Canaries and Motorbikes

Sailors rely on being able to “see” the wind.

They’ll watch the ripples on the surface of the ocean, the colours of the waves, and the foam on the crests – and it allows them to see the invisible gusts before they have approached.

In business or investment, we call these types of signals “leading indicators”.

They’re signals that show something is about to happen. Early warning signs. Canaries in coal mines.

Every world-leading expert I know has a few of these signals they watch.

An old colleague of mine (a semi-retired investment analyst and fund manager) commented recently that when he’s bored, he logs into vehicle sales websites, and counts the number of low-mileage Harley Davidsons and Mercedes Benz. It’s a signal that tells him how much financial stress private investors are under.

During the pandemic, I’ve kept a mental note of petrol prices each time I pass a petrol station. Higher petrol prices correlate with greater levels of community transmission. The higher the petrol prices are, the more mobile and complacent people are, and the more infections there are likely to be. [Related: I’m also watching the number of new infections in New South Wales right now. Current figures echo the stats from Melbourne a month ago. If the trajectory of the past few weeks continues, it’s likely Sydney will be in lockdown by early August.]

And in a recent post, I wrote about watching chains of indicators and how ripples from the pandemic have having wide-reaching effects.

But let’s apply leading indicators to marketing – and assume you wanted to forecast and improve sales.

One way to do this would be to look at sales team capacity and recent performance. (i.e. How good have they been lately? How many sales do they consistently make?)

But this would ignore the leading indicators that affect sales performance.

For example: a future dip in sales might be caused by a dip in leads, which might be caused by a dip in website traffic, which might be caused by a dip in ad effectiveness, which might be caused by the appearance of a new competitor – or perhaps even an industry-wide downturn.

If you see these ripples ahead of time, you can pretty easily predict what’s ahead.


P.S. I was fortunate to be interviewed by Rebecca Bradshaw for the Lockdown Library interview.

In this video, we put some of the ideas from my books “Unassailable” and “Beyond The Booth” into practice.

If you’re after some fresh reading material to help you to elevate your thinking, or get you through the pandemic, I highly recommend the collection Bek has assembled. There are some great books in there, and I’m proud to have two of my own in the collection alongside them.

Pick up the full (free) reading list.