In the past year, I lost 35 lbs.
How did I do this? Exercising more and eating less…especially eating less (and only eating the stuff that’s good for me). In order to achieve this goal, I kept track of what I ate and how much I exercised to be able to get a sense of what helped me lose weight faster. I plan to continue to keep track of what I eat and how much I exercise as well as my overall weight so that I don’t regain those 35 lbs.
I’m tracking my leading indicators (food intake and calories burned) to help me manage my lagging indicator (weight loss and gain).
Most people understand calories in and calories burned, but what they often forget is that understanding how leading indicators help achieve objectives are also very helpful for marketing efforts.
Leading indicators in marketing
All too often, when asked about objectives for marketing campaigns, executives and business owners are at a loss and throw out random things like: “We want to achieve 50 million impressions!” or “We want a million followers!” Beyond the fact that these objectives aren’t always relevant to the business’s broader objectives, they are also lacking the understanding of what goes into achieving those numbers…or the leading indicators.
Back to my weight loss example, I could have said, “I want to lose 35 lbs in 2 months!” which, under a very restrictive diet, could have been achievable, but it would have affected my entire life, so I opted for 6 months, which is more manageable.
If you’re familiar with the S.M.A.R.T. goal-setting framework, here is an example of how leading and lagging indicators help set better objectives from a recent presentation:
The key to this example (the smart goal comes from HubSpot, I added the commentary) is how clearly they understand how to achieve their objectives.
The leading indicator is the INPUT – ie. what you will do to achieve the measurable outcome (lagging indicator). In the HubSpot case, they will increase publishing frequency. How do they know that this will lead to the outcome (lagging indicator) of an 8% increase? Because they have a benchmark from previous efforts!
If you don’t know what it takes to get to an objective, it’s going to be very hard to achieve it. That’s why experimentation is very important early in the process of setting your objectives.
Setting your leading indicators
Most businesses know what they need to achieve overall, or at least they should. They need to hit certain sales targets or subscriber numbers or readers or the like. If you have a budget, you have that number.
The key is to reverse engineer how you got to that outcome in the past. How have you brought in your leads? Attracted subscribers? If you don’t know, you need to start running experiments to find out.
Let’s go back to the first HubSpot example around blog posts and leads [source]. In their broader experiment, they found that 3-4 blog posts per week resulted in 250 inbound leads on average. If 10% of those inbound leads resulted in a sale of $100 on average, they would make $2500/month because of those inbound leads. If they wanted to bring in more leads, they could experiment with increasing their publishing frequency. If doubling the number of blog posts directly correlated with doubling their leads (and their conversions stayed the same), this would be a solid indicator.
Of course, it’s never that straightforward and, as I’ve stated previously, things are always changing and tactics and platforms ebb and flow, so a good marketing team will be constantly looking to create new leading indicators to push on to achieve stronger lagging indicators.
Experimentation is key to setting indicators
One of the reasons Superbowl ads are such an enormous waste of time, energy, and money is because they are such a one-off gamble. If you want to be effective and smart about your marketing spend, you need to try a bunch of things to see how you can lower the cost per acquisition (CPA).
In a series of experiments with a client in the past year, we’ve shaved off a portion of our budgets to test smaller platforms (such as Pocket, a newsreader used by professionals) and the experimentation paid off. We reduced the CPA by 31%. Now we’re putting larger portions of the overall budget into Pocket and reducing budget on commonly used platforms. This isn’t saying that Pocket will work for everyone. That’s not the point. But our leading/lagging indicator experiments helped us measure the performance against other similar tactics.
Just like you would want to diversify your investment portfolio, you’ll want to diversify your marketing efforts.
Your indicators will change
If I go back to the weight loss example again, I can confidently say that the bulk of my weight loss is due to curbing my caloric intake. But does that mean that I don’t have to work out? I’m not a huge fan of working out and I have limited time, but I still work out at least 3x/week (and am aiming to do more).
If working out doesn’t lead to me losing weight (and I don’t like it), why would I put myself through it? Because working out helps me achieve a new objective: fat loss.
Fat loss isn’t just redistributing weight. I’ve found out that I fit into smaller sizes of jeans now because of fat loss. In fact, I’ve hovered at my current weight for 2 months, but have lost a whole size in jeans! My new goal is to lose another 5% in my BMI (measured through a different machine at my gym).
You may have to change your indicators along the way in marketing, too. Going back to that Hubspot example, perhaps you’re not attracting more leads, but you see that the leads coming in from certain types of blog posts convert higher. Maybe they convert at 15% instead of 10%! That’s a solid gain that can help you hone your marketing efforts.
Pocket, for instance, brings in fewer readers than Google Adwords, but they stay longer and read more articles and, as we’ve recently found, subscribe more to the newsletter. So, our lagging indicators are getting more precise, which helps us hone our leading indicators (targeting, content, ad unit type, etc).
Stop setting random objectives
Pro tip: stop setting random objectives and get smart about your indicators.
Millions of impressions, views, and followers are easy to achieve with a bucket of money, but then what? Just shovel more money into buying eyeballs? We already know these are BS, anyway.
Instead, take your money and spend it more effectively.
- Understand what you truly and realistically need to achieve to hit your broader business objectives (and not everything is direct, so understand that).
- Then run experiments with a combination of approaches, platforms, and tactics, making sure you are measuring everything as accurately as possible.
- Look closely at which levers you’re pulling that affect the outcomes and see what happens when you dial-up and down.
- When you hit your objectives, see what other objectives you can do the same with.
Also to note, it’s useful to do research at the onset (and ongoing) that helps you understand the overall benchmarks. What does a good CPA look like for your industry? How long is a lead? What is a newsletter subscriber “worth” versus a LinkedIn follower versus someone who fills in a lead generation form? The more you can set your benchmarks, the better your levers will work.
But overall, do NOT forget the value of those leading indicators. When your CEO says, “We need to cut back on the budget,” you need to be able to show how this could affect the lagging indicators.