Fixing your business by the numbers

Sept. 6, 2019
Four ways MSO owner used KPIs to build and operate the business he eventually sold

In a previous columns, I shared some of how John Gagliano carefully tracked key performance indicators (KPIs) to build Collex Collision Experts to more than a dozen locations before selling the business in 2014 for about $45 million. Here’s more of what John recently told me about how he used KPIs to make that happen.

Use KPIs to pinpoint customer service issues. One of the stats John said he kept an eye on for each of his company’s locations was the net promoter score: how likely customers are to evangelize for your business. When you see that dipping, he said, you’ve spotted an issue you need to go in and fix.

“Our stores knew if they had a customer complaint, they had 24 hours to resolve it with that customer,” John said. “If it wasn’t resolved within 24 hours, then the area manager would get involved and call that customer and fix it at that point.”

Use KPIs to give your managers the information they need. Company owners or top-level management aren’t the only ones who benefit from easily-accessible, real-time KPI data. Staff at each Collex location had a dashboard with the numbers they needed to meet that shop’s goals, John said.

“Let's say the goal for that shop is 2,000 production hours for the month, which broke down to 100 per day,” John said. “If at some point they fell behind, and were only at 75 instead of 100, that cell in the onscreen dashboard would turn red. So it was real easy to train the staff, because basically we would ask them to just look at the dashboard that popped up in front of them every day when they logged in. If they saw something in red, they knew to go directly to that. In this case, they’d see when they put the key in the door that morning, they were already behind. Something needed to happen if they wanted to change that.”

That location’s regional manager could also see that red cell, John said, and could check up as needed with that store manager to ask how they plan to catch up.

“He might say, ‘Don’t worry. I have two jobs that are 90 percent of the way, and I’m just waiting for a molding on a third one,’” John said. “So he knows the shop isn’t really behind. But that builds accountability based on data.”

Use KPIs to manage insurer relationships. John told me he recalls a time a certain large insurer came to him with “their numbers” and concerns about “performance.” John said he brought his dashboard of live KPIs up on the computer screen and told them, “Let’s compare numbers because I know mine are right.”

“From that point on, most insurance companies would ask us, ‘What are your numbers telling you,’” John said. “Because they knew we had them daily. Back then, they had to wait until the end of the month for some of their reports.”

Whenever the company was going to enter into a new relationship with an insurer, John said, he would ask what key measurements the insurer planned to use to gauge performance.

“We would build a model for that insurer’s claims based on their KPIs,” John said. “When they came in for a review, we would show them our numbers. If we were struggling in an area, we could say up front that we knew it, and point to all the things we were doing to try to change it. We would have the data, so it allowed us to get ahead of them.”

Use KPIs to help you finance your growth. “The biggest value I had with my KPIs was when I sat down with my bank,” John said. “Whenever I wanted to expand or buy additional locations or equipment, I could show them exactly what we track during the course of each day. Usually they would be blown away.”

When a lender is impressed with your KPIs, John said, you’re likely to find that a potential buyer is as well.

“If it works with your bank, you could probably make an appointment with the consolidators,” he said, laughing.

I’ll share a few more of John’s insights into effective use of KPIs in my next column.

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