{"id":1674524,"date":"2018-11-09T11:50:50","date_gmt":"2018-11-09T19:50:50","guid":{"rendered":"https:\/\/www.retailpro.com\/News\/blog\/?p=1674524"},"modified":"2018-11-09T11:42:43","modified_gmt":"2018-11-09T19:42:43","slug":"what-can-leading-indicators-do-for-the-bottom-line","status":"publish","type":"post","link":"https:\/\/www.retailpro.com\/News\/blog\/index.php\/2018\/11\/09\/what-can-leading-indicators-do-for-the-bottom-line\/","title":{"rendered":"What can leading indicators do for the bottom line?"},"content":{"rendered":"

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Think of the data that makes up your Business Intelligence as being made up of cause and effect factors.<\/p>\n

Those two factors are lagging indicators and leading indicators.<\/p>\n

The difference between them isn\u2019t complicated, but it is critical.<\/p>\n

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Lagging Indicators = Effect<\/strong><\/p>\n

These are made up of accounting and historic measures.<\/p>\n

In other words, these are the financial ratios you build based on the income statement.<\/p>\n

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Leading Indicators = Cause<\/strong><\/p>\n

These are also historic but look at internal processes and external events that occur prior to revenue.<\/p>\n

Some examples of what they are include the number of qualified sales leads, time to market, conversion ratios, employee satisfaction, etc.<\/p>\n

These are the indicators you should focus on if you want to improve results.<\/p>\n

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Why the big difference? <\/strong><\/p>\n

According to Gartner, 80% of current Business Intelligence content is made up of lagging indicators.<\/p>\n

However, all of that current Business Intelligence content should actually be made up of leading indicators.<\/p>\n

Why the big difference? One word: value.<\/p>\n

Lagging indicators are valuable if you only want to look at current conditions, but it\u2019s important to look at future projections to better guide your company toward greater success.<\/p>\n

Leading indicators give retailers the ability to \u201clook into the crystal ball\u201d and take proactive instead of reactive action, which can save both time and money.<\/p>\n

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So what can leading indicators do for the bottom line?<\/strong><\/p>\n

When you have the right information and understand what truly impacts success and failure in your business, the investment brings dividends quickly and abundantly.<\/p>\n

Leading indicators are truly valuable for businesses of any size because they:<\/p>\n