Much of the time, sales management is conducted through what are called lagging indicators. These are KPIs (Key Performance Indicators) that show what has already happened after all is said and done.
Examples of lagging indicators:
- # of units sold
- Gross margin
- # of different products sold
- Market share
- Gross revenue
- # of deals won
- # of deals lost
A clue to the problem with analyzing and managing only through lagging indicators is right there in the name: lagging. It means, “what has already happened.” By the time lagging indicators become clear, it is too late to change anything. That is why calculating risk only through lagging indicators is, itself, risky.
We certainly need lagging indicators—we need to be able to look back over time and see how we did. But in managing for the future, we need something that will show us how the activities we are engaging in now will impact our figures for the quarter or the year.
The other kind of KPIs are called leading indicators. Leading indicators are factors that can be monitored on a day-to-day basis, that give us an indication of how our lagging indicators are going to turn out.
Examples of leading indicators:
- leads created
- new leads into the pipeline
- leads converted to opportunities
- lead-to-opportunity conversion rate
- sales rep closing ratio
- team closing ratio
- % of opportunities through each sales stage
- opportunities proceeding within expected time frame
Combining Leading and Lagging
The combining of leading and lagging indicators give you a full picture of your operation. Moreover, the combination gives you a comprehensive look at your risk, and allows you to make changes to improve the scene before your lagging indicators come into effect.
You should be able to utilize your leading indicators to show how your lagging indicators are going to appear, if nothing changes between now and the time of your lagging indicators. For example, if you add up the value of your opportunities in the pipeline, the percentage chances of their making it through, the rankings of each deal, and other leading factors, you see that, if all goes according to plan, you’ll have $1.5 million for the quarter. If you add up all your leading indicators and see that you’re falling short of your target, you then have time to do something about it. For example:
- Get more leads into the pipeline
- Take steps to raise lead-to-opportunity conversion rates
- Coach and mentor your reps to raise closing ratios
- Make sure you have no unnecessary activities or tasks
- Make sure all necessary activities and tasks are being done
- Monitor your sales process to makes sure it is efficient
Tracking Leading and Lagging
Now, it’s one thing to decide what your leading and lagging indicators should be. It’s quite another to begin tracking them in such a way that you can actually use them to gain accurate sales performance insight, and skillfully manage.
For example, you could have all of your leading indicators arranged in a spreadsheet, and either have someone who is constantly updating it, or share it so that reps can update it with their own figures.
The basic issue with such an application—aside from the fact that someone can forget to update it—is that none of them present an instant, visual insight into how all of your leading indicators add up to your lagging indicators, moment to moment, day to day and week to week.
CRM Should Be—But It Isn’t
The traditional CRM approach has been more or less to ”track everything”—primarily the reps, their calls, their progress, their activities and so on. Reps entered their contact, account and activity data.
But what should a CRM solution really be? What should it show a company? The answer: Where sales has been, where they’re currently at, and where they’re going. In order for a CRM to do that, it must function with leading and lagging indicators, so it provides real insight.
No CRM has truly addressed this issue—until now.
Pipeliner CRM: It’s Built Right In
Unlike any other CRM solution, leading and lagging indicators are instantly and visually displayed. It’s all right there before you, starting with the main Pipeline View.
Right here you can see how many leads are available, how many opportunities are in each stage of the pipeline, and how many are overdue (per the average length of time for each stage). Your primary leading indicators are right there.
On the right-hand side, the target is always visible, showing your primary lagging indicators, and how they are affected by all the leading indicators as they now stand.
In Pipeliner, the most important lagging indicator is something not available in any other CRM: the Archive. The Pipeliner CRM Archive is arranged exactly the same as the active pipeline view. Leads and opportunities contain all information present when they were archived—including documents, emails, notes, social media interactions, tasks, and activities.
An in-depth analysis can be done right in the Archive of lost deals—with the same degree of detail that can be done with current opportunities. With Pipeliner’s new Multi-KPI feature, which is available both in the main Pipeline View and in the Archive, you can compare 2 different values (for example Revenue and Units Sold) or 2 different time periods. There has never been an analysis tool like the Pipeliner CRM Archive.
Pipeliner’s other features, such as filters, ranking, account view, and timeline all display leading and lagging indicators in various configurations, allowing you to instantly see how your leading indicators add up to your lagging indicators.
Sales Performance Insights
As you can see, it’s not just the indicators, but how they are displayed and used. And with Pipeliner, that view is about to gain another major improvement with its all-new feature called Sales Performance Insights. With Sales Performance Insights a sales leader or sales representative can see, at a glance, how various leading and lagging indicators have been combined so far for a sales unit, for reps as compared with other reps, and for territories as compared with others. Not only can reps be compared, but so can various indicators for those reps.
Leading indicators include items such as created leads/opportunities, created accounts, and won opportunities. Lagging indicators include won opportunities, lost opportunities, won amount and lost amount.
For overall sales management and for calculating risk, make sure you take both leading and lagging KPIs fully into account.
See how Pipeliner CRM incorporates both leading and lagging KPIs right into is functions. Get your free trial of Pipeliner CRM now.