Leading vs lagging sales indicators: how to forecast from activity data

Lagging sales indicators, such as revenue, new customers and last quarter's win rate, tell you what already happened. Leading indicators, such as call attempts, conversations and meetings booked, tell you what is likely to happen next, and you can steer them this week. A good sales dashboard has a few of each, linked in a chain. You can then forecast from your own activity: planned call attempts × connect rate × meeting rate gives the meetings you can expect. Compare that forecast with reality every month, and you will know how much to trust it.

Leading vs lagging in one minute

Think of driving a car. The speedometer tells you how fast you are going right now. The trip counter tells you how far you have already driven. You need both, but only one helps you avoid a crash.

• Lagging indicator: measures a result. It is easy to measure and hard to change, because by the time you see it, it already happened. Examples: revenue, new customers, win rate.
• Leading indicator: measures something that comes before the result. It is harder to pick well, but you can change it today. Examples: call attempts, conversations, meetings booked.

The idea is not new. In their 1992 HBR article on the balanced scorecard, Robert Kaplan and David Norton argued, after a year-long project with 12 companies, that financial measures should be complemented by operational measures, which they called the drivers of future financial performance. Sales is a clear case of the same logic.

Why you cannot manage revenue directly

Revenue is the number everyone watches. It is also the one a sales manager can least control directly. The authors of the book Cracking the Sales Management Code describe this in a blog series for the Sales Management Association. They sorted 306 sales metrics, collected from dozens of sales forces, by one question: how much can a manager directly affect this number?

They ended up with three levels:

Their striking finding: in their study, 83% of the metrics companies tracked could not be affected through the direct actions of the sales force. They call activities the best leading indicators of sales performance. That is a strong claim from a book's authors, not a controlled experiment, but the logic holds: if you only watch results, you only learn about problems when it is too late to fix them.

Pick leading indicators that really lead

Not every activity number is a good leading indicator. A good one passes three tests:

1. It comes before the result. Meetings booked this month should show up as customers in a month or two.
2. It moves the result. If you double it, the result should go up. Emails sent might not pass this test; conversations usually do.
3. People can steer it. A caller can make more attempts. A caller cannot decide the prospect's budget.

For a cold calling team, a practical set looks like this:

• Call attempts per week: pure activity. The input everything else depends on.
• Connect rate: conversations ÷ attempts. Tells you about list quality and calling times.
• Conversation-to-meeting rate: meetings ÷ conversations. Tells you about the script and the caller.
• Meetings booked: the objective the caller owns.
• Leads with a planned next step: a health check. A lead without a next step is a lead you will forget.

Then keep one or two lagging indicators, such as new customers per month and revenue, to check that the chain still works. For a full list of definitions, see our guide to cold calling KPIs.

How to forecast from activity data

An activity-based forecast does not ask "how do you feel about this deal?". It multiplies what you plan to do by how well it has worked so far.

Expected meetings = planned call attempts × connect rate × meeting rate

Expected customers = expected meetings × show rate × close rate

The numbers below are an example, not a benchmark.

Two practical rules make this much better:

• Use your own rates, per campaign. A new list in a new sector rarely behaves like your best old one. Our article on how many calls it takes to win a customer walks through the same math in more detail.
• Respect the time lag. Calls this month become meetings this month, but customers maybe in two or three months. Put the customers in the month they will really sign, based on how long your deals usually take.

Planned activity is the weak spot

The rates are usually stable enough. The plan is not. Holidays, illness and meetings eat calling time. Plan with the real number of calling days, and check it against how many attempts people actually made in the last few weeks. If the team has averaged 30 attempts per caller per day, do not forecast with 40. Our guide on setting sales goals covers how to turn this into realistic targets.

Why gut-feel forecasts often miss

Many forecasts are built from what reps say about their deals. That is a weak base. In a 2022 survey by Gong, a vendor of sales software, of 928 sales and revenue professionals, only 24% of sales leaders said they trusted the forecast commitment from their reps. And 52% said their organisation regularly missed its forecast by more than 10%. It is vendor research that promotes its own product, and it is self-reported, so read it as a signal, not a precise measure.

There is also a trap in how teams spend their pipeline meetings. In a 2015 HBR article on a survey of 62 B2B companies, Jason Jordan and Robert Kelly warn that talking mostly about close dates, probabilities and deal sizes is forecasting, not pipeline management. The useful meeting is about how to move deals forward. In their survey, companies that spent at least three hours a month managing each rep's pipeline reported 11% greater revenue growth than those that spent less. It is a survey of executives' own ratings, so it shows a link, not proof of cause.

Activity data helps on both points. It is less dependent on opinion, and it gives the meeting something concrete to talk about: "Your connect rate dropped this month. Shall we look at your calling times?"

Check your forecast every month

A forecast you never check is a guess you never improve. Once a month:

1. Write down the forecast for the month before it starts.
2. At the end, compare with what happened: attempts, conversations, meetings.
3. Calculate the error: (actual − forecast) ÷ forecast. Example: forecast 35 meetings, actual 30, error is −14%.
4. Find where the gap came from. Fewer attempts than planned? A lower connect rate? A lower meeting rate?
5. Adjust next month's plan or rates.

The fourth step is where the leading indicators pay off. If the forecast missed because attempts were 20% below plan, the fix is time, not the script. If attempts were fine but the meeting rate fell, look at the script or the list.

In Ringlane, every call gets one outcome with a single key, so the activity data builds itself. The reports show call attempts, connect rate, conversations, conversation-to-meeting rate and meetings as a share of attempts per period, campaign, team and person. The rhythm calculation works out how many calls per week and per day you need to win one new customer per week, based on your own numbers. For using these numbers in one-on-ones, see our guide on coaching a sales team with data.

Common mistakes with sales indicators

• Only watching revenue. By the time it drops, the cause is months old.
• Too many metrics. Three to five leading indicators are enough. More numbers mean less attention per number.
• Activity without quality. 100 attempts on a bad list is not progress. Watch the rates next to the counts.
• Borrowed rates. Forecast with your own numbers, not with a benchmark from someone else's market.
• Ignoring the time lag. Today's calls are next quarter's customers. Do not judge a new campaign on revenue in week two.

Frequently asked questions

Sources

1. Harvard Business Review: The Balanced Scorecard: Measures That Drive Performance (Kaplan and Norton, 1992)
2. Sales Management Association: Cracking the Sales Management Code, the secrets to measuring and managing sales performance
3. Gong: As Economic Headwinds Grow Stronger, Only 24% of Sales Leaders Are Confident in Their Team's Revenue Forecast (2022)
4. Harvard Business Review: Companies with a Formal Sales Process Generate More Revenue (Jordan and Kelly, 2015)