Leading Vs. Trailing Indicators
Do you know the difference between Leading vs. Trailing indicators, what they mean for your business, and why you need both?!
Most folks are fairly use to measuring trailing indicators as a normal practice in running their business.
Trailing Indicators, also known as lagging indicators, are output measures of past performance. They tell you how well you have accomplished your goals. The majority of metrics that aesthetic business owners track fall into this category. Examples of such indicators would be:
Revenue, Marketing ROIs, Client Reviews, Client Retention
Leading Indicators, on the other hand help you predict future performance.
They allow you to see opportunities or obstacles coming your way. Leading indicators are particularly valuable for creating a resilient business that is both flexible and adaptive. These indicators help you make decisions about the future. A few examples of leading indicators would be:
Leads, Conversions, Booking Ratio, Scheduled Surgeries, Event RSVPs, etc.
Both types of indicators are helpful when diligently tracking your KPIs and updating your Performance Metrics Dashboard. I recommend that your dashboard include 5-10 of your top KPIs and be a healthy ratio of both Leading & Trailing indicators.
When it comes to systems for tracking your metrics, make them specific, shareable, and replicable. Tracking your metrics will allow you to make better informed, strategic decisions.
Sharing information with your team is a critical component of resilient businesses. Even though it may be uncomfortable at times, being transparent with your team about metrics and goals is one of the keys to success!
A well-informed team can understand the impact that tracking these metrics will have on the business, instills accountability, and helps get your business on autopilot.
It’s time to review your metrics and make them work for you. Choose your top KPIs, including Leading & Trailing indicators, and put them into action!
If you need assistance putting your metrics in order, Contact me as our monthly dashboards make evaluating your business performance a breeze!