The Importance of Leading & Lagging Metrics in Marketing

Goals. Metrics. SQL. AQL. MQL. KPI.  

We as marketers all have metrics that we are measured by. That we live and die by.  However, is there a way to have an early warning system that can help you see what is coming up ahead and adapt to ensure you’re on target?  

This is where the concept of leading and lagging indicators comes into play.  

Lagging Indicators

Lagging indicators are usually focused on results and are the output of your marketing department and your company. This makes them relatively easy to measure but you cannot influence or improve them once they have happened, although, they will fuel your strategy going forward. (eg: last quarter’s results may impact what you do this quarter, but you can’t change last quarter).  

Some examples of critical lagging metrics for marketing to be tracking are:

•    ROI of your marketing efforts

•    Brand Recognition

•    Churn Rate

•    SQL or MQL

•    Product bookings or revenue

•    ARR/MRR

•    EBITDA

So why aren’t lagging indicators enough?  The difficulty comes when you want to improve your output proactively.  How can you impact the results when if by the time you get the results the effort or marketing activity has already been done?

This is where leading indicators come in.

Leading Indicators

By their name, leading, these can be tracked and influenced actively to improve your outcomes. If you select the right ones for your KPIs, then you will have your early warning system.  When I was at Microsoft, we tracked these regularly so that we could course correct, try new things, and adapt to ensure we hit our targets.

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Some examples of leading indicators could be

•    Daily or monthly active users: perhaps you know how much revenue an average user brings you or how long they have to be engaged to reduce their risk of churn.  Daily Active User (DAU) or Monthly Active User (MAU) can be a great leading indicator to the health of your app, product, or business

•    Unique Visitors: How many new people are finding your company or product?

•    Clicks to opens to forms to MQLs: Tracking this backward and knowing your conversion rates stage to stage can let you know how many MQLs or other leading activity you need to get to your target number of SQL or SALs. For example, I need to get 100 SALs to hit my target for this quarter, and my conversion rate from MQL to SAL is 10%, that means I need 1000 MQLs to hit my SAL target.  I can then reverse even farther back to say what my conversion rates that lead to MQLs are? Working back like this enables you to see if you’re likely to come up short so you can adjust your activity or change your approach before finding out you missed your quarter.

•    # of thought leadership articles published

•    # of speaking engagements

•    # of new newsletter subscribers

The key to leading indicators is to ensure that you identify the right ones for your product(s) and KPIs.  I like to start with what are the key things I’m responsible for and accountable for, how is success measured for those?  Once I understand that, take a step back and look at what drives those metrics, what are the things that if you ensure you do or hit, you know you’ll hit your KPI, your lagging indicator.  Involve your team in this because they may have ideas you never even thought of.  See what leading indicators you can measure today and where you need to improve your tracking and measurement.