Most of you know what you want in the long-term for your business, but are you aware of your leading indicators now? Perhaps not, because they are not as prevalent as the lagging indicators, i.e., revenue and profit. Failure to determine these predictive measures can hinder your organizational growth trajectory later. In his blog article, Bernard Marr helps you determine the leading indicators.
Clear the Air
Experts used leading indicators for economic purposes initially. With those, they could project the future impacts and opportunities of a company or a country’s present activities. For instance, if the mortgage default rate is on the rise, it is one of the leading indicators that the nation’s economy was heading towards a downtime. They also kept a close watch on manufacturing, stock prices, housing, customer demands, and the number of startups joining the country’s budget.
Similarly, organizations also should have such measures that would give out warnings or predict positive prospects.
Some Use Cases
Leading indicators are basically forward-looking, while the lagging indicators help you determine your past activities’ wins. Since the former is customized based on organizational demands, it is more difficult to achieve. Here are some examples to give you an idea:
- The number of webinar or conference respondents and product purchases per customer indicates an increase in product or service license renewal.
- Customer service calls and user manual downloads predict happy customers.
- Market initiatives and sales appointments forecast an increase in sales.
- Training budget and objective syncing disclose resource upskilling.
- Overall employee performance reviews and competitive analysis of salaries, incentives, and perks foretell happy staff.
Steps to Create Leading Indicators
- Determine your business objectives and expected outcomes.
- Set up measurement KPIs and metrics.
- Detect what improves the value of your activities.
- Designate the leading indicators.
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