Lagging and Leading Indicators Template

A KPI is any metric that indicates performance against a strategic goal. It can be leading or lagging. A leading indicator specifically predicts a future outcome. For example, "monthly revenue" is a lagging KPI, while "qualified trial starts" is a leading KPI that predicts future revenue.

Two to three. One leading indicator is fragile (if it stops being predictive, you are blind). More than three is noisy and hard to prioritize. The [Metric Definition Template](/templates/metric-definition-template) helps you define each one precisely.

Run a correlation analysis on 6-12 months of historical data. Shift the leading indicator data forward by the expected time lag and calculate the Pearson or Spearman correlation with the lagging indicator. A correlation above 0.5 is a strong signal. Below 0.3, the relationship is too weak to rely on.

Yes. "Activation rate" is a leading indicator for "monthly revenue" (activated users convert to paid) and a lagging indicator for "onboarding completion rate" (onboarding drives activation). Whether a metric is leading or lagging depends on what outcome you are trying to predict.

If the ideal leading indicator is hard to instrument, find a proxy. For example, if you cannot track "time spent in collaborative editing," you might use "number of shared documents created" as an approximation. Document that it is a proxy and revisit when better instrumentation is available.