Lagging vs Leading

The science and data behind sales has always interested me. How do you remove some of the guesswork from sales and create a process that consistently drives results?

Having spent a significant part of my career working in private equity-backed organizations, I learned quickly that you don't have unlimited time to figure out whether your sales strategy is working. You need to gain traction, understand what is driving results, and identify problems early enough to actually do something about them.

That's why one of the first things I evaluate in a sales organization is the KPIs.

What should we measure? What should we hold the team accountable for? And most importantly, which numbers tell me what already happened versus which numbers help me understand what is likely to happen next?

That's the difference between lagging and leading KPIs.

Lagging KPIs = What happened

Most sales organizations understand lagging KPIs because these are the numbers we naturally talk about:

• Did we hit our number? What were bookings versus goal?
• What was our average deal size?
• What was our win rate?
• How long did it take us to close a sale?

Yes, of course these numbers are critical!  I have measured them throughout my entire career and would never suggest that a sales leader stop measuring them BUT there is one problem.

By the time a lagging KPI tells you there is a problem, the result has already happened.

If I get to the end of the quarter and discover that my team finished at 72% of goal, that's important information; however,  I can't go back and fix the quarter and no one is going to be happy with those results. 

Early in my career, I realized I needed indicators months earlier that told me we were heading toward 72%.That's where leading KPIs become so powerful.

Leading KPIs = What is likely to happen

Leading KPIs measure the activities, behaviors and pipeline movement that influence future sales results. Think about it in very simple terms:

Lagging tells me the score. Leading tells me how we're playing the game.

If revenue is falling behind, I want to know why.

• Are we creating enough new opportunities?
• Are those opportunities moving through the pipeline?
• Are we talking to the right prospects?
• Are we completing enough of the activities that historically lead to revenue?
• Are deals sitting in the same stage for too long?

Those are all things a salesperson can change and conversations I can have before we miss the number.

That is why a strong sales leader or sales professional doesn't just measure results at the end of a month, they identify and measure the behaviors that create the results.

I encourage you to take a look at your own KPIs. Are you measuring the things that help guide your coaching, activity, and structure toward hitting your numbers? Or are you only measuring the gaps after a bad month or quarter?

Over the next several weeks, I'll be continuing my Sales KPI Series, where I'll break down the sales metrics I've relied on throughout my career to understand performance, identify problems early, and coach teams toward better results.

Be sure to follow me on LinkedIn as we take them one at a time … what to measure, why it matters, and most importantly, what the number is actually telling you.

About Pivot 2 Performance 

Pivot 2 Performance was created to help sales professionals and sales leaders build the foundation behind the numbers  from daily activity and weekly rhythm to pipeline discipline, accountability, value, and more.

It's practical, affordable, online training you can work through at your own pace.

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