRM should then be calculating the demo rate for you. This number tells you whether your leads are truly interested in your company’s services, or if they’re just kicking tires. 

After all, a booked appointment means nothing if your sales team shows up and the prospect no-shows, ghosts you, or cuts the meeting short. 

Your demo rate is the percentage of issued leads that actually sit through a product demo or in-home consultation. It’s a clear sign of engagement and intent. 

If you discover that you have a low demo rate, it’s time to investigate the quality of your leads, as well as review your pre-appointment checklist. 

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5. Close Rate

Now for the sales team’s favorite metric – close rate, also known as conversion rate. This number tells you how well your sales team is closing deals. Ideally, you can see this conversion rate in your CRM, broken out by salesperson. 

A low close rate across the team may be an indication of a pricing issue, a market issue, or a gap in training. And if one person is dragging down the conversion rate, you can then work on training that individual team member. 

It can also be helpful to see how this metric changes by product and over time. With the seasonality of the home improvement business, it’s critical to see how your close rates fluctuate during various parts of the year. 

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6. Lead Sources

Not all lead sources are created equal. As mentioned in an earlier example, you could be spending $400 per lead to close a $10,000 project, and you could be spending $2,000 to close a project of the exact same price. 

NSLI will alert you to overarching issues, but tracking performance by lead source will help you nip an issue in the bud when it arises, and you can capitalize on those lead sources that are performing above average. 

The key is to take action in each of these cases immediately. You can only do that when your home improvement CRM automatically tracks this data for you. 

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7. Profit Margin

At the end of the day, this is the most important metric. Profit margin tells you how much you’re keeping after all your costs – labor, materials, overhead, etc. In the home improvement industry, you work way too hard to not be taking home a healthy profit. 

Unfortunately, many contractors are left guessing their profit until an end-of-month or end-of-year meeting with their bookkeeper. By then, it’s too late to do anything about what’s happened in the past.

Instead, Builder Prime makes tracking real-time profit margin – and making adjustments – easier than ever. With our sales and estimating features, you can build accurate estimates using Builder Prime’s Price Book that automatically calculates labor, materials, and your gross profit margin — right on the spot.

So instead of “ballparking” your way through bids, you can price jobs with confidence and protect your bottom line.

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Become Fanatical About Knowing Your Numbers 

If you’re truly serious about growing your home improvement business, tracking these 7 metrics isn’t optional. It’s essential. 

And if you’re tired of pulling multiple spreadsheets and using your calculator just to get one of these KPIs, it’s time to explore an all-in-one business management software solution like Builder Prime. 

Home improvement businesses are complicated, containing many departments that can become silos if they don’t have centralized reporting that provides the business owner and management with a universal source of truth. 

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With automated reporting, real-time tracking, and estimating tools that keep your margins front and center, Builder Prime is designed to empower home improvement businesses to not only know their numbers – but leverage them to reach new levels of success. And when your reporting tells you which marketing and sales actions are creating and converting leads,  you can spend less time guessing and more time investing in the things that will give you the most bang for your buck.

To find out more about how Builder Prime’s reporting features and estimating tools can provide you with the clarity to boost your profit margins, schedule a demo with our team today. We would love to show you how easy it is to pull all of these metrics, and how you can start using them to grow your home improvement business.