Leading vs. Lagging Indicators

Lagging indicators tell you what happened. Leading indicators hint at what’s coming. This section teaches how to balance both, so you can spot issues early and stay ahead of the curve.

Why it's Important

Helps you make proactive—not reactive—decisions.
Identifies signals of future success (or problems).
Improves forecasting for sales, product, and marketing.
Lagging-only focus leads to “post-mortem” decision-making.
Investors prefer startups who track both types.

How to Implement

Identify your core lagging indicators (e.g., MRR, churn).
Brainstorm potential leading indicators (e.g., trial usage, demo booked).
Define what "healthy" leading signals look like.
Track leading indicators weekly to detect early shifts.
Connect leading to lagging with a correlation model.
Set alerts for key leading indicator changes.
Run scenario modeling based on leading data changes.

Available Workshops

Indicator Mapping: Define your startup’s top 3 of each type.
Time-Lag Analysis: Track how long leading indicators take to impact lagging ones.
Signal vs Noise Drill: Review past data to identify false positives.
KPI Shift Simulation: Use past changes to forecast potential outcomes.
Team Forecasting Game: Predict next quarter based on leading data.
Red Flag Alerts: Set up a mock alert system for indicator changes.

Deliverables

A list of top 3–5 leading and lagging indicators.
Metric correlation chart (what leads to what).
Regular dashboard views of both types.
Alert system or rules around leading indicator drops.
Scenario models linking activity to outcomes.

How to Measure

Accuracy of forecasts using leading indicators.
Average time between leading activity and outcome.
Number of course corrections based on leading data.
Team understanding of indicator types (via quiz or poll).
Frequency of updates to leading indicators.
Engagement with indicator dashboards.
Reduction in surprise events due to early detection.

Real-World Examples

Canva

Tracked new template usage as a leading indicator of future engagement.

Notion

Monitored invited users per workspace as a predictor of retention.

Calendly

Focused on meeting bookings per user as a sign of long-term value.

Get It Right

Define leading indicators that map to your business model.
Review weekly and act quickly when they change.
Share both types in investor updates.
Teach your team how to spot signal vs noise.
Build simple alerting systems—don’t rely on gut checks.

Don't Make These Mistakes

Focusing only on revenue and calling it a day.
Choosing leading indicators that aren’t measurable.
Reacting to lagging data without analyzing root cause.
Assuming all leading indicators are predictive.
Waiting for investor pressure to track this stuff.