Key performance indicators (KPIs) are an essential part of any business in any industry. They’re the ways that your business measures how well it’s doing. Identifying the right KPIs is essential when determining how well your business is meeting its goals.
What Is a KPI and How Is It Used?
The fundamental principle underlying KPIs is that you need something measurable. Business isn’t something you should be simply estimating or doing by feeling. You need to know what works and what doesn’t if you’re going to succeed.
Whether you’re looking into AV inventory rental business KPIs or camera rental business KPIs, the common factor is that the things they represent are going to be solid and measurable.
There shouldn’t be any room for ambiguity when dealing with KPIs because they play an essential role in defining where you are and showing where you need to go.
How Do KPIs Improve a Rental Business?
A business needs a plan to move forward, and that plan will be made up of goals. If you want to get the best results, these goals can’t be anything vague like “improve rentals.” They need to be actual numbers, something you can measure and relate to your company’s success.
By evaluating clothing rental business KPIs or furniture rental business KPIs, you set yourself up for success. You’ll be able to more clearly identify where issues and opportunities lie and continue to grow your business into the future.
What Are the Top 5 KPIs in Any Rental Business?
Return on Investment
Return on investment (ROI) is a KPI that sees use across many different industries but is essential to rental businesses as well. ROI is the profit from your investment divided by the input costs. It demonstrates how much money you’ve made compared to how much you’ve spent.
Tool rental business KPIs — and KPIs for any rental business — should always include net profit. It’s a measurement of how much money you’re making after all expenses. You take your revenue and subtract utilities, rent, wages, equipment purchases, taxes, and anything else to find out how much you’ve made.
Time to Break Even
Time to break even is important for any rental business. It tells you how long any piece of equipment takes to pay for itself in rental income. Divide your fixed costs by the rental income per year, minus maintenance costs for that piece of equipment.
Common staging rental business KPIs include stock-to-rental ratio as one of their most important metrics. This KPI indicates how much of your inventory you’re actually renting. It’s the total number of pieces of equipment you have divided by the number that are rented at any time, and you want it to be as low as possible.
Rental businesses have significant maintenance costs. The income to maintenance ratio shows whether your revenue can cover your maintenance costs. It’s your income divided by your maintenance costs over any period.
What Are the Top 5 KPIs for Sales and Marketing in Any Rental Business?
Change in Rental Business Value
Is your business worth more now? Take your total assets minus your debts at any point and compare them at different points in time. Has your business been growing consistently?
Movie rental business KPIs and other rental business KPIs should include rental growth, which is determined by taking the difference in revenue between this year and last year and dividing it by last year’s revenue. Hopefully, you’re doing 10% growth or better.
Customer Acquisition Cost
Your customer acquisition cost shows how much you’re paying to get new customers. If you’re doing social media advertising or radio advertising, these both have costs. The customer acquisition cost is the cost of advertising divided by the number of customers that advertising brings in.
Marketing Revenue Attribution
Marketing revenue attribution is the measure of how much of your marketing spend goes to securing which sales. You can determine this by finding out how each customer found you and dividing the totals by total market spend.
This KPI measures how many of your visitors become paying customers. It’s the total traffic to your rental business website divided by the number of sales that you generate. You want to keep it as low as possible.
What Are the Top 5 KPIs for Customer Satisfaction in Any Rental Business?
Keeping your customers satisfied means more return business, so keep a close eye on these customer satisfaction KPIs:
Customer Lifetime Value
Customer lifetime value refers to how much revenue you expect from each customer. It’s your total revenues divided by the number of individual customers and is one of the most important truck rental business KPIs.
Social Media Traffic
Your social media traffic numbers can indicate how your customers react to your business, and these values are available through any social media platform.
Net Promoter Score
You can obtain this KPI by asking customers how likely they are, on a scale of one to ten, to recommend your business to a friend and average the results.
You can find customer reviews for your business on multiple platforms, and tracking those scores is a great way to gauge overall satisfaction.
Customer Churn Rate
This rate is the percentage of your customers who are first-time customers. A lower churn rate indicates more repeat business.
Construction Equipment Rental Business KPIs
Your annual rental revenue is divided by your acquisition costs, indicating how well your inventory is being used to drive revenue.
The number of days a piece of equipment is rented is divided by the days it is available, showing you which pieces of equipment are in demand.
Rental rate is also important; the total revenue is divided by the number of individual contracts, indicating whether the equipment is rented for short or long contracts.
Event and Party Rental Business KPIs
Your total income is divided by maintenance costs. This KPI demonstrates the toll that maintenance has on your business.
Property Acquisition Costs
When renting facilities, keeping close track of property acquisition costs is an absolute must.
Reservation sources are also important. This metric reflects an understanding of what percentage of rentals come from which sources and is key to growing your event rental business.
Water Sports Equipment Rental Business KPIs
Many decisions have to do with the age of your water sports equipment and knowing the average fleet age can help point you in the right direction.
The ratio of the committed contract length is divided by the potential rental days for each unique contract.
Average maintenance downtime, or how long water sports equipment is being taken offline on average for repairs, is another important KPI.
What Software Tools Should I Use to Manage KPIs?
The most important thing when implementing KPIs is to track them accurately and reliably. Quipli can provide you with the versatile rental business management software you need to do just that. Reach out to Quipli today to schedule a demo for your business!