Matthew's Mind

Your wings already exist. All you have to do is fly.

Leading vs. Lagging Indicator – what’s the difference? And why should you care?

The majority of my coaching time begins with clients focused on the result desired, the lagging indicator. Discussions center on what’s happening after the equals sign, not the equation pieces themselves. We talk about why that number (albeit profit, revenue, production, hours worked or a handful of other “end goals”) isn’t where someone wants it.

  • Profit is down, but doesn’t “feel” like it should be.
  • Revenue is off, but why?
  • Production is flat, but workload is up.
  • Hours worked increased, but efficiency hasn’t.

Ever felt that?
Oh, you have? You feel that right now?!?

Let me suggest it’s because you’re looking at the end result. You’re focused on the lagging indicator, which is the “scorecard” of all your work done and processes in place. And you’re focused in the wrong area.

If a ball team isn’t winning games, they need to back things up and re-evaluate what’s happening before the game. Likewise, if you’re not securing clients, revenue or achieving the work-life balance right for you, you should back things up and re-evaluate what’s happening before the point of sale.

Where you need to focus is an earlier, leading indicator. The earlier, simpler, more concrete and communicate-able (is that a word?) the better. Another fancy MBA term for this is Key Performance Indicator (KPI). But call it a leading indicator, KPI or whatever you want. If you don’t have one, and the support team around you doesn’t know it, then you’re in trouble.

The easiest example…

Before clients are acquired, you obviously need closing meetings. Before closing meetings, you need opening, first meetings. Can you back-calculate (or reverse engineer like I’ve talked about before) into how many opening, first meetings you need to bring on the number of clients, revenue and profit you want? Once that number of first meetings is known, you’re able to tailor a marketing plan to directly aim at that number of first meetings; and communicate the number of daily, weekly or pending first meetings that should be on your firm’s calendar to hit your objectives.

Leading indicator (or KPI) = 1st Meetings
Lagging Indicator = Clients/Premium/Revenue/Profit

Want to crush it in 2018? Find your single-most important leading indicator (or KPI) and focus everything on it. Marketing, sales process, appointment flow, staffing, internal communication, stated vision and goals and tracking. Then watch the lagging indicator take shape.

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