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Wednesday, August 31, 2011

Leading Indicators: What Are Yours?

Special Guest Blog Post By:
Brad RoderickExecutive Vice President, InkCycle

Like a lot of you, I try to pay close attention to certain “leading indicators”. Some of these indicators come from the media, some from financial analysts, some from economists, some from trend-watching and some from maybe more obscure places. As an example, If my left foot starts to hurt, it’s a sure sign that gout is getting ready to hit which means I haven’t been drinking enough water. So let’s think this through a little bit. What is my leading indicator in above described gout situation? Some would say, “pain” but isn’t the onset of pain a “result” and not an indicator? Ashamedly, I drink bottled water even though there are better environmental solutions, but a recycling bin full of recyclable water bottles means I will remain pain free. An empty recycling container? Well, that’s a leading indicator that the doctor will be getting his co-pay in the very near term.

Notice how I stayed away from politics and referencing specific economists or analysts? That was intentional, thought I better keep this post to a more neutral position.

So, if not the economy and not the political stage, where should we be looking at for indicators of what is coming down the pike? Glad you asked. If your job is to acquire and retain customers, grow revenues and profits, increase the size and value of your company, may I suggest that your Leading Indicators can all be lumped into one bucket called, “Activity”.

We all love to talk about deals we’ve just won. End of the month sales numbers. Record sales days. That’s just how most of us are wired… especially those of us who play the sales game each and every day. These are all results, not activities. While I’m not saying we should discount the importance of measuring, rewarding and celebrating the revenue numbers, I am suggesting that those numbers are a RESULT of a series of ACTIVITIES and that when we measure the activities, only then will we have a strong insight into what the future will bring.

Managing by Leading Indicator Metrics: Start by defining the activities you know impact your future success. For some these will be “number of dials per day”. For others, “total time engaged with prospects”. A word of caution is due here. Be careful when measuring only those activities far downstream in the sales process as they are most likely the result of other activities that came before them. As an example, many sales managers look at “number of closing presentations”. While not a bad indicator on a number of levels, to look at this and not look backwards at say, the number of new contacts, could be very misleading. Come up with three to five indicators that work for your organization and then watch just where this leads you over time!

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