J. Miller and Company Blog

August 5, 2008

1 Vital Number – the CSNPI!

Metrics are my mania – there isn’t a number I don’t like, zero is a miracle, I’m especially fond of ratios and prime numbers are simply the best!  Then there’s that deliciously infinite Pi.  The complexity of number theory is astounding.  I wish I had more time to try to understand it better.

However when it comes to usefulness, simple is usually better.  Especially in remodeling where the most important measurements are two:  customer satisfaction and net profit.  My first Benchmark column in Remodeling Magazine September of 2005 focused on this relationship, called the CSNPI (pronounced “Snippy”). 

If customer satisfaction remains high, gross profit can slowly increase barring any calamitous economic circumstances outside our normal span of control (yes, kind of what’s going on now).  And with gross profit increases should come increases in net profit — not in a one to one fashion but increased nonetheless.

Build an index of the two to represent your company’s goal and compare that monthly to your company’s actual performance.

So if you shoot for a customer satisfaction score of 4 out of 5 and net profit of 8, your Snippy would be 12.  Anything greater than 12 would be cause for celebration; anything less would be cause for analysis and correction.

Read it at http://www.remodeling.hw.net/industry-news.asp?sectionID=149&articleID=186144

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