03 January 2024 |

Leading Indicators vs. Lagging Indicators: The Key to Sales Leadership Success

By Alex Alleyne

Last Week’s Reflection: Data vs. Emotion

Last week, we discussed the critical balance between data and emotion in sales leadership. Pivoting from that discussion, let’s delve into an aspect of data crucial for our success: understanding leading versus lagging indicators.

A Look Back at My VP Role

In my early days of sales leadership, it felt as if I was always facing the challenge of improving underperforming teams. As I looked for innovative ways to solve these issues, the conversations with fellow sales leaders revealed a gap in understanding. An all too common focus on lagging indicators – metrics based on past performance, like previous quarters’ revenue or deal success. While informative, lagging indicators tell us where we’ve been, not where we’re going.

The Importance of Leading Indicators

Instead, I focused on leading indicators like pipeline coverage and activity rates, which are about current and future trends. They help us predict where the team is heading in the coming months or quarters. These indicators are vital as they give early warning signs and guide us toward proactive improvements.

Aligning Coaching with Leading Indicators

In coaching and development, aligning our efforts with leading indicators is critical. Focusing on increasing pipeline coverage helps us develop our talent to generate more opportunities. More pipeline coverage equals a better chance of closing deals.

Observing Top Performing Teams

If you observe the top-performing teams within your organization, you’ll notice their leading indicators – pipeline growth expanding deal sizes – are trending upwards. In contrast, teams struggling with growth often focus too much on lagging indicators.

Leveraging Tools for Tracking

Various software tools and AI applications can assist in tracking leading indicators. Tools like Clari are excellent for predicting business outcomes, taking some manual labor out of assessing these crucial metrics.

Key Takeaways: Understanding Leading vs. Lagging Indicators

  1. Focus on the Future: Leading indicators are about current trends and future predictions, not just past performance.
  2. Pipeline Coverage: This is a crucial leading indicator. More coverage means a better chance of deal success.
  3. Activity Rates: Monitor current team activities to predict future performance.
  4. Proactive Improvement: Use leading indicators to make early improvements and avoid future pitfalls.
  5. Coaching Alignment: Align development and coaching efforts with leading indicators for effective talent growth.
  6. Tool Utilization: Leverage tools like Clari and AI applications for accurate tracking and prediction.
  7. Top Team Trends: Successful teams show upward trends in leading indicators like pipeline growth and deal sizes.

Focusing on leading indicators will be our compass in navigating the sales landscape as we move forward. They’re not just about numbers; they’re about foresight and strategic action.