{"id":16076,"date":"2021-06-07T15:01:42","date_gmt":"2021-06-07T15:01:42","guid":{"rendered":"https:\/\/fieldnation.com\/resources\/rethinking-utilization\/"},"modified":"2025-07-31T08:31:53","modified_gmt":"2025-07-31T13:31:53","slug":"rethinking-utilization","status":"publish","type":"post","link":"https:\/\/fieldnation.com\/resources\/rethinking-utilization","title":{"rendered":"Rethinking utilization and embracing revenue per day as your core KPI"},"content":{"rendered":"

For many service delivery leaders, utilization metrics provide clarity and peace of mind when it comes to the on-the-ground efficiency of their service offerings. But while utilization is an important KPI, it is too often treated as a primary field service success metric that directly reflects profitability.<\/span><\/p>\n

The reality is much messier.<\/span><\/p>\n

After all, it\u2019s possible for high utilization rates and low growth rates to coexist, and this fact should concern anyone relying heavily on utilization data. The truth is that high utilization rates can mask other labor inefficiencies that are eating away at your company\u2019s bottom line, and relying too heavily on these metrics can lead to blind spots and profitability issues that undermine your potential for growth.<\/span><\/p>\n

My goal is to give service delivery leaders a better understanding of a metric problem that is hindering many in the industry \u2013 and suggest a few solutions to this problem.<\/span><\/p>\n<\/a>

A false sense of security<\/b><\/h2>\n

Let\u2019s say you have a utilization rate of 80%. On average, your field service engineers are spending 80% of their billable hours actively addressing the problems your clients have hired you to solve.<\/span><\/p>\n

At first glance, this sounds pretty good: Your data tells you that you are maximizing one of your largest costs: your payroll. But upon closer inspection, this number does not (and cannot) highlight meaningful information that may be impacting your bottom line.<\/span><\/p>\n

Utilization metrics do not (and cannot) highlight meaningful information that may be impacting your bottom line<\/b><\/p><\/blockquote>\n

For example, this utilization rate might not account for extensive travel times that are chipping away at the number of jobs your technicians can work on per day. Additionally, unpredictable customer demand makes resource planning extremely complicated, and this can result in high-value employees handling work that is incommensurate with the fixed cost of their labor. Needless to say, these are massive potential inefficiencies in the delivery process that cannot be captured with utilization.<\/span><\/p>\n

In this way, because it cannot give you a holistic understanding of factors impacting your bottom line, a high utilization rate is not a reliable metric of success \u2013 at least not on its own.<\/span><\/p>\n

A high utilization rate is not a reliable metric of success \u2013 at least not on its own.<\/b><\/p><\/blockquote>\n

Furthermore, the confidence that leadership gets from this high utilization rate can lead to serious profitability issues going unaddressed. In other words, high utilization can lead to a false sense of security.<\/span><\/p>\n

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A $400M MSP\u2019s Profitability Problem<\/i><\/b><\/p>\n

Background<\/strong>: A $400M technology services company we work closely with had a strong backlog and their utilization rate (their primary field service effectiveness measurement) was consistently performing above 85%. Despite all this, they were experiencing profitability issues.<\/span><\/p>\n

Underlying issues<\/strong>: Our analysis revealed some key problems in the company\u2019s service delivery strategy that were negatively impacting its bottom line.<\/span><\/p>\n