Leading Indicators

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by Walter Briggs Co-Founder of GrowthMentor

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A leading indicator is a type of metric that can help you predict future performance and fast-track your growth. You can use this data to make sure that your business strategy becomes a success.

What Is a Leading Indicator?

A leading indicator (or leading metric) is a metric that you can use to help make predictions about a business outcome before it occurs. You can use leading indicators to predict future outcomes.

To flesh this out, let’s look at an example of a leading indicator: free trial signups.

In the software-as-a-service (SaaS) industry, it’s common for businesses to offer free trials of their product. The number of free trial signups could be used as a leading indicator of future customer growth. How?

People who sign up for free trials are interested in the product, and likely to become paying customers if they find the product useful. An increase in free trial signups usually indicates a future increase in new customers.

Leading Indicators vs. Lagging Indicators

Now that we’ve defined leading indicators, it’s important to understand how they differ from lagging indicators. Lagging indicators are measures of past performance (e.g., revenue, net profit, customer churn rate, etc.).

In some cases, a metric can be both a leading and lagging indicator. For example, free trial signups could be used as a leading indicator that predicts future customer growth.

But free trial signups could also be used as a lagging indicator that describes the outcome of the free trial marketing campaigns.

While this won’t be the case with every indicator, it is fairly common.

Examples of Leading Indicator

There are an endless number of leading indicators that businesses can track—it all depends on your specific business goals.

To give you some ideas, here’s a list of common :

  • Website Traffic
  • Sales Pipeline Activity
  • Social Media Engagement
  • Email List Growth
  • Content Downloads
  • Free Trial Signups
  • Event Registrations
  • Job Applicants
  • Supplier Inquiries
  • Webinar Attendees

Today, there are many analytics tools that automatically track these leading indicators, such as Google Analytics, Stripe, HubSpot, and so on. Knowing how they work can help you successfully grow your business.

How to Use Leading Indicators

Lagging indicators can be used in a number of ways.

Here are a few examples:

  • Predicting outcomes (e.g., Based on our demo downloads, we predict a 20% revenue increase).
  • Reallocating resources (e.g., We’re getting more first-time users, so we need to increase our customer support capacity).
  • Identifying issues (e.g., We’re seeing a sharp decline in webinar signups, why).
  • Spotting trends (e.g., There’s been a gradual decline in email list growth, so we need to revise our lead generation strategy).

Leading indicators can be used for a variety of purposes. The key is to identify the leading indicators that are most relevant to your business goals.

Start Mastering Analytics

Now that you understand leading indicators, it’s time to put them to use!

If you’re looking for guidance as you start mastering business analytics, Growth Mentor is here to help. We can connect you with talented mentors and coaches who can teach you the ropes.

Get started today and see the results for yourself!

Suggested mentors to help you make sense of Leading Indicators

Michael Taylor

Co-Founder @ Vexpower | Marketing Memeticist | Ex-Founder @ Ladder

Data-driven, technical marketer with 11 years experience, 8,000 experiments run, and $50m optimized across all 4 major growth channels. Author of Marketing Memetics, Co-Founder at Vexpower, Ex-Founder at Ladder.

Clemence Lepers

Data-driven marketer w/ 10+ years of international experience

I help companies of all sizes and shapes conquer the souls and wallets of their target audiences. I can provide you actionable feedback and guidance across brand marketing, conversion optimization, and customer acquisition strategies (with a strong focus on content marketing, and SEO).

Kuba Nowak

Data-Driven Growth for 💻 SaaS 🤝 Marketplace 📱 Mobile Apps 🛒 eCommerce 📈 Growth Strategy 🎏 Experimentation Consulting

I’m focused on building strategic and sustainable growth machines where Acquisition, Retention, and Monetization are considered across Marketing & Product, and Experimentation, User psychology, and Data are leveraged in the decision-making process.

Jason Barbato

Growth, Inbound, Product Marketer. Advisor and Mentor. Former Best-In-Class Enterprise Growth Hacker at IBM.

Currently a SaaS and startup growth consultant and Senior Director of Growth at HYPR. Former VP of Growth at Orange Pegs, an award-winning growth agency. From 2016-2019 I developed, launched, and scaled a $40M+ growth hacking program at IBM, running 200+ experiments across the Cloud marketplace.

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