Sales Indicators

Leading Indicators tell you the future


… and lagging indicators tell you what just happened.



Leading or lagging KPIs?

As managers, it is our job to have a good view of our business at all times. For this we look at our processes and define some key measures along the flow. The measures that tell us how much or how well we do things are referred to as KPIs, or key process indicators. Often you will see that any process is split into a sequence of process steps. This way, it is easier to isolate and consider each step separately and to study their charateristics.

When we measure things that go into a process step to predict what will come out on the other side, this is known as a leading indicator. Leading indicators are generally more difficult to measure, but they make it possible to influence the future result. Typical leading indicators will be focus around activity and capacities, e.g., number of visits, meetings, and proposals made.

When we measure on the result that comes out of a process, we talk about a lagging indicator. Results are things that already happened. They are easy to measure, but are generally very difficult or impossible to influence. Typical lagging indicators are sales revenue, profitability, and quantity sold.


Most sales organizations focus on the lagging indicators of the business,. i.e., orders received. These are often easier to measure and tend to be available through accounting, ERP, and CRM systems. However, it is important that we also look at the leading indicators of our business to establish that we are undertaking the right amount of activities, of sufficient quality, and in the right direction that will give us the results we need.





Activities drives sales


We should always look for leading Indicators when we want to see how we will be doing. Lagging indicators, such as last month’s sales numbers, tell us what already happened (was sold last month). They say nothing about our coming months. When we are looking for predictability and to plan our work, we need to look elsewhere for guidance.


Many companies analyse the sales pipeline to predict future results. But the sales pipeline is just a static snapshot. It tells us how many opportunities there are right now in every sales step. In other words, what work we have invested to move each opportunity to where it is now. If we do not spend a minute of work on any of the opportunities at all for a month, our sales pipeline would look exactly the same a month later. The deals would just be delayed a month, except we would probably lose some.


If you use pipeline data, look at the change in pipeline rather than the absolute numbers. Examples of forward looking pipeline KPIs you may want to consider are listed below:

  • New opportunities in the last 30 days (value and # of opportunities)
  • Time opportunities are in same stage (per stage)
  • Number of transitions, forward movement between sales steps


These are the direct results of the amount of customer interaction that is done and how well the interaction went, thus indirectly measuring quantity and effectiveness of activity. We recommend that you work with activity data in an active way to complement these more traditional views. For this, it is important that calls, video, and visits are registered. In our opinion, it is preferred that all activity gets at least a quick mention and an entry into the system. Prioritise getting at least some information about all activity, rather than asking your team to write long visit reports, as this almost guarantees that very few will be made.

Today, you need more leads than ever!

4 reasons you need more leads now than you used to need


You probably already have a pretty good idea about your team’s performance by monitoring basic sales processes and metrics. You know how many leads enter in one end, and you know how many turn into qualified prospects then deals. You are controlling your conversion rates, and you are constantly trying to find ways to improve them.

Just increase the conversion rate and you will do well” is the common recipe.

Yes, increasing your conversion from lead to actual sales is of course important. But a “conversion rate only” strategy depends on individual skills and introduces a serious scalability problem. Why? Here are a few things to keep in mind:


Diminishing benefit per transaction

First, the benefit you get from every transaction is not what it used to be, especially in software.  With the introduction of SaaS models, initial deals are smaller, and you may find that the initial benefit/margin from the first contract doesn’t even cover your transaction costs. Over time and with Customer Success management, you will win it back many times over, but in the meantime, you need to finance your activity. 


B2B sales remain complex

Before, a customer would need 5-6 months and 8 signatures to pass you an order of 100,000 Euros, but today, that same guy pays a subscription fee of 2,000 Euros/per month. At least one could expect the purchase decision to be easier for the customer. This is often not true. The decision to implement a software solution is STILL associated with great risk later on in implementation and usage. 

For the customer, the main part of the actual transaction cost is not in the price but in the implementation of new processes, adoption of new technology, the product cost over the whole lifecycle, the perceived risk of cloud hosting, etc. So, even if your contact could sign off on the initial contract, he or she will not take the risk without doing all the evaluation work, proofs-of-concept studies, and anchor the decision with his peers and managers, just like before.



The “educated” lead

Additionally, today your leads already come to your “shop” well educated. They have studied your offerings on the web, as well as your competitors’ offerings. They understand the basic benefits of the product, etc.

They find plenty of information on the web before you even get a chance to talk to them. Even if you have gotten the lead through outbound activities, your leads will browse around to educate themselves before buying anything from you. This makes traditional selling even more difficult than say 20 years ago, and your transaction cost (“cost of sales”) increases.


Sales conversion takes sales skills

Increasing your win rate, or conversion rate, from the leads that you have essentially depends on the skills of your sales reps, meaning their personal skills on how to create a buying vision, how to meet objections, how to manage the process, how to turn a sceptic prospect into a devoted believer, etc. These skills take time to develop, and only a few reps will become real stars.

A long learning curve and total dependence on your key seller(s) doesn’t really sound like a very scalable model to build your business on, does it?



Get the Lead-Machine working, and qualify well


You need more efficient ways of increasing sales than to just hire more and “better” sales reps:

  • Lead generation is key – Build a lead strategy, get enough (online) qualified leads for your sellers. Traditional cold calling to people is dead, so you need to find other ways of reaching out. You need to create an abundance of good leads coming in. If you have few leads coming in, you risk having those in sales spending their days calling the same leads over and over, “loving them to death” but not selling anything. There is a lot of truth to what SaaS-sales gurus Aaron Ross and Jason Lemkin say in their bestseller Predictable Revenue: “Lead generation drives growth; salespeople fulfil it.”
  • Work pipeline efficiency rather than conversion. Get skilled at early qualification! (Or rather disqualification.) It’s all in that first sales call. If you can, specialize a group of reps for this phase, qualification, and make others good at follow-through, negotiating, and closing the deals. Provided your lead generation phase provides you with working material, your qualifiers will do a real qualification, and use the right questions. See my article on ”Qualification and Pipeline Efficiency.”
  • Be “data driven” – Make everything measurable so you actually know when you are improving and when you are not. Today, there are plenty of good CRMs and marketing automation tools out there, from which you can get all kinds of statistics that help you work your efficiency.  (Also make sure you work the 100% adoption of these tools in your teams. See “Love your CRM.”)