No matter their industry, companies must constantly evaluate their performance to stay ahead of the competition. However, too many businesses become too focused on lagging indicators, which only provide information about how the company has performed in the past.
To truly gain an advantage, it’s essential to study leading indicators, which can provide insight into how the company might fare in the future. Here, Forbes Business Council members explore 15 often overlooked leading indicators and discuss why they are so telling for companies.
1. Clients’ Willingness To Refer Your Business
For us, a leading indicator is how willing clients are to refer us to their friends and colleagues. It is a sign of how much they value the work we’ve done together and their confidence that we can have an equally amazing impact on others. If a client is hesitant to refer us, we need to take a second look at our delivery because we might be slipping in ways that will impact growth. – Julie Williamson, Karrikins Group
2. Employee Turnover Rate
High turnover can signal underlying issues within a company that may negatively impact its future success. When employees are leaving at a high rate, it could signal poor culture, lack of growth opportunities, inadequate compensation or benefits or poor management. This may lead to decreased morale, productivity and profits. – Jacopo Dalessandris, Canidae
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3. Customer Sentiment
A frequently overlooked leading indicator is customer sentiment, which can be gauged via social media, reviews or support interactions. Monitoring sentiment helps predict future behavior, enabling businesses to proactively address issues. Positive sentiment signals growth potential while negative sentiment warns of possible churn and revenue decline. – Dustin Lemick, BriteCo
4. Employee Satisfaction
If employees aren’t happy, they won’t perform their best and if they don’t perform their best, it will affect customers. Determine what the source of employee discontent is in your organization. Is it a sloppy process that can be refined? Is it an undefined return on equity (ROEs) for sales? Is it pay and benefits? These are all problems worth solving if they can help retain more employees and help employees sell more. – Ty Allen, SocialClimb
5. Customer Satisfaction
Many companies become hyper-fixated on acquisition and lose sight of customer satisfaction and retention. High customer satisfaction levels can be a strong predictor of future success for a company because satisfied customers are more likely to be loyal, become repeat customers and recommend the company to others. This can lead to increased sales, revenue and market share. – Trey Ferro, Spot Pet Insurance
6. Referrals From Existing Employees
An often overlooked leading indicator is the number of qualified job applicants coming in via referral from your existing employees. People don’t refer their friends, family or former colleagues to work at a company if they’re miserable themselves. The bottom line is a dip in top talent referrals from your own employee base is a sure-fire sign you’re about to have a turnover problem on your hands. – Angelique Rewers, BoldHaus
7. Customer Engagement
As CEO, I prioritize studying leading indicators like customer engagement metrics, as they can provide valuable insights into how we might perform in the future. Many companies overlook this metric, but it’s telling because it reflects how engaged our customers are with our brand and products. – Chase Hughes, Pro Business Plans
8. Customer Feedback
In my experience, regularly soliciting feedback provides insights into the health of your business and how it might perform in the future. By understanding customer needs and preferences, you can make data-driven decisions to boost satisfaction and drive growth. Also, feedback can help identify potential issues early on so you can take proactive steps to avoid future problems. – Ifiok Nkem, MarketingBlocks
9. ‘Right’ Activities That Generate Results
Success comes from understanding which activities will generate the results you want. Lagging indicators like the sales, profits and numbers of new and retained clients are the results of “right” activities. Identify those activities (e.g., the number of prospects becoming clients) rather than generic numbers. The key growth indicator is trends; more “right” activities generate more impact over time. – Jerry Cahn, Age Brilliantly
10. Employee Engagement
One often overlooked leading indicator that can provide valuable insights into a company’s future performance is employee engagement. When employees are engaged and motivated to work, they are more likely to be productive, innovative and collaborative, which can significantly impact a company’s success. Unfortunately, many businesses neglect this critical indicator. – Michael Shribman, APS Global Partners Inc.
11. Supply Chain Efficiency
Supply chain efficiency is an area that may often be overlooked for how it is interwoven into so much of the business. It affects marketing, branding, operations and sales. Delays and broken chains reveal a path toward broken trust that could hinder revenue. Being mindful of how supply chain partners are supporting the business helps ensure the business is keeping promises and driving revenue. – Paul L. Gunn, Jr., KUOG Corporation
12. Annual Churn Ratio
The best metric a company can use to guide them into the future is the annual churn ratio. If customers are leaving you, then nothing else matters. Start working with customers to find what feature or tool is missing to keep them from leaving. – Joseph Edgar, SnapAds
13. Top Performers And Their Motivators
Companies need to start looking into the leading indicators concerned with their people to determine who are the true top performers, what motivates them, what gets them engaged and what makes them disconnect. If companies can also start to predict the attrition of top performers and take measures to prevent it, they will save millions, as top performers are up to many times over more productive than regular employees. – Denys Grabchak, Performetry
14. Why Customers Use And Need Your Service
There are economic leading indicators and customer-centric leading indicators, and many are specific to your company’s service or product rather than a broad-stroke answer. So, you should look at why customers use your service, what leads to the need for your service as well as the indicators to those factors. – Howard Rosen, LifeWIRE Corp
15. How Quickly New Clients Refer You
One of our greatest leading indicators is how fast and how furious new clients refer other clients to us. We can always tell right out of the gate when our clients want to repay us for what we have accomplished for them. I used to visit one such client in Nantucket every summer. I would spend a week with them and they always had me booked with new millionaire clients every morning and afternoon. – ‘Smitty’ Robert J. Smith, Robert J. Smith Productions
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