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Measure Your Sustainability with

Key Performance Indicators The KPIs Top MSPs Rely on for Success & How to Use Them in Your Business

The KPIs Top MSPs Rely on for Success & How to Use Them Measure Your Sustainability with Key Performance Indicators 2 800.671.6898^ |^ ConnectWise.com Contents

Percentage of

Billable Hours

Average

Resolution Time

SLA

Compliance

Tickets Per

Technology

Resource

Utilization

Tickets Per

Customer

Satisfaction

Rating

Part Two: Service Desk KPIs Part One: Finance KPIs

Effective Rate

Per Offering

Customer

Distribution

Effective Rate

Per Customer

Business Offering

Margins

8 11 7 10 6 9 12 4 5 1 2 3

Revenue Source

Breakdown

PART ONE:

FINANCE

What Really Brings Home the Bacon? How to Calculate:

Total Revenue of Business Source/Total Revenue

Revenue Source Breakdown Finance KPI # Example: $750,000 Recurring Services Revenue $1,000,000 Total Revenue = 75% Why This KPI Matters In a constantly-changing industry, it’s important to create an adaptable, resilient business model. Relying on a single line of business adds risk to your organization. Additionally, not all revenue streams are created equal. A higher priority should be placed on maximizing recurring revenue — a desirable goal is 50% or more of your total revenue sources. It yields a higher return during a business valuation, and recurring services generally have a higher margin.

Example: ($500,000 Revenue from “Silver Package” - $250,000 cost) $500, = 50% Does This Service Make Money? How to Calculate:

(Revenue of Line – Costs of Revenue Line)/Revenue of Line

Business Offering Margins Finance KPI # Why This KPI Matters

Understanding the profitability of each product and/or service you

offer is essential to maximizing the revenue stream bringing the

most to the table. This KPI can guide you when determining what to market and

sell to both your new and existing customers, allowing you to maximize the sale of marginally beneficial items. As a reference, professional services should strive for 30% or more margin, while managed services should set 40% plus as a goal, with intellectual property aiming at over 50%.

Finance KPI #2 Business Offering Margins Continued How to Improve:

Your basic options are to increase price or decrease cost.

Decreasing costs allows you to be in control of the margins, without affecting customer satisfaction. Automating processes within your organization, as well as researching other solution offerings, are two ways

to decrease costs with no negative affect on customers. Keep in mind

that negotiations to increase price or update services can be

made at contract end dates.

Successful Use of This KPI

• Determine which offerings bring the highest gross margin
• Promote, sell, and service the highest margin offerings, often aligned to the intellectual property you offer to customers
• Create higher margins across- the-board for your business Failure to Use This KPI
• Offering products and services that bring in little or no money
• Bottom-line revenue loss
• Potential high COGS
• Poor product offering and/or customer satisfaction

Finance KPI #3 Effective Rate Per Customer Continued How to Improve:

The overall goal is to minimize hours entered for a customer.

Educate and train your clients on the technology you offer to alleviate time wasted in helping them complete mundane tasks or answering unnecessary questions. Ensure you’ve appropriately aligned internal processes around your customer’s needs, with a review of accountability, use of automation, and fully effective onboarding. Successful Use of This KPI

• Focus on customers that bring in highest effective rates
• Higher revenue per labor hours
• Identify low margin recurring revenue customers
• Enable necessary action in education, training, and automation Failure to Use This KPI
• Continual renewal of customers with low effective rate, distracting you from bringing on new customers with a higher effective rate
• Decreased revenue
• Inefficient customer use of technology, leading to additional support hours
• Wasted time marketing and/or selling to the wrong customer (such as industry, niche, size), leading to additional support hours

Example: $400,000 Total Revenue from “Silver” Offering 5,000 Hours Applied = 80% Effective Rate Where Should I Invest My Time? How to Calculate:

Total Revenue for Offering/Hours Applied to Offering

Why This KPI Matters This indicator can reveal the effectiveness of product development, and lead to better product management. Service offerings are often initially

based not only on analytics, but also assumptions and “gut feelings”. Once

data is available, however, there’s now a clearer understanding

of the best level of service for you and your customers. You

can make fact-based decisions about which service offerings to prioritize, provide, or even remove from your catalogue. Effective Rate Per Offering Finance KPI #

Example: $150,000 Revenue from Client A $1,000,000 Total Revenue = 15% Who’s Your Big Fish? How to Calculate:

Revenue from Customer/Total Revenue

Customer Distribution Finance KPI # Why This KPI Matters Resilience is essential to success in a changing industry. Having a sizable percentage of revenue

segmented to a small number of customers puts your financial stability at risk. You need to

prioritize which clients are most important to keep happy, and be prepared

to rebound quickly if any of your customers do leave.

How to Improve:

You guessed it… bring on more clients!

Successful Use of This KPI

• Healthy customer contribution breakdown that removes unwanted risk from revenue streams Failure to Use This KPI
• Unhealthy customer distribution, creating risk

PART TWO:

SERVICE DESK KPIs

Service Desk KPI #6 Resource Utilization Continued How to Improve:

Implement a system to track employee utilization, configure

automated reports that are emailed for review, and

manage work capacity with

dispatch.

Successful Use of This KPI

• Higher revenue
• ROI on employee wages
• Ticket resolution times can be minimized if employees are properly utilized. Failure to Use This KPI
• Loss of revenue
• Paying employees for non-revenue generating tasks
• Overstaffing
• Slow ticket resolution: High utilization rates can lead to delayed tickets, while low utilization rates may mean your employees aren’t moving from one task to the other
• Customer satisfaction decreases as ticket resolution times are increased

Example: 75 Tickets Met SLA 100 Total Tickets = 75% SLA Compliance Service Desk KPI # Why This KPI Matters Service Level Agreements (SLA) define a standard of performance, which sets up appropriate expectations for your customers and your help desk team. They can also reveal a need for improvement in internal processes and tools. SLA compliance is key to customer satisfaction; businesses want to deal with minimum downtime – and that means they are often willing to pay a higher rate for better SLA times. Average rate for number of service requests that met SLA is 80% or more; best in class is an impressive 99.999%. Are You Meeting Customer Expectations? How to Calculate:

Service Requests that Met SLA Requirements/Total Tickets

Example: 30 Billable Hours Entered 40 Hours = 75% Is Your Time Spent Making Money? How to Calculate:

Employee Billable Hours/Total Hours

Percentage of Billable Hours Service Desk KPI # Why This KPI Matters

If the main goal of your business is making money, spending

time on non-billable work is not the way to get there. Your

teams should be entering as many billable hours as possible every day to ensure you bring in the revenue needed. This can be confusing for some service providers for two reasons: they think work covered by a contract isn’t “billable”, and they don’t want technicians entering time simply to justify their hours working. These issues are easily resolved: in reality, the majority of work applied to a contract should be considered billable, and a reporting mechanism can automatically track utilized vs. billable technician time. As a guide, average employee billable hours out of total time is between 65-75%, while best in class ranks above 75%.

Service Desk KPI #8 Percentage of Billable Hours Continued How to Improve: Configure your contracts to automatically cover/not cover certain types of work. Train your team to understand that time against contracts is billable,

and conduct daily or weekly reviews of time entries to be sure

nothing is falling through the cracks.

Successful Use of This KPI

• Higher margins
• Accountability for employee time
• Higher billable amounts for employees Failure to Use This KPI
• Lower revenue margins
• Loss of actual revenue
• Potential “hidden” time