Indicators will lead you

Economists employ the use of “indicators” to predict what might happen and to determine what caused past events to occur. “Leading indicators” signal future results or the trends related to a result. “Lagging indicators” follow an event or activity.

An economist, for example, might see a high number of new unemployment benefit applications as one leading indicator of an economic decline. Later, that same economist might see a plunging Consumer Confidence Index as a lagging indicator that proves the decline he or she predicted.

You are probably quite adept at monitoring the lagging indicators of your marketing efforts, such as one-time sales income or new recurring revenue. Similar to profit and loss statements and balance sheets, these lagging indicators are evidence of what already has happened in your business.

To improve your marketing results, I encourage you to carefully define and monitor the related leading indicators that affect your business. Focusing on this area will give you advance warning of the trends you must respond and react to before they become lagging indicators of problems that are beyond repair.

As an example, let’s say your website routinely generates an average of 20 form submissions from 1,000 visitors per month. Seven days into the current month, the data show only 50 visitors, which is a leading indicator you can use to predict that you’ll only receive four form submissions this month—unless you act quickly.

In addition to the above example, here are some other leading indicators to consider in your marketing:

1. direct mail meter – measures the number of marketing pieces you’ve mailed;
2. call-in and call-out indices – calculate the number of incoming calls you receive from prospects as well as how many outbound prospecting calls your team made;
3. meeting monitor – records how many face-to-face sales visits occurred; and
4. proposal gauge – measures the number of new proposals or pricing estimates delivered.

Once you’ve defined the leading indicators for your business, you must measure them rigorously. It will take time and effort to establish your baseline metrics and get your staff habituated to reporting on them. If your leading indicators are working properly, lagging indicators that support your predictions won’t be hard to find.

Tom Adams is an executive coach and strategic advisor to RIM service companies. Check out his Thrive in 5 videos at www.TomAdams.com.