Lead vs. Lag Indicators

As a sales manager, have you ever had to fire your top producer from the year prior and then found yourself asking, “What happened, they did so well last year?”. I would contend the answer lies in lead vs. lag indicators.

A lead indicator is a predictive measure. For example, in sales it would be number of prospects, or number of appointments. A lag indicator is typically output oriented. Again, an example in sales would be production numbers, or commissions.

In a typical sales environment we spend 90% of our time pouring over lag indicator reports. I’m guilty of this too, after all it’s how we’re judged, compensated, and rewarded in contests. However, we can’t change any of those numbers after the fact. I believe if we spent that same 90% of our time pouring over lead indicator reports we’d be better served.

If you’ve been in sales long enough you’ve seen someone pay that monster case. Their production numbers, lag indicators, are off the chart. We give them awards and plaques. But, what if it was just luck? What if looking at their lead indicators you saw month in and month out they only had one prospect. Yes, maybe that one happened to pan out, but, luck is not a sustainable business model.

Focusing our attention on those lead indicators, such as new names and new appointments will tell us so much more about how our sales individuals are performing. It will also help direct us were we can better train them, before it’s too late. If an agent is consistently running 20 appointments, or whatever the number is, yet closing nothing, we can focus our training on how to close, or run a better appointment. If they are consistently only coming up with 1 or 2 names a month we can focus on prospecting skills.

Yes, it is much harder to track, but, that doesn’t mean we shouldn’t try. These are the conversations we need to be having with our sales agents. Shifting from, “What was your production?” to, “What was your prospecting, how many new appointments?” I believe this will take our agents to the next level.

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