Leading vs Lagging Indicators: What They Are & Why They Matter

The main point of identifying and tracking specific metrics is to measure your progress toward your goals. But not all metrics can give you the information you need right away. Lagging indicators--by definition--take a long time to change and show the later-stage results of your efforts. Leading indicators, however, measure the activities you've put in place to help you reach your goal, and can be tracked on an ongoing basis.

Because of the different timeframes required by leading vs. lagging indicators, it’s important to understand when you’re tracking a lagging metric so you can identify leading indicators to help guide you as you go. Understanding the difference between leading and lagging indicators and how they tie into your objectives will help keep your teams aligned and on track, and will help you accurately monitor progress towards your goals.

What are leading indicators?

Leading indicators give early indications of performance. These indicators “lead” to results by showing the progress you’re making toward your goal. Typically, leading indicators are metrics that will help keep you on track so that you achieve your strategic objectives.

If your goal is to sell 100 new software subscriptions, but your sales cycle is six months. You would want to set leading indicators to help you see if you’re on track to meet your goal in the early months while you’re still far enough ahead to make changes.

Leading indicators for sales revenue might be Pipeline Volume or Number of Calls/Meeting/Emails per sales rep. By tracking these metrics, you can monitor sales activity on an ongoing basis and see if your team needs to increase outreach efforts to meet your “100 subscriptions sold” goal.

Benefits of using leading indicators

• Faster feedback: By tracking leading indicators, your team can get feedback on their efforts more quickly and determine what actions they might need to take to achieve their larger objectives.
• Team alignment & involvement: Because there are often many facets to broad goals, there are typically many leading indicators to track. Different team members and departments can own different metrics, so everyone contributes to meeting the company’s larger objectives.

What are lagging indicators?

A lagging indicator is a metric that takes a long time to change or measure. Because of the time frame involved, lagging indicators are not a good option for providing project effectiveness feedback to teams. However, lagging indicators are often the metrics that most accurately measures the actual business impact you’re trying to achieve.

For example, if you’re trying to improve customer retention, it’s essential to track Customer Churn Rate. But Churn Rate is slow to change and can take a long time to show results.

Benefits of using lagging indicators

• A clear indicator of success: In many cases, the metric that best assesses the impact of your efforts is going to be a lagging indicator because it takes time for your changes to take effect.

Weaknesses of lagging indicators

• They take time to measure: By definition, lagging indicators measure long-term trends, so they take weeks or months (or even longer) to change.

Leading and lagging indicators work best together

A lagging indicator may be the best metric for measuring the outcome of your effort, but tracking lagging metrics alone is problematic. It takes a long time to see results and lagging indicators can’t help you make ongoing adjustments.

The solution is to use a combination of leading and lagging indicators. Look at leading indicators on an ongoing basis to make changes that will help improve your odds of success.

Use leading indicators that complement your lagging indicators and help you measure progress more quickly.

Track your leading vs. lagging indicators

While it’s essential to monitor both leading and lagging indicators on a regular basis, you don’t need to track them at the same rate. Lagging indicators take a long time to change, so you may not want to track them on a daily or sometimes even weekly basis. Instead, check them less frequently, perhaps monthly or quarterly, depending on the metric.

Leading indicators, on the other hand, change more rapidly and should be checked often. Consider adding them to a dashboard so you can track them in real time on a daily or weekly basis.

Spider Impact for KPI Tracking & Reporting

Spider Impact makes it easy to set goals for your KPIs, track them over time, and visualize your performance to improve outcomes. With Spider Impact, you can:

Track KPIs: Everyone in your organization needs to see your latest key performance indicator data. Spider Impact gives it to them anytime and on any device. Plus, Spider Impact automatically rolls up your weighted KPIs to larger key performance areas so you can see how well you’re executing your overall strategy.

Monitor Your Critical Data: Dashboards show your performance at a glance. You can add charts, gauges, text, images, and more. If you want more information, just click to drill down to underlying data, performance trends, and comments.

Create Interactive Executive Briefings: Assemble your strategy maps, reports, and dashboards into a multi-slide briefing. It's like PowerPoint, but with live data. As you advance through slides, your data is fully interactive—and now your executive meetings will be as well.