Product metrics and goals
Leading and lagging indicators
Also called Leading indicator, Lagging indicator
Leading indicators move first and predict results; lagging indicators confirm results after they've happened.
How it's worked out
Leading: changes before the outcome, and can be acted on. Lagging: reports the outcome
Revenue, churn and annual retention are lagging: by the time they move, the causes are months old. Activation, weekly usage and support tickets are leading: they warn early.
Steer by leading indicators and judge by lagging ones. A team that only watches lagging numbers learns about problems too late to act.
In practice
A drop in weekly usage among new customers in March predicts the rise in cancellations that shows up in June.
Common mistake
Choosing a leading indicator that doesn't actually predict the outcome. Check that it moved before the result did in the past.
Where it comes from
The terms come from economics, where Wesley Mitchell and Arthur Burns classified business cycle indicators for the National Bureau of Economic Research in 1938.