The difference between leading and lagging indicators

Sent by Jonathan Stark on December 23rd, 2018

Have you ever wanted to be twenty pounds lighter? Or have a million dollars in the bank? Or wanted to land a dream client like Starbucks?

Being twenty pounds lighter is what I’d refer to as a “lagging indicator” - i.e., an indication that you have been doing something right.

Lagging indicators are results or output oriented. Typically, you can’t just snap your fingers and make a lagging indicator happen.

So how do you end up with a lagging indicator that you desire? That’s where “leading indicators” come in.

A leading indicator is something that you can observe and measure in time increments that are much more frequent and regular than the lagging indicator.

For example, a leading indicator for losing twenty pounds might be jogging three miles per day for six months.

Or a leading indicator for having a million dollars in the bank might be saving $1000 per month for twenty years.

Or a leading indicator for landing a dream client like Starbucks might be connecting with a new Starbucks executive every week.

Okay, so what does this have to do with anything?

When you’re having a Why Conversation with a prospective client, you want to uncover a lagging indicator of success. That’s your home run. Their desired business outcome. That’s what you’ll base a value price on.

But you don’t want to stop at uncovering the lagging indicator. You want to also uncover a leading indicator that you believe you can influence and measure while the project is in progress.

A personal trainer can’t magically make you be twenty pounds lighter, but he or she can probably get you to run three miles a day most days.

A financial planner can’t magically make you have a million dollars in the bank, but he or she can probably get you to save $1000 a month most months.

A sales consultant can’t magically land a dream client like Starbucks for you, but he or she can probably get you to connect with a new Starbucks executive every week.

And you can’t magically deliver your client’s desired business outcome but you probably can do something in collaboration with them every day or week or month that they believe is likely to get them there.

Yours,

—J


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