I was speaking with an entrepreneur recently about key metrics for their business. We started talking about the importance of knowing the leading indicators for your business, as some key metrics are lagging indicators (revenue, churn). Here are a couple of examples.

Sales

At the end of the month you can see your sales/revenue number and if you hit your goal. But that number comes at the end of your process. How does your sales funnel look? There are things like leads, demos, proposals sent, etc. that can be good leading indicators of your likelihood to hit your sales targets. If you are short in any of those funnel metrics, you may be short revenue in future periods. You can also track the length of your sales cycle and conversion percentages at any stage of the pipeline as there may be ways to improve your go-to-market process. These are also good indicators of what your future sales numbers will be. Make sure you focus on the process versus just the end result (as the process drives the result).

Churn

When a customer leaves, you can see that show up in your churn numbers. But more importantly, how do you predict churn before it happens and then do something about it. Usage patterns, system downtime, customer engagement (or lack thereof) with emails, webinars, customer support, and survey metrics like Net Promoter Score are all ways to better predict churn and more importantly stop churn from happening by being aware of the risk earlier.

There are other key metrics that have good leading indicators; understanding those can help you better forecast as well as respond and make adjustments to your business before it is too late.