A LEADING indicator is something that will measure a future event. Economists use these all the time to predict changes in the economy. If economists find use of specific indicators important to determine economic health shouldn't you have a leading indicator or two to measure your business health? As a business owner, broker, or agent you keep track of what you are doing and the effect it is having. Your car has a dashboard of controls and if something is wrong the red light comes 
on. Sometimes people don't see or look for the red light in their business or business career.
If you are working ON your business you will have a set of red and green lights and other measurements to track important trends which can quickly warn of problem areas or encourage full speed ahead. You should not waste time getting bogged down in the small details of working IN the business any more than you should be worried about a minor scratch on your car when the oil pressure light is shining red.
Furthermore measuring business success by measuring trends and directions is far more effective than numbers. Looking at the numbers alone will not tell the entire story. You should be measuring the trends and the movement toward the critical goals of your business.
These are some trends that are worth measuring.
Finances – revenues and sales, profits, cash flow
Inventory – unusual drops or increases
People (Employees or independent agents) – productivity, turnover, engagement scores
People (Customers) – customer satisfaction, customer loyalty scores
There is, however, one measurement that is the most important because it is the biggest leading indicator of future success. No, it is NOT finance and profit. That may surprise you. Of course, profit is indeed very important but it is a measure of what has already happened. Your profit and loss statement should come with the same warning put on mutual funds which is “This represents past performance, which is no guarantee of future results.” That’s right. Just because you have had good sales and profits last year does not mean that you will have increased sales and profits this year. Sales and profits are TRAILING indicators.
A LEADING indicator which will predict future success is customer loyalty or the customer loyalty score. The most important measure of customer loyalty is the answer to this question. “How likely are you to recommend us to your friends?” Do you survey your customers with this question along with other customer questions that will help you understand what you need to do to exceed your customers’ expectations? Whatever else you measure make sure that you track this. Rising scores will lead to more sales. In the same manner falling scores will predict decreased sales.
If you measure customer loyalty and see opportunities for improvement take action immediately. Taking the correct steps will keep your business on the road by creating more sales, profits, and success. See a similar post on our web site.
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