Leading indicator

A measure that moves before an outcome, far enough ahead to act on, and that someone can change.

DefinitionA measure that moves before an outcome, far enough ahead to act on, and that someone can change.

A leading indicator earns the name only by evidence: on the business's own history it moved before the outcome did, by a consistent interval. Coverage at cadence, dormancy by value and utilisation before renewal usually pass the test; calls per day usually does not. The test is a split of accounts or periods by the indicator and a reading of the outcome one to three periods later. See leading versus lagging indicators.

How it is used

A candidate is tested on history: split accounts or periods by the indicator, then read the outcome one to three periods later. It earns the name if it moved first, far enough ahead to act, and someone can change it.

Example

Accounts covered at cadence in a quarter grew 4 percent over the next two; uncovered accounts fell 9 percent, and the gap held within each tier. Calls per day showed no relationship with anything.

Where it goes wrong

Chosen in a workshop and never tested. Effort measures get the label because they are easy to count.

Articles that use this term

Board and management reporting · Finance and FP&A teams

KPI vs metric vs measure: what is the difference, and why most dashboards have too many of the first

Measure, metric and KPI are used as synonyms and are three levels of the same thing. A measure is a number computed from data, such as revenue or a count of accounts. A metric is a measure given a definition and a context, such as revenue per active account over a trailing twelve months. A KPI is a metric that someone owns, that has a target, and that a decision depends on. This page sets out the three, gives the test that separates a KPI from a metric, and shows how to cut a forty-tile dashboard to the five that matter.

17 Sept 20264 min read Board and management reporting · Sales teams

Leading vs lagging indicators in sales: what is the difference, and how to test that a leading one leads

Lagging indicators in sales report results after they have happened: revenue, churn, win rate. Leading indicators move earlier and can still be acted on: coverage at cadence, dormancy, pipeline created, utilisation before renewal. This page sets out the difference, lists common pairs, and gives the test most teams skip: checking on the business's own history that the supposed leading indicator actually moved before the lagging one, by how long, and how reliably.

17 Sept 20264 min read Forecast and pipeline · Sales teams

Win-loss analysis template: what to record on every closed deal, and the four tables it produces

A template for win-loss analysis that runs on every closed deal instead of an occasional interview programme: the seven fields to record at close, a short controlled list of loss reasons, how to stop price becoming the answer to everything, and the four tables the data produces: win rate by segment and size, by competitor, by source and by stage lost. This page gives the fields, the reason list, the tables, the interview questions for the few deals worth a conversation, and a copyable form.

17 Sept 20265 min read