Something most businesses aren’t aware of is the difference between lead vs lag metrics and the benefit of using both for different reasons when measuring the performance of your business.
Most businesses think that measuring performance is all about looking at the history – things like number of leads received, conversion rate, sales figures and so on.
In reality, there are two kinds of metrics – the ones above are all known as Lag metrics, because they tell the story of what’s already happened.
If you want to manage your business for better performance, get in the habit of building in some Lead metrics.
Lead metrics are numbers that predict the future, rather than telling you a story of what’s already happened.
A salesperson making very few calls on clients and not following up on enquiries won’t make many sales. But if you measure the activity and manage them not only by the quality of their results, but also the work they put in, the results will improve. This isn’t old school “bash the phones” stuff – it’s the numbers of doing the work, versus the results from the work.
Too many businesses get wrapped up in measuring results, yet if you monitor activity, it’s nowhere near that of the top performers. Let’s find another example of lead vs lag metrics in your marketing.
If your marketing is not producing sufficient results, you might look at the activity that goes into it. Great marketing takes a lot of effort and failures along the way until the formula is worked out for consistent lead generation.
If all you’re doing is putting the same ads out every month without thinking about it, you can’t expect to produce decent results. So some lead metrics could be how many new things are tried out, or how many hours each week are being devoted to marketing work.
Your business dashboard needs to show you these kinds of numbers to cover your financial position, your new customer acquisition, and the operational performance of your business.