“While a team cannot survive a long run
of poor results, neither should a couple
of lucky wins convince the coach or
supporters that all is well.“
“H
ow’s business?” It’s a commonly asked
question and one that many of us find
hard to give a serious or complete
answer to. As a consequence most of us tend to
resort to one of three words – “great”, “okay” or
“tough” – and avoid the in depth analysis of all of
the moving parts. I suspect that most of us have
our profit and loss account in mind when we answer
the question and our response can be broadly
interpreted as “ahead”, “at” or “behind” our budget
or expectations.
In sporting terms this is the same as being asked
“how was the match?” and replying “we lost 2-0”.
The answer is factually correct, but it gives little
indication of the longer-term prospects for your
team; are they moving in the right direction or
getting worse? Does the defence need improving or
is an injured striker’s return the key to improvement?
This is where performance metrics come in; because
while a team cannot survive a long run of poor
results, neither should a couple of lucky wins
convince the coach or supporters that all is well.
The concept of measuring performance in rental
has many similarities with the way you might assess
the performance of a sports team. I have always
found it helpful to think about the business as a set
of linked functions, together with a backroom team.
In rental (indeed in most businesses) we need to
think about finding and winning customers (attack),
sourcing and supplying equipment (midfield) and
dealing with errors (defence). We also need to buy,
develop and sell players (HR) and ensure they stay in
good shape (reporting and analysis).
To feed the business we want to know how many
potential customers we ‘know’ and how many are
actively trading with us. It is also then helpful to
‘bucket’ those customers into their purchase
frequency. A customer who is spending
regularly has a greater lifetime value
than a one-off customer, but there
may be customers amongst the ‘one-
offs’ who can be turned into regular
customers. If an increasing proportion
of your business is coming from ‘one-
off’ transactions you are building a
potentially unstable business. Getting to a view of
relative customer profitability (usually a blend of
volume of transactions and level of price) is also
really useful in making better decisions on which
customers to prioritise.
Once customers are attracted to the business we
need to know how efficiently and effectively we are
serving them. How quickly do we answer the ‘phone/
how many calls are missed?’ How often can we
fulfil the customer request? Do we deliver on time
(to customer’s request)? Do we uplift equipment
promptly after off-hire? How many invoices are
queried or credited?
If things do go wrong how do we deal with
them? How quickly do we respond to equipment
breakdowns/requests for exchange? What is our
experience of workplace injuries and what causes
them? How many customer complaints are received
and how quickly and satisfactorily do we resolve
them?
Staff turnover rates
Our HR backroom team should be measuring and
managing the average length of service of our
‘players’. How many leave each year? How many fit
the description of ‘ideal’ for the role we want them to
play? Are salary/package levels appropriate for the
level we are playing at?
Our business reporting teams should be telling
us about each of the areas of performance we
have identified as key. Additionally they should be
telling us which tactics work best (e.g. which type
of equipment has the best relationship between
reliability, cost and sales and which branches or
regions are producing the best outcomes, so that
best practice can be identified and spread).
These are all really just examples, and pretty
generic and superficial, but the basic point is to view
your business like a high performance sports team
and coach them for better behaviours and tactics.
Whatever you do, don’t just look at the result of
the last game and judge yourself by that alone.
Being a champion is always about wanting to win the
next game, not about dwelling on the result of the
previous one.
IRN
KEVIN APPLETON is a non-executive director of Ramirent and former chief
executive of Lavendon Group. To comment on Kevin’s articles, please e-mail:
Team rental
One way of approaching performance metrics is to view your business as a football team,
with an attack, midfield and defence. Kevin Appleton explains the approach.
11
THE APPLETON COLUMN
IRN SEPTEMBER-OCTOBER 2013
