The internet, and along with it technology keeps growing and evolving. A prime example of that would be marketing. It happens to be one of the most data-driven activities in the business. Sales, on the other hand, hasn’t changed as much. The same processes while do help with calculating commissions, doesn’t do much to improve overall sales productivity. What will truly help is Sales Velocity, a management metric that has recently gained popularity. But before we proceed any further.
How Do We Define Sales Velocity?
Sales Velocity is a measurement of how fast you’re making money. This management metric is a prominent aspect of sales, yet we don’t give it too much attention. Due to it considering other aspects like trial length, features to measure sales productivity, and pricing is a valuable part of sales.
In simpler words, it is a measure of how quickly business deals are closed, after a customer shows interest in the form of a lead generation. But how do we use it to it’s best potential?
Why Should You Track It?
- It is quite evident that sales velocity is essential for the growth of your business.
- The higher the sales velocity is, the more revenue you’re bringing in.
- Keeping track of this will help you understand how the sales process impacts your business over time.
- It also helps you determine whether your sales process can be optimized.
Accurately Calculating Your Sales Velocity
With how important sales velocity is for, correctly calculating it is extremely crucial.
You first multiply your opportunities created in a period, then divide all that by your sales cycle. Once you do, run each of them through the equation.
Sales Velocity = Number of Opportunities x Deal Value x Win Rate / Length of Sales Cycle
What Are Its Four Variables?
1. Number of Opportunities
Your pipeline contains a certain number of opportunities(leads). You have to ensure that the opportunities it does contain are qualified, since anything under wouldn’t be good. If it is packed with bad opportunities, there is a slight chance that some of them will convert.
2. Deal Value
Sometimes to referred to as the Average Purchase Value, is simply the average selling price for the deals you close in a month.
3. Win Rate
The average win rate depends on the number of quality leads you have. How do you identify your win rate? You divide your number of sales win by the total number of opportunities.
4. Length Of Sales Cycle
You measure the length of sales cycle in months, which is why this is the only factor you wouldn’t want to increase. It is also often referred to as an Average Sales Cycle Length.
How Do You Increase Your Sales Velocity?
Now that we know how tracking works, let’s recognize how we can increase and improve it.
The prime factor that affects your sales velocity is lead generation. The lesser time a lead spends in the pipeline, the higher its chances of making a deal with you.
But how do you find the best leads?
A lead is a person who is interested in your brand or the services you offer. Leads are the most important aspect for sales velocity. But how do we find said leads? That is where lead generation comes into play.
The process of finding potential customers is called lead generation. It is also a method of funnelling in your potential buyers.
Now that we know what lead generation is, does it play an integral part for your business?
The obvious answer is that lead generation is extremely important for the growth of your business. LeadMi can help by generating quality leads that have a higher chance of converting.
An extremely efficient way is to add more opportunities to your pipeline. While maintaining a healthy pipeline should be your prime focus, learning about your prospective buyers/companies could always give you an upperhand.
Data – driven sales can also give you that much needed edge. Why? The sales velocity is inversely proportional to the sales cycle value. This and many other methods can give your sales velocity that much needed push.
To learn more, read our blog on What Is Lead Generation And How Is It Useful For Your Business?