12 Equipment Rental KPIs and Metrics You Should Track to Ensure Success

Tracking revenue per customer is a key equipment rental KPI that measures how much each customer spends when they rent from you. This is crucial for understanding how effectively you’re increasing the value of each transaction through techniques like upselling, cross-selling, or offering additional services.

How to calculate:
Revenue Per Customer = Total Rental Revenue / Number of Unique Customers

Why it’s important:
It’s not just about getting more customers— it’s about getting each customer to spend more. Tracking revenue per customer helps you maximise the value of each interaction. This is especially useful in identifying opportunities for upselling or creating packages that drive additional revenue.

Actionable steps:

• Implement upselling techniques: Encourage customers to rent complementary items or upgrade to higher-end products to increase the transaction value.
• Offer bundle deals: Creating bundled packages for commonly rented items helps increase the total spend per customer.

Technology in action:
Your rental software can automatically apply discounts for rentals over three days or for customers renting multiple items, such as more than three bicycles. It can also prompt customers to add safety equipment like helmets or protective gear, increasing the overall spend per transaction without additional staff effort. Coupons can also be used targeted promotions that encourage higher-value rentals.

A snorkel and scuba rental shop introduced a loyalty programme, offering discounts after multiple rentals, which significantly increased repeat business. They also created package deals that combined wetsuits, flippers, and snorkels at a discounted rate. By promoting these packages to customers both in-store and online, they boosted their overall revenue per customer. Additionally, the shop used coupons to target regular customers with seasonal offers, further increasing their average transaction value while enhancing customer loyalty.

Average rental duration is another essential equipment rental KPI that tells you how long customers are keeping your equipment. This is crucial for inventory planning, as it gives you insight into turnover times and helps you manage equipment availability.

How to calculate:
Average Rental Duration = Total Rental Days / Number of Rentals

Why it’s important:
Knowing how long customers typically rent your equipment allows you to better manage inventory. Shorter rental durations mean higher turnover and potentially more rentals, while longer durations may indicate you need more equipment on hand to meet demand.

Actionable steps:

• Optimise rental periods: Offer flexible rental durations to meet customer needs, ensuring high-demand items are always available.
• Adjust pricing based on demand: Use this data to adjust pricing for shorter or longer rental periods, helping you balance demand and profitability.

Technology in action:
Rental software can track average rental durations, helping you predict future demand and adjust inventory levels accordingly. This also helps with forecasting and resource planning, especially during peak seasons.

A camping gear rental shop tracked the average rental duration of their tents and discovered that rentals spiked during the holiday season, with most customers keeping the equipment for an extended period, averaging 7-10 days. With this insight, the shop adjusted their inventory management by stocking more tents ahead of peak holiday periods.

They also introduced tiered pricing, offering discounts for customers renting for more than a week, encouraging longer rentals and increasing profitability. As a result, the shop not only ensured they had enough tents to meet demand but also maximised revenue by optimising rental periods based on real customer behaviour.

Your rental yield is a vital equipment rental KPI that calculates how much revenue each piece of equipment generates relative to its value. This metric helps you understand which items are your top performers and which ones might need to be retired or repositioned.

How to calculate:
Rental Yield = Total Rental Revenue / Total Inventory Value × 100

Why it’s important:
Knowing your rental yield allows you to focus on the equipment that generates the highest profit margins. By monitoring this KPI, you can identify underperforming assets and either adjust their pricing or remove them from your inventory.

Actionable steps:

• Invest in high-yield equipment: Focus on acquiring more equipment that delivers a higher rental yield.
• Reprice or retire low-yield items: If certain items aren’t performing well, consider adjusting their pricing or phasing them out.

Technology in action:
Modern inventory management software can automatically calculate rental yield, helping you spot trends and make decisions about your inventory without manual effort.

A snow gear rental company noticed that their snowboards generated a higher yield compared to skis. By focusing their marketing on snowboards and gradually reducing ski inventory, they significantly increased profits during peak winter months. They also adjusted pricing to match demand and introduced bundle deals for snowboard rentals, further boosting their revenue. This strategic shift allowed them to maximise the profitability of their inventory without adding more equipment.

The stockout rate measures how often you’re unable to meet customer demand because your equipment is unavailable. This equipment rental KPI helps you avoid missed revenue by ensuring that high-demand items are always in stock.

How to calculate:
Stockout Rate = (Number of Stockouts / Total Stock Checks) × 100

Why it’s important:
Stockouts can result in lost revenue and frustrated customers. Keeping track of your stockout rate ensures you have the right amount of inventory to meet demand, especially during peak seasons.

Actionable steps:

• Use demand forecasting tools: Historical data can help you predict future demand and adjust stock levels accordingly.
• Maintain optimal inventory levels: Ensure that you have enough of your most popular items in stock, especially during busy times.

Technology in action:
Rental software integrates with demand forecasting tools, helping you anticipate high-demand periods and ensure you have the right stock available when it’s needed.

Customer satisfaction and Net Promoter Score (NPS) are key indicators of how likely your customers are to recommend your business to others. A high NPS can drive organic growth through word-of-mouth referrals.

How to calculate NPS:
NPS = % Promoters − % Detractors

Why it’s important:
Satisfied customers are more likely to return and recommend your business. By tracking NPS, you can gauge customer loyalty and identify areas for improvement in your service offering.

Actionable steps:

• Improve customer service: Focus on areas where customer feedback suggests improvements are needed.
• Encourage referrals: Use customer satisfaction data to identify happy customers who are likely to recommend your business.

Technology in action:

Rental management software can automatically send out customer satisfaction surveys and track NPS, providing real-time insights into how customers feel about your service. Smart reviews can enhance this process by sending a link to customers after their rental. Customers who rate the service 4-5 stars are directed to your linked Google Business profile, encouraging positive public reviews, while those who rate 1-3 stars are directed to you privately, allowing you to resolve any issues directly. This helps maintain your online reputation and improve customer loyalty.

A lawnmower rental business used NPS surveys after each rental to gauge customer satisfaction. They discovered that customers highly valued their free delivery service, prompting them to expand this offering, which led to an increase in NPS and more repeat business.

Additionally, by using a rental software with smart reviews, they automatically directed 1-3 star reviews to their portal for quick resolution, while 4-5 star reviews were posted directly to their connected Google Business profile or Trustpilot account. This approach not only improved customer retention but also boosted their online visibility, attracting new customers.

Return on investment (ROI) is a key equipment rental KPI that measures how profitable your rental business is, taking into account the costs of purchasing and maintaining equipment.

How to calculate ROI:
ROI = (Total Rental Revenue − Inventory Costs) / Inventory Costs × 100

Why it’s important:
Tracking ROI helps you ensure that your equipment is generating enough revenue to justify its cost. It also helps you decide when to retire or replace certain items.

Actionable steps:

• Retire unprofitable equipment: Focus on high-ROI items and phase out underperforming ones.
• Monitor maintenance costs: High maintenance costs can erode your ROI, so balancing maintenance expenses is crucial.

Technology in action:
Some rental softwares can track ROI automatically, helping you identify which items are no longer profitable and when it’s time to invest in new equipment.

An ATV rental company used ROI tracking to identify older models that were costing more in repairs than they generated in revenue. After retiring these models, they invested in newer ATVs with lower maintenance costs, which significantly improved their overall ROI. By using rental software to monitor these metrics in real-time, they were able to make faster decisions, reducing downtime and increasing customer satisfaction with more reliable equipment. This strategy not only boosted their profits but also attracted more repeat business due to the higher quality of their fleet.

Maintenance costs can eat into your profits if not managed properly. Tracking maintenance costs as a percentage of revenue helps you ensure that repairs and upkeep aren’t negatively impacting your bottom line.

How to calculate:
Maintenance Costs as a Percentage of Revenue = Total Maintenance Costs / Total Rental Revenue × 100

Why it’s important:
This KPI helps you keep overheads under control, ensuring that the revenue generated by each piece of equipment outweighs the costs of maintaining it.

Actionable steps:

• Schedule regular maintenance: Preventive maintenance can reduce costly breakdowns and prolong the life of your equipment.
• Track high-maintenance items: Identify items with high maintenance costs and evaluate whether it’s more cost-effective to replace them.

Technology in action:

Rental software can automate maintenance schedules and track associated costs, ensuring you stay on top of repairs without affecting equipment availability. When the rental software integrates with repair software, items needing repairs are automatically sent to the workshop for servicing. As soon as an item is flagged for repair, it disappears from the rental inventory to prevent further bookings. Once repairs are complete, the item is returned to the rental inventory, ensuring efficient management without disrupting rentals. This automation helps reduce downtime and ensures equipment is always in top condition.

A scuba gear rental business tracked maintenance costs on their wetsuits and tanks using rental software. They noticed that older gear consistently required more frequent repairs, which was eating into their profits. By phasing out these high-maintenance items and investing in newer, more durable equipment, they reduced maintenance costs and increased overall revenue. Additionally, the integration between their rental and repair software ensured that any gear needing repairs was quickly serviced, preventing it from being rented out and ensuring availability of safe, reliable equipment for customers.

Inventory ageing measures how long each piece of equipment has been in your stock. This equipment rental KPI helps you track equipment that may be becoming obsolete or less desirable over time.

Why it’s important:
Older inventory may become less attractive to customers, especially if new models are available. Tracking the age of your inventory helps you avoid holding onto outdated equipment that isn’t generating revenue.

Actionable steps:

• Offer promotions for older items: If certain equipment has been sitting idle for too long, offer discounts or bundle it with other rentals to encourage usage.
• Retire outdated equipment: Phasing out old inventory ensures you’re offering customers the latest, most desirable options.

Technology in action:
Some inventory management systems track the age of each item, notifying you when it’s time to either repair, sell or retire older pieces of equipment.

The rental cancellation rate measures how often customers cancel their bookings. This equipment rental KPI helps you track lost revenue and inefficiencies in your booking process.

How to calculate:
Rental Cancellation Rate = Number of Rental Cancellations / Total Number of Rental Agreements × 100

Why it’s important:
High cancellation rates can indicate issues with your booking process, pricing, or customer expectations. Reducing cancellations helps you optimise inventory management and avoid lost revenue.

Actionable steps:

• Improve the booking process: Make sure your booking system is user-friendly and offers clear communication to reduce cancellations.
• Update cancellation policies: Consider implementing stricter policies or fees, especially during peak times, to minimise last-minute cancellations.

Technology in action:

Rental software can streamline the booking process with features like automated confirmations and reminders, reducing the likelihood of cancellations. It also comes with an online booking widget, making it easy for customers to reserve equipment directly from your website. Additionally, the software allows businesses to take rental deposits, helping secure bookings and reduce the risk of last-minute cancellations.

A camera rental company noticed a high rate of cancellations for specialised equipment like high-end lenses and drones. To address this, they upgraded their booking system to include automated reminders and confirmations, ensuring customers were well-informed about their bookings.

They also introduced a flexible payment plan that allowed customers to secure bookings with a deposit, reducing last-minute cancellations. These changes led to a 20% reduction in cancellations, helping the company better manage their inventory and increase revenue by minimising disruptions.

Inventory holding costs include storage fees, insurance, depreciation, and the opportunity cost of unused equipment. This equipment rental KPI helps you ensure that idle inventory isn’t draining your resources or negatively impacting your profitability.

How to calculate:
Inventory Holding Costs = Storage Costs + Depreciation + Insurance + Opportunity Cost

Why it’s important:
Holding inventory that isn’t being rented costs money, whether through direct storage fees, depreciation, or missed opportunities for revenue. By monitoring and minimising these costs, you can ensure that your equipment is generating income rather than sitting idle. Keeping inventory levels optimised can help you operate more efficiently and protect your bottom line.

Actionable steps:

• Optimise stock levels: Ensure you’re only holding inventory that is in demand. Avoid overstocking and regularly review which items are underperforming.
• Evaluate storage solutions: If you have excess inventory that isn’t frequently rented, consider reducing storage costs by downsizing your storage space or using lower-cost storage alternatives.
• Sell or repurpose idle equipment: If certain equipment isn’t being rented often, sell it to recoup costs or repurpose it for new rental packages.

Technology in action:
Rental management systems can track holding costs in real time, allowing you to see which items are sitting idle and draining resources. This helps you make informed decisions about when to downsize inventory, adjust pricing, or sell off underused items.

This solution allowed them to pay only for the space they needed at a lower rate compared to their regular storage costs. By carefully managing how much inventory was stored off-site and how much remained readily available for sporadic rentals, they reduced their overall holding costs by 15%.

A camping gear rental business faced high holding costs during the off-season when demand for their tents, backpacks, and other outdoor equipment dropped significantly. Instead of keeping all their inventory in-house, which would continue to incur storage fees and insurance costs, they decided to outsource the storage of their excess equipment to a third-party facility. 

Tracking customer success metrics like Lifetime Value (LTV) and Customer Acquisition Cost (CAC) is crucial to understanding long-term growth and profitability. These KPIs provide insight into the value of each customer and how much it costs to acquire new ones.

How to calculate LTV:
LTV = Average Revenue Per Customer × Customer Lifetime

How to calculate CAC:
CAC = Total Marketing Costs / Number of New Customers Acquired

Why it’s important:
A high LTV means customers are providing recurring revenue, while a low CAC suggests you’re acquiring new customers efficiently. Together, these metrics help you gauge the effectiveness of your marketing efforts and the value of your customer relationships.

Actionable steps:

• Increase customer retention: Focus on building long-term relationships with customers to increase LTV.
• Optimise marketing spend: Evaluate your marketing efforts to ensure you’re acquiring customers cost-effectively.

Technology in action:
Rental management platforms can calculate LTV and CAC by integrating with your sales and marketing systems, allowing you to track customer success metrics in real time.

A medical equipment rental business tracked their CAC and LTV to evaluate customer acquisition and retention. They realised that customers who rented equipment for longer periods or chose recurring rental agreements naturally had a higher LTV, as they generated more revenue over time. To leverage this insight, they adjusted their marketing strategy to promote long-term rental discounts and recurring rental options, encouraging more customers to opt for these plans. This not only increased overall profitability but also reduced their CAC, as customers were more likely to return for future rentals, improving the efficiency of their marketing spend.

The future of rental inventory management is being shaped by powerful technologies that enable businesses to operate more efficiently and respond proactively to market demands. By adopting emerging trends such as predictive analytics, cloud-based inventory systems, and demand forecasting, rental companies can not only optimise their operations but also gain a competitive edge in a fast-evolving industry.

How these trends impact rental businesses:

• Predictive analytics: Using advanced data analysis, predictive tools help businesses anticipate customer demand by examining historical rental patterns and market trends. This technology allows you to avoid stockouts, schedule maintenance at optimal times, and adjust pricing dynamically based on expected demand. By making data-driven decisions, you can ensure your inventory is being used to its full potential.
• Cloud-based inventory systems: With cloud-based systems, your inventory is accessible in real-time from anywhere, enabling seamless management across multiple locations or remote teams. These systems streamline operations by reducing manual processes, improving accuracy in stock levels, and allowing you to scale your business more efficiently as demand fluctuates.
• Demand forecasting: Leveraging historical data and market trends, demand forecasting tools enable you to anticipate future rental needs. This helps you maintain the right inventory levels, ensuring popular items are available when needed while reducing the costs associated with overstocking. By aligning inventory with demand, you can increase profitability and customer satisfaction.

Businesses that embrace these technologies can not only enhance efficiency and reduce operational costs but also gain valuable insights into customer behaviour and market trends. This allows you to plan for peak seasons, optimise pricing strategies, and invest in the right equipment at the right time, ensuring long-term growth and sustainability.

The 4 P’s of KPI are key components that make Key Performance Indicators (KPIs) effective in improving business performance. They ensure that KPIs are clear, actionable, and aligned with business goals. Here’s an explanation of each:

1. Purpose: This refers to why the KPI is being tracked. It defines what the business hopes to achieve by monitoring the KPI and how it relates to larger objectives. For example, the purpose could be to increase customer satisfaction or improve operational efficiency.
2. Performance: This represents the actual metric or value being measured. It shows the data or outcome being tracked, such as sales numbers, equipment utilisation rates, or customer retention rates. Performance answers the question of what specific result is being measured.
3. Process: The process refers to the method used to gather, monitor, and analyse the KPI data. It involves outlining how the data will be collected, what tools or systems will be used, and how often the KPI will be reviewed. This ensures the accuracy and usefulness of the information.
4. People: This refers to the individuals or teams responsible for tracking the KPI and acting on the insights. It identifies who will be accountable for monitoring the KPI and ensuring that necessary improvements are made based on the results.

By having a clear understanding of these four elements: purpose, performance, process, and people, businesses can effectively use KPIs to guide decisions, improve strategies, and achieve their objectives.

Tracking equipment rental KPIs is essential for the long-term success of your business. By focusing on these 12 key metrics, you can optimise operations, improve customer satisfaction, and increase profitability. Integrating advanced rental inventory software allows you to streamline these processes, making data-driven decisions that enhance efficiency and performance.

Hubtiger’s rental management software offers a complete solution tailored to rental businesses across various industries. Our rental software seamlessly integrates with popular POS providers and payment processing platforms such as Stripe or Paystack. To see how Hubtiger can help your business, schedule a personalised demo or try our 7-day free trial and experience it firsthand.

We hope you found this guide on rental equipment KPIs helpful. For any questions about our software solutions, please don’t hesitate to contact us.