The importance of Lead and Lag measures in sales

The key to hitting sales goals is tracking the right sales and marketing KPIs.

Why do businesses struggle to hit their sales targets? 

There are various sales challenges which may be affecting your business, such as: 

• Economic factors: The impact of slowing economic growth in recent times, the cost of living, and the cost of borrowing money has affected both businesses and consumers alike. 
• Market dynamics: There is constantly a growing oversaturation of markets and the rise of new competitors.  
• Change in the buyer journey: It is considerably easier for buyers to research and compare via the internet before deciding. This means the sales process may take longer than it would have done previously. The buyer’s journey is often over 50% complete before they take action to engage with a sales representative. 
• Increased difficulty in prospecting: Cold calling takes nearly double the attempts than it did almost 10 years ago- as it can take up to 8 times before reaching your prospect. 

The first action is to identify what the correct key lead and lag measures are for your sales and marketing teams, which will provide important direct focus of time and efforts to hit the goals. In our extensive experience, we find that businesses don’t place enough emphasis on the lead measures. 

What is the difference between a ‘Lead’ and a ‘Lag’ measure? 

• Lead measures – these are the critical activities that are required to drive the numbers.  These are the ones that can be directly influenced. 
• Lag measures – these tend to be the resulting numbers that are derived from the lead measures and tells you if you’ve achieved the goal.

When deciding on your lead measures you must ensure that these are relevant to your business and tracking these will drive your lag measures.   

For all businesses, especially if you are a project-based business it is important to consider the time lags that you may experience when thinking about setting the correct levels of lead measures. For example, for an office fit-out company, you have won an order, but this might not be completed until next year, therefore you need to ensure that you have a constant pipeline to ensure that you have enough invoiced work each year in order to hit those sales targets. 

What are some examples of Lead and Lag measures for sales and marketing teams? Lead measures 

• Marketing (including Business Development) 
  • Number of e-shots sent 
  • Number of connected cold calls 
  • Number of unique website visitors 
  • Email open/click rates 
• Sales 
  • Number of quote follow-ups 
  • Number of appointments held 
  • Number of appointments with director involvement 
  • Number of new customers 

Lag measures 

• Marketing 
  • Number of inbound enquiries 
  • Number of booked appointments 
  • Number of samples sent out 
  • Event attendee numbers 
• Sales 
  • Value of quotes completed 
  • Value of orders won 
  • Conversion rate 

How do you incentivise sales and marketing teams? Once you have decided on your lead measures you need to make sure that you are actively doing things to drive these forward each week. Create a clear and visual dashboard that all sales and marketing team members can see - ideally in real-time.   

Consider incorporating lead and lag measures as part of a sales and marketing bonus scheme, to ensure that there is a monetary incentive too. 

How do you ensure these numbers are hit? By having regular scheduled meetings to go over the lead and lag measures, will ensure the team are held accountable to their results.  Obtain commitment from each individual team member what they will change or do that day/week to make a difference to their lead measures. 

Ensure all team members have some lead measures as their KPIs. 

Action points 
 

1. Reconsider whether you are tracking the right lead and lag measures 
2. Create a real-time dashboard tracking lead measures to enable visibility across your sales and marketing teams 
3. Ensure accountability of team members by setting KPIs on lead measures 
4. Review Franklin Covey’s 4DX (4 Disciplines of Execution) concept here and implement in your sales and marketing teams 

In summary, it is important that you assess what might be affecting your sales figures, decide what key lead and lag measures are going to drive your sales forward and decide how you are going to engage and keep the team accountable. The close relationship between lag and lead measures means it's important to continually identify, track, and monitor both of these KPIs within the business. 

Summary 
For more detail and information we recommend the following resources:  

https://www.oldfieldadvisory.com/articles/2024/03/617-maintaining-and-driving-sales-momentum
https://www.franklincovey.com/the-4-disciplines/
https://www.oldfieldadvisory.com/articles/2022/05/473-6-strategies-to-maintain-sales-momentum
https://www.oldfieldadvisory.com/articles/2019/02/125-5-strategies-to-win-new-business
https://www.oldfieldadvisory.com/articles/2017/07/29-5-secrets-to-a-compelling-value-proposition

Please note: This article is provided for information only and was correct as at time of writing (01/08/24). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.