Measuring Sales Performance: Leading Vs. Lagging Indicators
- by Elay Cohen
- July 9, 2021
SalesHood - Sales Enablement Platform
Leading indicators look forward, through the windshield, at the road ahead. Lagging indicators look backwards, through the rear window, at the road you’ve already traveled. A financial indicator like revenue, for example, is a lagging indicator. It tells you what has already happened. Leading indicators give us real-time coaching opportunities — for example, looking at rep activities or call connects. Lagging indicators, such as revenue or quota attainment, tell us what’s already happened. These measures give us the ability to review and strategize.
When measured in tandem, leading and lagging indicators provide us with the most holistic view of sales performance. Leading indicators allow us to look forward at the road ahead, and course-correct. Lagging indicators on the other hand, represent reflection on the road already traveled.
This blog will help sales enablement and revenue leaders identify, measure, and improve the most impactful metrics, KPIs, and activities that positively impact revenue outcomes.
The practice of sales enablement has matured. Companies are spending billions hiring and developing sales teams. Money is being poured into enablement programs and sales tools to boost productivity. Why are we still struggling to boost and measure sales productivity? We believe we’re not measuring the right behaviours and subsequently not enabling our teams the right way either. Once we know what data look at and when to look at it, we’ll be able to drive up the benefits of our sales enablement investments.
One of the most common questions we hear is:
“What sales activities and metrics have the biggest impact on revenue outcomes and why?”
By identifying the most impactful sales productivity metrics, we can better understand their impact on sales pipeline, sales pipeline progress, sales effectiveness and revenue outcomes. The holy grail of sales enablement is to easily and systematically correlate our sales enablement programs to:
Over time it’s become clear that as enablement professionals, we’re great at coaching, building content, facilitating sales training, rolling out programs, etc.
But when it comes to measuring and proving impact, and identifying sales metrics that are directly improving sales productivity, some enablement practitioners struggle. We need to better understand and measure the metrics and KPIs that ultimately will help sales reps move revenue needles.
Training completion, assessments, quizzes, certifications and pitch practice are all great to measure. But these are consumption metrics and they need to be correlated with performance data. These metrics don’t directly measure impact, value, and measurable results.
The reason why enablement professions struggle with analytics, metrics and KPIs is:
As sales enablement evolves and matures, it will become increasingly more important to prioritize benchmarking and measuring metrics and KPIs. We’ll need to answer the questions:
After asking these questions, you can then evaluate these metrics to determine exactly how and what you are measuring.
To provide a greater impact on the company you will need to understand the activity, conversion rate, and outcome metrics.
As a sales manager, getting to know these sales productivity KPIs will also allow you to quickly increase sales performance to meet revenue goals. The three main components include:
Getting a better idea of these key performance indicators will help sales leaders determine sales productivity and establish ways for these sales metrics to lead to achieving the company’s objectives.
Leading indicators are measurable or observable variables of interest that predict performance before it’s too late. Leading economic indicators are used to forecast changes before the rest of the economy begins to move in a particular direction and help market observers and policymakers predict significant changes in the economy. In sales, leading indicators are early activities we measure to gauge the performance of our team.
We don’t want to wait months until we find out there’s a performance issue we need to rectify. We want to know in days and weeks how our teams are doing. Leading indicators are important sales metrics in the sales process to ensure our salespeople are on track to hit their revenue goals. Leading indicators are important in a new hire onboarding program to see if our new hires are on track to hit their ramp goals.
Leading indicators help front-line managers and enablement boost productivity, ensure revenue goals, and allow for continuous growth within the sales cycle, as well as future growth.
Lagging indicators look backwards, through the rear window, at the road you’ve already travelled. A lagging indicator is a metric that can measure sales effectiveness. It helps us determine the business impact that has already been made.
Many companies today focus primarily on lagging indicators like:
These are important, but there’s not much we can do after they happen.
Different positions in a sales organization will require you to take different metrics into account. Here are examples by role to follow as a guide. Once these plans are complete, they will inform training, onboarding, compensation and forecasts. In short, plans by role with metrics and KPIs that are measured in real-time will drive better productivity. Getting this right is a real business multiplier.
Typically with sales development, you’ll be looking to integrate training completions and certifications from a system like Saleshood with activity data from systems like Salesforce, Salesloft and Outreach. In some cases, correlation will include intgerations with incentive compensation systems like Xactly but this would be a lagging indicator. Here’s a list of sales development leading indicators.
Regardless of segment (small business, mid market or enterprise), the plans by role for these sellers all have very similar leading and lagging indicators to measure. Here’s a list of account executive leading indicators.
Those that try to do a one size fits all to enablement fail. When we look at leading indicators and the supporting training and coaching requires to help make customer success professionals productive and successful, it’s very different than sales development and account executives. The activities are different. Some skills may be the same. The processes are different forcing us to look at their leading indicators differently.
As a sales manager, diagnosing where the issues are taking place ensures the success and productivity of your team. Some steps take include:
Bringing enablement and operations together to discuss processes, systems, data and sales metrics is a win-win. The recommendation is to start small. Pick a role and map out the enablement plan for that role. Follow these steps:
Getting this project right will result in huge cross-team process and sales productivity improvements.
There are many factors that will contribute to successfully tracking the right metrics and KPIs and correlating enablement activity with performance data.
Working together to help identify, measure, and improve the most impactful sales productivity KPIs will ensure your sales organization exceeds revenue goals.
Measuring sales productivity as sales leader proves challenging as sales productivity KPIs can be difficult to identify, calculate and interpret. SalesHood can help you more easily measure sales productivity metrics. Our sales enablement platform visualizes sales productivity impact by correlating activity to outcomes, helping you to improve key sales metrics, KPI’s and most importantly, revenue. Sign up for your free SalesHood demo today.
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