Sales - Leading & Lagging Indicators

Most mature executive business leaders figure out the key metrics that drive the business and then get laser focused on those metrics.  They also learn that these metrics fall into (2) main categories; leading indicators and lagging indicators.

Sales leaders need to look at their business the same way.  It seems we want to over-complicate things by getting caught up in all the action items that need to be done.  At the end of the day, sales teams have their own leading and lagging indicators they need to focus on:

Leading Indicator = Pipeline 

It’s amazing to me how many sales teams don’t track and pay attention to their pipeline!  Pipeline is as important as anything else a sales team does.  Now there are (2) key types of pipeline we would talk about; the first is newly created pipeline and the second is factored pipeline (my friend Jay Tyler would say "quality pipeline".)  Both are important and both play a key role in the success of a sales team.  And BOTH are leading indicators.  The health and growth of your pipeline is a future predictor of your team’s success.

Now there are other types of leading indicators in sales like; partner certifications, marketing metrics, # of sales calls, etc.  But start with measuring your pipeline and assigning pipeline goals for your teams and hold them accountable to those goals.

Lagging Indicator = Closed Sales

The lagging indicator is the one that most sales teams have a handle on.  It’s usually the revenue number at the end of the month and we all know if we hit it or missed it.  It’s important that you have a method for tracking your team’s performance in some type of system.  It’s best to have one that shows both data and visuals.

Of course, there are other types of lagging indicators like; close ratios, average deal size, revenue by product category, etc. 

Sales is a business.  As leaders of that business, you need to measure it as seriously as the other divisions within your company.