Data Science

Leading vs Lagging Indicators: Using the Right KPIs for App Marketing

In the neverending search for improvement and excellence, you will come across various programs aimed at making your organization faster, better, and stronger. Which only means you’re going to be measuring key performance indicators or KPIs.

Just be aware that there’s a difference between leading vs lagging indicators. Knowing which is which can help you track and measure the right metrics. This article helps you break down what leading vs lagging indicators you need to measure the performance of your mobile app, and comes complete with examples of how to use them.

Quick Review: What is a KPI?

Key performance indicators are one way to measure your organization’s performance while striving to attain specific business goals. KPIs make your performance quantifiable, time-bound, and transparent to all. By giving concrete numbers to efforts, everyone on your team can see the overall progress and strive together to reach business goals.

But these indicators come in one of two flavors: leading and lagging. Let’s define each before giving more concrete examples of lagging indicators as well as examples of leading indicators in business.

Lagging Indicators Measure Results

Lagging indicators are usually results oriented. This means they are the direct result or output of your organization’s activity. It makes lagging indicators easy to measure but not as easy to improve or influence.

Because they measure the output or the result of your marketing efforts, lagging indicators usually come after an event happens or an action occurs. By their nature, they are a moving target. As you improve aspects of your performance, the KPIs may be constantly changing.

The difficulty comes when you want to improve the output. How do you influence the outcome when, by the time you get the numbers, efforts have already been completed? The solution turns out to be: taking control of your leading indicators so that your lagging indicators can be improved.


leading and lagging indicators - what are leading indicators?

Examples of Lagging Indicators in Business

Overall, the most relevant lagging indicator for your entire business will be revenue. But there are others that will better match the needs of your department.

In measuring marketing performance, lagging indicators could include metrics such as:

  • Brand recognition
  • ROI
  • Customer acquisition costs

Customer success might use lagging indicators like:

And finance would fare better with classic KPIs such as:

  • Net revenue
  • EBITDA
  • ARR

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Leading Indicators Measure Change

Leading indicators, on the other hand, are easier to influence or improve since they deal with immediate progress and show the likelihood that you will achieve your goals.

However they’re difficult to quantify and measure at the end of your effort. This is because you need to have well-defined processes and very specific tools in place in order to measure them.

The point of it all is to improve leading indicators over time in order to enhance your lagging indicators. You’re tweaking your operational processes to positively impact financial results or service excellence.

Examples of Leading Indicators in Business

Some of the leading indicators at top tech companies may include:

For development teams, it could be as simple as: number of items released. If the team completed and released everything that they committed to, their stakeholders are pleased.

In marketing, you might have a leading indicator such as the number of outreach emails you send out in order to promote your content. This leading indicator increases the chance that bloggers and influencers in your space link to your website. But in the end, it’s a bit more difficult to measure whether your emails will successfully lead to posts mentioning or embedding your infographic.

For customer success, your leading indicators will probably contain:

  • Open tickets older than 1 day
  • Backlog of open tickets per customer success agent
  • Number of tickets reopened

Leading and Lagging Indicators Balanced Scorecard

Another related concept here is the leading and lagging indicators balanced scorecard – a strategic planning system that allows you to align daily work to higher level business objectives in a visual grid. It helps in prioritizing those projects and products that make sense.


Leading and lagging indicators balanced scorecard

The balanced scorecard contains a grid – or a strategy map – that separates your efforts into larger buckets. On the X-axis, you can identify the objective, how success will be measured, the target, the projects, and the persons responsible. While on the Y-axis, you plot out whether a tactic belongs to one of the five perspectives with which to view your KPIs:

  • Financial: how financial resources are used
  • Customer: from the point-of-view of the customers or stakeholders
  • Internal: looking at internal quality and efficiency in your processes and in final product
  • Learning and Growth: looking at performance with regards to staff, infrastructure, technology
  • Values: looking at culture and mission

Mapping out your priorities on a strategy map then allows an organization to visualize how they create value from every important aspect of the business. And KPIs are used to track progress toward the higher goal.

3 Leading vs Lagging Indicators in App Marketing

So how do you use leading vs lagging indicators to enhance your app marketing? Here’s a list of three specific marketing KPIs that should help measure your progress:

1. Earn Back Your Marketing ROI

ROI measures whether the money you’ve invested in your campaign is returning to you and whether there is any profit above and beyond the investment. As mentioned above, ROI is a lagging indicator, so it will show you results, but only at the end.

If you want to improve ROI, look to enhance your leading indicators such as:

  • Increasing unique visitors to your website
  • Increasing daily active users of your mobile app
  • Increasing the amount of time that users engage with your app or stay on your website

2. Lower Customer Acquisition Costs

Because you will always need to add new users, and the cost of acquiring them is always expensive, this lag metric can be improved by focusing on the following leading indicators:

  • Increase the number of new downloads by incentivizing users or improving app store presence
  • Increase the number of referrals by launching a customer referral program: it helps improve brand loyalty while attracting new users

3. Lower User Churn Rates

Most apps lose 80% of new users in the first 90 days, so it’s nothing new. However, as a mobile marketer, your job consists of keeping this number from ballooning out of control. User churn rate is a lagging indicator, but it can be improved by tracking and improving on the following leading indicators:

  • Reduce uninstalls by improving performance issues such as bugs, battery drain, or latency
  • Win back churned users by sending them surveys, discounts, or retargeting ads and helping them see the benefits of your app

These are just three KPIs. There are many more that may be pertinent to your app. For a more in-depth discussion on what those KPIs are, plus how you can track the metrics that truly matter when scaling your app, download our whitepaper: Metrics That Matter For Growth: A Handbook for Mobile Marketers.

Metrics That Matter For Growth Whitepaper

Metrics That Matter for Growth: A Handbook for Mobile Marketers

Not sure what you should be measuring? Get started with our guide and learn how to track metrics like a true pro.

Download Now

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