You will be able to tell which numbers predict results and which only report them.
It is the 28th of the month and the team is S$20,000 short. You know this because the revenue report says so. You also know there is almost nothing you can do about it now. The deals that will close in the next three days were created weeks ago, and the ones that were not created then will not close in time. The report is accurate. It is also too late to help.
Revenue tells you whether the team succeeded. It does not tell you what to do differently on Monday. This lesson separates the numbers that report the past from the numbers that predict the future, and adds two more that explain the difference between reps.
A lagging measure records an outcome after it has happened. Revenue closed and deals won are the obvious ones. Quota attainment, average revenue per rep and client cancellations are lagging measures too.
Lagging measures matter. They are what the business runs on, what your own manager asks about, and what pay plans are built around. But they have two weaknesses as management tools. They arrive late, after the work that produced them is finished. And they do not tell you why. A rep with low revenue this month might have had too few meetings, poor discovery, small deals, slow buyers or plain bad luck. The number is the same either way.
Lesson 1.1, Your job is the team's number, not your own, made the same point from the other direction: results are the last thing to move, so a manager who only watches results is always reacting.
A leading measure counts an activity or an early event that tends to come before a result. For a sales team, the usual ones are meetings booked, discovery calls held and proposals sent. If you have used the stages from module 4, they map straight across: new deals reaching meeting agreed, problem confirmed and proposal seen each week.
Leading measures are useful because they move first. If Wei Ming's team booked eight first meetings a week for the last two months and booked three this week, that tells him something about revenue a month or two from now, while there is still time to act. Prospecting: build a pipeline that does not run dry, lesson 7.1, Pipeline maths: work backwards from your target, showed how a seller can work out the weekly activity a target needs. A manager does the same for the team and watches the result every week.
Leading measures are not guarantees. A team can book plenty of meetings with the wrong buyers. That is why activity alone is not enough, and why the next two kinds of measure matter.
A conversion rate is the share of deals that move from one stage to the next. If the team reached meeting agreed on 30 deals last month and 18 of them reached problem confirmed, the conversion between those stages is 60 percent.
Conversion rates sit between leading and lagging. They show how well activity turns into progress. And they show where deals leak. A team with plenty of meetings but low conversion from meeting agreed to problem confirmed has a discovery problem. A team that confirms problems well but rarely turns proposals into wins may have a pricing, proposal or competition problem.
Prospecting: build a pipeline that does not run dry, lesson 7.2, Read your conversion rates to find the leak, taught this for an individual seller. As a manager, you look at the same rates for each rep and for the team, and you compare them. Lesson 8.2, From numbers to coaching decisions, shows how.
Two reps can do the same amount of activity, convert at similar rates, and still end up with very different results. Usually that comes down to two other measures.
Average deal size is the average value of won deals. A rep who closes four deals at S$15,000 brings in more than a rep who closes five at S$9,000, with fewer deals. If one rep's deals are consistently smaller, the question is why: different buyers, more discounting, or selling a smaller version of the product.
Sales cycle length is the average time from first meeting to signature. A rep whose deals take three months instead of six weeks needs a fuller pipeline to produce the same monthly result, because each deal is in progress for longer. Long cycles can come from larger buyers, but they can also come from missing steps, such as never meeting the person who decides.
In Wei Ming's team, Aisha and Daniel had similar activity and conversion. Aisha's revenue was higher because her average deal was larger, which turned out to be because she always asked about the client's other sites before writing a proposal.
Most CRMs can produce dozens of numbers. You need a small set, mostly leading, with one or two lagging results to keep score. Lesson 8.3, Build your dashboard, will ask you to choose no more than eight.
The leading measures that matter most are the ones closest to your team's main weakness. If your conversion rates look healthy but the pipeline keeps running thin, watch first meetings booked. If activity is high but few deals reach proposal seen, watch the conversion from meeting agreed to problem confirmed.
In the activity below you will sort ten common sales numbers into leading or lagging and pick three leading measures for your own team. For each of your three, write one sentence on why it matters for your team in particular.
Sort ten common sales numbers into leading or lagging and pick the three leading ones that matter most for your team.
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