In the world of performance management and strategy execution, understanding the difference between lead and lag measures is crucial. These concepts help organizations and individuals focus on the right activities to achieve their desired outcomes. So, let’s get some clarity on these terms in this article.
To help illustrate these concepts, let’s paint a hypothetical scenario for example. Let’s say you and a colleague work for a yoga studio. You want people to sign up for one of the yoga classes, so you decide to host a table at a community event in order to obtain these sign-ups.
After the event you and your coworker return to the studio. Your coworker eagerly tells the studio owner, “The event was great, we got 10 sign-ups!”
You on the other hand reflected and questioned the success of the event before speaking.—You want to be this person, the one who takes time to look at metrics.
What are Leads & Lags?
The 10 sign-ups received at the community event is an example of a lag measure. That number is a done deal after the event is over, and there is no changing the outcome.
Lag measures are outcome-based metrics that reflect the results of actions already taken. They show the final performance and are typically used to assess success or failure after the fact.
Lead measures, on the other hand, are predictive and influenceable metrics that can be directly impacted to achieve desired outcomes. They are the actions or behaviors that drive the results we aim to achieve.
Let’s compare the two a bit more:
| Leads | Lags | |
|---|---|---|
| Timing | Leads are early indicators | Lags are final results |
| Control | Leads can be influenced and controlled | Lags are fixed and unchangeable |
| Focus | Leads focus on activities, inputs and behaviors that drive results | Lags focus on the results and outcomes of those activities |
| Usage | Leads are used to make adjustments in real-time in order to improve outcomes | Lags are used to evaluate the success of strategies and make decisions based on results |
How did the Yoga Studio Do?
So, should your coworker have been excited about getting 10 sign-ups? Well, of course any sign-up, or conversion, is a good thing. A conversion is when someone took the desired action you wanted them to take, which in this case is to sign up for the Yoga class.
If we look a bit closer we can investigate conversion rate. A conversion rate is the percentage of people who take a desired action after engaging with some sort of marketing effort. This can be mathematically counted.
Let’s say we estimate that 1500 people walked by the yoga studio table at the event. Calculating the conversion rate would look something like this:
- Number of sign-ups: 10 conversions
- Number of people exposed to your event table: 1500
\[ \text{Conversion Rate} = \left( \frac{\text{Number of Conversions}}{\text{Number of People Exposed}} \right) \times 100 \]
\[ \text{Conversion Rate} = \left( \frac{10}{1500} \right) \times 100 = 0.67\% \]
To determine the success, consider these factors:
- Conversion Rate: A conversion rate of 0.67% might be low or high depending on industry standards and your specific goals.
- Goals and Benchmarks: Success depends on whether the 10 sign-ups meet your initial goal. If you aimed for 5 sign-ups and got 10, it’s a success. If you aimed for 50, it might be less so.
Let’s look at percentages for better context. If the goal was to achieve a 1% conversion rate, then 0.67% falls short. However, if the industry average is around 0.5%, then 0.67% is above average. So, you’ll want to do some research on average benchmarks. - Cost-Benefit Analysis: Compare the cost of attending the festival (including time, materials, and any fees) to the potential revenue from 10 new students.
“The best marketing strategy ever: CARE.”
Gary Vaynerchuk
How Could Have Leads Increased?
Since lead measures are the inputs and activities that are flexible and drive outcomes, there can be made effort to increase them. Listed below are some examples:
- Increase Engagement:
- Interactive Demos: Offer demonstrations to attract more attention and engage passersby.
- Personal Touch: Have friendly, enthusiastic staff to greet and engage people, answering questions and providing more personalized information about the classes.
- Marketing Materials:
- Visually Appealing Display: Ensure the table has attractive, eye-catching signage that clearly communicates the benefits of joining the yoga class.
- Informative Handouts: Provide detailed brochures or flyers that highlights class details and the value benefits of taking it. Ensure they have a direct call-to-action, such as a QR code to register or a campaign-specific website landing page to learn more.
- Keep the Content Specific: Ensure all materials prominently feature information about the yoga class, making it easy for conversations to pivot towards the main goal.
- Tally the Collateral: Take count of how many people took material, and learn from these numbers.
- Have a Newsletter: Use a tablet or phone that allows people to sign up for a newsletter right at the table. Then execute an email campaign sequence to transition these leads into a sale.
- Strategic Placement:
- Location: Ensure the table is in a high-traffic area with good visibility.
- Timing: Be aware of peak times during the festival when foot traffic is highest and ensure that the most engaging activities are planned for those times.
- Improve Offerings:
- Exclusive Offers: Provide a special sign up discount for those who register at the event.
- Contests or Giveaways: Organize a raffle or giveaway that requires signing up or providing contact information to enter. Then you can follow-up with an email campaign.
- Follow-Up:
- Collect Contact Information: Collect emails or phone numbers to follow up with those who expressed interest but did not sign up immediately.
- Post-Event Communication: Send follow-up emails thanking them for visiting your table and providing more information or reminders about the yoga class.
Conclusion
Understanding the difference between lead and lag measures helps organizations and individuals focus on the right activities to achieve their desired outcomes. Lead measures are about taking action and making adjustments to influence future results, while lag measures are about measuring the success of those actions. By effectively managing both types of measures, businesses can drive performance and achieve their strategic goals.
