How to identify Leading vs. Lagging Metrics?
Before tying together the concepts of input and output metrics for different customer journey stages with the concept of metric hierarchy, let's quickly understand another commonly term: leading & lagging indicators.
Leading metrics are predictive indicators that signal future events or outcomes, while lagging metrics provide information about results that have already occurred.
Identifying these helps businesses anticipate trends and evaluate past performances, respectively.
Example:
For an online fashion retailer, the number of new visitors to their site could be a leading metric, suggesting potential future sales.
In contrast, the total monthly sales figure is a lagging metric, summarizing the completed transactions for the period.
Explanation:
Leading metrics can be seen as the drivers of change, useful for setting goals and predicting outcomes.
Lagging metrics are the outcomes that validate the success or failure of business strategies.
A balance of both is crucial for comprehensive performance analysis and strategy adjustment.