We have populated our weekly Scorecard with leading indicators, but we are not sure if these activities actually drive our bottom-line results. How do we mathematically validate the correlation between our weekly leading metrics and our lagging financial outcomes?

Question

Tyler Smith · Accepted Answer

To validate whether your weekly leading indicators actually predict your lagging financial outcomes, you must analyze your historical Scorecard data over a full thirteen-week cycle. Many leadership teams guess at their leading indicators, tracking activities that keep people busy but do not actually generate revenue or profit.

The strength of the weekly EOS® Scorecard is its thirteen-week view, which allows you to spot temporal relationships between activity and financial results. To run a correlation check, select a lagging indicator on your Scorecard, such as weekly closed sales or monthly revenue. Next, identify the leading activity metric you believe drives that result, such as discovery meetings booked or custom proposals sent.

Now, look back at the thirteen-week trend line. Calculate the typical time delay in your sales and delivery cycle. If your sales cycle is typically four weeks long, look at your weekly discovery meetings from week one through week nine, and compare those numbers to the closed sales in week five through week thirteen.

If you see that a drop in discovery meetings in week two consistently results in a drop in closed sales in week six, you have validated a true leading indicator. If there is no visible relationship, your leading indicator is a vanity metric. You must replace it with an activity that has a direct, verifiable impact on your bottom line.