Lagging Indicator

What Is a Lagging Indicator?

A lagging indicator is a performance metric that reflects outcomes of past actions, such as closed revenue, win rate, or customer churn. These metrics show what has already happened rather than predicting what’s likely to happen next.

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In B2B sales, lagging indicators help leaders assess whether the organization hit or missed its targets, validating the effectiveness of past strategies. They complement leading indicators, which forecast future performance by tracking inputs and activities.

Why Lagging Indicator Matters in B2B Sales

Lagging indicators are foundational to Forecasting Accurately and Hitting Your Number. They quantify results from decisions made weeks or months earlier and provide the context you need to evaluate process health and sales execution quality.

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Without consistent measurement of lagging indicators, teams risk reacting too late to poor performance trends. When properly integrated, they validate strategy effectiveness, support board reporting, and inform capacity and territory planning.

How to Use Lagging Indicator in Your Sales Motion

1. Define which outcomes matter most.

Start by aligning with your revenue goals. Common lagging indicators include total closed revenue, win rate, average deal size, and churn rate. Select a focused set tied directly to your North Star metrics.

2. Map them to your forecast model.

Lagging indicators should anchor your revenue model. For example, use historical close rates to validate forecast accuracy or determine whether productivity assumptions hold. The goal: translate past results into predictive insight.

3. Review them during QBRs and forecast calls.

Embed discussion of lagging indicators into monthly or quarterly reviews. Evaluate whether leading activity metrics (like meetings or opportunities created) converted into real revenue.

4. Use insights to adjust future inputs.

Once trend lines emerge, shift emphasis toward improving leading indicators. For instance, if win rates drop, inspect opportunity qualification or deal execution processes. Lagging data becomes the foundation for forward-looking decisions.

Key Metrics and Benchmarks

Lagging indicators typically align with top-of-funnel and bottom-of-funnel outcomes. Benchmarks vary by industry and stage, but here’s a guide for SaaS sales:

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• Closed-won revenue: Should match or exceed quota attainment (commonly 90–110% for high-performing teams).
• Win rate: Average 20–30% for enterprise SaaS; mid-market often 25–35%.
• Customer churn: Under 5% monthly or <15% annually for subscription-based businesses.
• Average deal cycle: 60–120 days depending on ACV and complexity.
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Use rolling three-quarter averages to establish baselines and measure directional improvement.

Common Mistakes and How to Fix Them

Frequently Asked Questions

How are lagging and leading indicators different?

Leading indicators track current inputs (like meetings booked), while lagging indicators show results (like revenue closed). The two work together to connect effort to outcome.

How often should I review lagging indicators?

At least monthly for operational oversight, and quarterly for strategic reviews such as QBRs or board reporting.

Can lagging indicators predict future performance?

Not directly. But when paired with leading indicators, lagging data helps calibrate assumptions in your forecast model.

What’s the best lagging indicator for sales leaders to track?

Closed-won revenue remains the primary measure, though win rate and average deal size reveal underlying health more quickly.

How do lagging indicators influence rep accountability?

They establish outcome ownership. By reviewing lagging results by rep or segment, leaders can identify who consistently converts activity into results.