Leading indicators predict future performance. Lagging indicators report past results. Learn how to balance both in your KPI tree.
A lagging indicator reports the outcome of past activity (e.g., quarterly revenue, churn rate). A leading indicator predicts future outcomes (e.g., pipeline value, product usage frequency). In a well-built KPI tree, the root metric is typically a lagging indicator, while leaf nodes tend to be leading indicators. This structure is powerful because it connects daily actions (leading) to business outcomes (lagging) through a traceable mathematical path.