Last week in Measure Your Success…Or Failure, we discussed lead and lag indicators.
While we know that everyone tends to use lag indicators, like quarterly earnings or monthly sales, these types of numbers only keep track of the score, they do not tell the story of how you got there. As we discussed last week, lead indicators measure the actions or activity required to achieve your desired outcome or result, they “lead” the way, and this is why lead metrics are so important.
If you eat too many calories this week, your weight will go up… sometime in the future.
If you do not make sales calls this week, your sales will go down… sometime in the future.
These are lead indicators. So, in case you don’t use lead indicators in your business right now, or you don’t know what your lead indicators are, or what they should be, we are going to discuss them in more detail.
Every process has lead indicators. So, how do you identify your key lead indicators?
You have to identify the most basic activities in your process, the fewest key activities that have to be completed to achieve your desired result. These are your high payoff activities and your lead indicators. If these things are not done, you will not achieve your desired results.
For you operations managers and production leads that want to optimize operations and control costs, you need to look at the most basic activities that drive cost in your business. This generally includes your production costs – how many labor hours used, how much material consumed and how much waste created.
For you business managers and students of business that want to improve business process, implement business best practices and get better, you need to look at how you learn and implement new processes and systems. This could mean actively tracking your learning, training, education and implementation – how many pages you read, how many minutes of training videos you watch and how many ideas you capture and implement from your studies.
For you sales reps and sales managers that want to grow revenue, you need to look at the activities that drive revenue growth in your market. This typically means focusing on your prospecting and sales contact numbers – number of leads generated, number of prospects contacted and number of prospect meetings.
Hopefully, with these examples, you will be able to identify your key lead indicators, determine the best way to track them and improve your results.
