“How can I know whether I’m measuring the right things in my business?” This is a question that plagues business owners at virtually every level. You know you need to be tracking your metrics and taking consistent steps forward if you ever want to reach your ultimate vision for your company… But how can you know the difference between spinning your wheels and taking intentional action? And is there a way to measure the results of your actions, so you can be 100% clear on what’s really working for your business?
Short answer—yes. And developing a strategy around tracking the right things in your business is integral to your ability to reach your next level.
At Exit Momentum, we like to say trying to propel your business forward without the right data is a lot like kicking off a roadtrip without a GPS; you might know where you’re trying to go, but you’re going to waste a lot of time and take a lot of wrong turns trying to get there. But when you start your journey with a GPS that has a built-in map and tracks your mileage along the way? You can take the easiest, most direct path possible, without ever having to question whether you’re on track.
We want to see you take the easiest, most direct road to unlocking the success you desire. In today’s article, we’re going to explore the lead and lag indicators you need to track in order to do that.
Why Should You Track Your Lead & Lag Indicators?
Decisions like these can cost your company millions. We’ve seen clients tank entire offerings, end contracts, fire team members, and make massive missteps—when if they would have just taken the time to identify and track the right indicators, they could have saved themselves massive heartbreak and wasted efforts.
Tracking the appropriate lead and lag indicators for your business takes emotions out of the equation. As a business owner and leader, your goal should be to lead your team from a place of clarity and strategy. When you can root your decisions in hard facts vs. unreliable feelings, you set yourself and your company up for long-term success.
What Are Lead & Lag Indicators?
At their simplest level, lead and lag indicators are metrics business owners can use to track their success towards a goal.
Lag indicators tell you whether or not you’ve achieved a goal—things like revenue, profit, quality, and customer satisfaction. These are the indicators business owners usually obsess over… but the reality is, lag indicators simply show you where you’ve been. By the time you see your lag indicators, it’s too late to impact your results.
Lead indicators, on the other hand, track the actions that drive your lag indicators. They predict, ahead of time, how likely you are to succeed with your goal. They are not only trackable, but movable, changeable, and (when used correctly) a powerful tool to help improve your lag indicators over time.
To see this in practice, let’s pretend you own a car dealership. A lag indicator you’d likely be focused on is number of car sales per day, week, and month. If those numbers are high, you’ll feel on top of the world. If those numbers are low, you’ll wonder what went wrong. Either way though, those numbers are the past. You need to define your lead indicators, and focus on those instead.
Your lead indicators at a car dealership would include things like:
- How many potential customers are showing up on the lot each day?
- How many phone calls are sales team members making?
- How many test drives are taking place each week?
These numbers might feel softer or less critical to a business owner—however, tracking and improving your lead indicators will have a direct positive impact on your future lag indicators.
(Don’t believe us? One of our coaches used to work in the automotive industry. He used this exact shift to take a dealership’s sales from 60-80 per month, to a whopping 250+ sales per month!)
What Lead & Lag Indicators Will Help You Measure Success In Your Business?
Figuring out your own lead and lag indicators starts with getting clear about where you want to wind up. You can’t just plow forward without a specific destination in mind. You have to begin today by clarifying and defining your vision.
Once you’re solid on where you want to go, you can start working backward to identify the lead indicators that will propel you forward. Remember, we’re looking for the actions we can take today that will impact future results, not the lag indicators that are in the past.
If you’re unsure where to start, think about watching your favorite sports team. They don’t base their likelihood of winning the next game on how many points they scored in the last game. They base it on indicators like fouls, interceptions, fumbles, penalties, yards per play, etc.
What are the equivalent metrics in your business? Every industry and every company will be different, so it’s up to you to map out the metrics that really matter for your organization.
One word of caution, however—depending on what stage of business you’re in, you may feel like you don’t have access to the metrics you need to succeed, or like taking the time to curate that data would only put you further behind.
Remember, you don’t have to fix everything overnight. Start where you are, with the numbers you do have—and take this as a sign to get honest about the holes in your systems. Admitting your processes and indicators suck is a tough pill to swallow, but identifying these gaps is crucial if you want to make meaningful changes going forward.
Ready to get support with ironing out your systems, honing in on your business’ most important lead indicators, and developing a data-backed business strategy to hit your goals in record time? Book your call today and have one of our coaches begin guiding you through defining the lead indicators that will drive real results.