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How to design KPIs that work. Leading vs Lagging Indicators #19
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How to design KPIs that work. Leading vs Lagging Indicators
In this episode we take you through how to design KPIs that create change and drive performance with least effort. We'll cover the triangle of performance management + a breakdown of leading vs lagging indicators.
We all know businesses run on results, aren't KPIs all about delivering results?
No! And that's the point of this podcast.
- It's helpful to measure what matters most and ignore what doesn't
- It also helps to why we measure what we measure. Not all measurements are equal.
- All outcomes can be put into three categories; Results, Objectives and Activities
What's difference between Results, Objectives and Activities?
- Here's the myth - nobody can manage results. Results are things that hapen to you. You get to these through mutually agreed objectives.
- Objectives are goals with consent... something two or more parties sign up to and work towards achieving together. But you still can't manage objectives..... you can only manage systems and process and lead people.
- Activities are the only things we control. Therefore, this is where our key performance indicators should live. If we manage activities, they lead us to objectives and results.
So, then, we started of talking about Leading vs Lagging Indicators..... how's all this connected?
- Lagging indicators are the things that happen to us... so that's the 'results' and 'objectives'
- Leading indicators the the things that tell us we are doing that if achieved lead us to the result, things like response time or sales calls
What are some common Sales Lagging and Leading Indicators?
Common Lagging Indicators
- Total Sales Volume
- Margin Sold or Discount Given
- Revenue from New Clients
- Average Contract Length
- Renewal Rates
- Acquisition Costs
- Sales Cycle length
Common Sales Leading Indicators
- Sales Activities
- Pipeline Weighted Value
- Opportunities Created
- Opportunities Lost
- Quotes or Proposals Sent
- Completion of training / learnings
- Compliance to a Sales Process
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