For the Clearest Market Insight, Analyze Both Leading and Lagging Indicators
There's an issue plaguing marketers from the wildly experienced to the startups, the data-driven to those still "gut-driven." It's the overwhelming, and sometimes paralyzing, trust issues that marketers experience from conflicting data, reporting issues and lack of confidence in both statistics and humans.
The basics: leading versus lagging indicators. Whether we're talking financial, social trends or marketing metrics, leading indicators precede events and, ideally, help predict what's to come. Lagging indicators, on the other hand, always follow the event.They're the traditional meat-and-potatoes numbers when it comes to sussing out a campaign, test, or other brand initiative. Think market share or unemployment rates.
At a basic level, considering a balanced scorecard of both lagging and leading indicators for decision-making can help you determine your "single source of truth" or the data that everyone can work off of. From there, brands can ensure everyone speaks the same "truth," be it culling historical performance data, assessing campaign results, squashing personal bests and even predicting future success outcomes.
Marketing strategists today not only use leading and lagging lingo, but also put the theory into practice. Marketing has become much more data-driven. Picture a company experiencing a hiccup with a product or service, such as a defect or other ongoing quality issue. The quarterly returns report could be a indicator of a problem with production, packaging or general development. That's a clear lagging indicator. The reporting follows the event or, in this case, the returns.
But what happened ahead of the returns? Were there complaints, either in-store, online or via customer service outlets? Both the lagging indicator, which is the data behind the returned items, and the leading indicator, which is the complaints that potentially indicated a challenge ahead, have merit.
Lagging indicators without leading indicators don't tell the story behind the outcomes. What's more, they don't provide critical early warnings if you are you offtrack with your brand's strategic goals. On the flip side, leading without lagging drill down too heavily on short-term performance. Without those hard lagging numbers, it's virtually impossible to confirm the broader organizational objectives have, or haven't, been achieved.
Where the indicators excel and where they fall short. As standalone indicators, both lagging and leading have their benefits as well as significant shortcomings.
Leading indicators allow you to predict and benchmark real-time KPIs, and demonstrate improvements before a campaign concludes but they are often honed in on a narrow range of measures, such as awareness,that can't be precisely tied to the results.
Lagging indicators definitively follow marketing campaigns, so they are easy to identify, capture and leverage but it's hard to make smart, data-driven decisions with indicators reflect what has happened in the not-so-recent past, rather than what is happening in the present.
Putting it together for the marketer. A balanced scorecard is the key to the marketer's forensic and predictive prowess with data. Like a skilled epidemiologist, savvy marketers look for patterns and ask themselves if past behaviors can indicate future ones. They see anomalies, such as fluctuations in purchase behavior, that might indicate a boom (or a bust) this holiday season.
The General Automobile Insurance Services Inc. puts a balanced scorecard to good use. Using a monthly page flow analysis report, they are able to determine how visitors navigate the company's website, and test page variations to see what could result in higher returns. By displaying a security logo on every page, for instance, The General saw a 16.34 percent uptick in converturing returning visitors into customers.
This approach helps marketers overcome pervasive trust issues with the data. It's tapping into both the customer service complaints and the returns to paint a well-rounded picture of the situation for reacting with some level of stop gap and, after the fact, in a more permanent way.
By balancing the leading with the lagging, the predictive with the "real," brands have both worlds—a reasoned view into the future well-anchored in the recent past.
Entrepreneur Editors' Picks
Tory Burch Built a Brand Around Empowering Women. Now Her Foundation Is Furthering Her Mission: 'How Do We as a Company Have a Positive Impact on Humanity?'
This Founder Had to Play College Basketball in Men's Shorts and Shoes, So She Launched an Athletic Clothing Company Named After the Now 50-Year-Old Title IX Act
Is Beyoncé's 'Break My Soul' the Theme Song of the Great Resignation?
You're Probably Falling for All of Amazon Prime Day's Psychological Sales Tactics. A Marketing Professor Reveals Them — and How You Can Actually Get the Best Deal.
Comedian Paul Virzi: 'If You're Not Authentic, You Have Nothing'
Struggling to Come Up With Creative Ideas? Try Doing This.
Picking a Winning Emerging Brand Is How You Get Rich in Franchising. Here's How to Spot One.