Pass In Training

Revenue within Owned Operations grew from £11,411k (2017) to £11,755k (2018) to £12,605k in 2019.

Ultimately, the number of new customers and the value of their business has exceeded the value of lost customers.

Some of the reasons for this are:

• Improving customer satisfaction scores (91% to 94% to 96%). Whilst this is an arbitrary measure, which accountants tend not to like, it is a good indication that customers value Scour. You need to ensure you are aware of any changes to this figure as it could help explain customer movement.
• Improving customer retention rates (61% to 65% to 68%). As fewer customers leave Scour, there is a good chance there will be an increase in revenue. This does depend on the number of new contracts won and also the value of the contracts lost and won during the year. However, if this trend was to continue and all other factors remaining equal, there would be some growth in revenue.
• Strong reputation in the West & South West regions
• Recommendations from other clients

Whatever the reason for the growth, a key facilitator of revenue growth are the cleaners. The more cleaners that Scour can employ, the more customers they can service and the more revenue they can generate. However, they must ensure their revenue and the number of cleaners are aligned. This will minimise idle time and help to maximise gross profit.

This efficiency is currently best measured by average revenue per employee.

• Improving revenue per employee (£33.9k to £34.6k to £35.1k). The logic is there that the more revenue a cleaner is earning, then overall revenue will increase.
• his figure will increase if there are general price increases (so watch out for this as if prices increased 3% but the average revenue per cleaner increased by less, that doesn't sound quite as good!). 
• It can also increase if idle time decreases. Cleaners are earning for more of the hours they are being paid for and therefore the average revenue per cleaner must increase.
• Finally it could increase if cleaners are working more overtime and you are likely to see an increase in the average cost per cleaner. Short term, overtime may not be an issue, but longer term it could be a problem with recruiting new cleaners or cleaners could get fed up of working extra hours.

When discussing Owned Operations (Revenue) in the examination, you need to include some of the following points, but not all of them as you may waste time. Therefore, you need to select the most appropriate:

• Comment on the KPIs - these are quite likely to be AJ style points
• Are customer gains greater than their losses
• Understand whether the growth is volume driven (most likely - and this will be easy to spot through the number of FTEs) OR if it is price driven (unlikely due to the highly competitive nature of the industry). This is another AJ style point
• Comment on any major customer changes e.g. Tonto may have opened new stores during 2020, have the colleges opened for conferences and events during the holidays?
• Does the revenue change follow the recent growth trend and if it does state this!
• Revenue mix - don't forget to mention the mix!