What Is Sales Velocity And How Do You Measure It?
Sales velocity is a sales tool that helps you understand the average time it takes to win a sale. This number is reached through the following formula: the number of Opportunities (or amount of deals or leads in your pipeline) * Deal Value (your expected income) * Win Rate (or the amount of leads that turn into customers over the time) / Length of the Life Cycle (or the average time it takes for a lead to close).
A sales person’s objective is to try to consistently improve that number since that would mean that deals are being won at a faster rate without losing quality. This number can be easily obtained by using data stored in your CRM, but can also be done externally if your current system doesn’t offer that reporting tool.
It’s common to find sales velocity as a sales KPI (Key Point Indicator) in very sales-driven companies.
What Things Should You Do To Improve Sales Velocity?
Increase The Amount Of Opportunities In Your Funnel:
- Create outbound campaigns to segmented and targeted audiences. Avoid being too broad. Try multiple channels to understand which one works best.
- Create inbound campaigns to attract and nurture your leads to your brand and products.
- Be present on social media: provide information, create connections with your target audience and prove why they should contact you or reach out to you.
Increase Deal Value:
- Evaluate how you can improve your deals margins to have better gains.
- Evaluate how you can add extra value in your proposal.
- Really consider what differentiates you from the competition, and why that is something they could pay extra for.
Increase Win Rate:
- Analyze why your clients chose your proposal over the competition and use that to capture new clients.
- Analyze why you lost opportunities and what you could do to fix that in the future.
Reduce Length of the Life Cycle:
- Understand the buyer’s journey: set how long each lead should be in that stage.
- Nurture your leads into the buying process: don’t make conversations so sales oriented, convince them they need your product or service by providing useful resources that speak to their problems, reducing their doubts and hesitations with compelling arguments.
- Have consistent conversations with them about subjects they care about. Offer extra value in your conversations.
Below, We Provide 6 Battle-Tested Tips To Help You Increase Your Sales Velocity:
- Choose Quality Leads Over Quantity
Overly competitive or pressured sales teams tend to fall into a trap. They feel they need to fill their CRM with leads or deals that don’t meet the requirements just to show numbers off. This can become a real pain for those sales people in the long run, since this can usually translate to not reaching their initial projections.
By choosing to emphasize quality over quantity, they can more accurately predict buying intention and reach better goals. This is usually done by having well defined MQL (Marketing Qualified Leads) and SQL (Sales Qualified Leads), and sales processes that respond to key lead qualities and actions.
- Create Lead Stages That Reflect Your Selling Process
By creating a clear breakdown of what the process looks like, and how much time a deal should spend in each stage, you can and work out what the maximum amount of time should be for each stage a deal goes through. This lets you remove rotting leads from your funnel (avoiding build up of unnecessary leads) and keeping more reliable expectations of your forecast. Another way to create this process is by creating Customer Journeys: understanding and writing down what the most common steps are for your different target audiences (or buyer personas) and what needs to happen for them to move to the next stage.
- Keep A Consistent And Targeted Communication With Your Leads
Provide educational information to reduce hesitation and speed their learning curve. Creating content that resonates with your audience at the moment they’re in will help your audience overcome their doubts or hesitations and will create an honest conversation with them. When you provide information that resonates with their current issues, it not only proves to them that you understand their doubts and pain points, but that you know how to help them and answer their questions when they need it.
- Read reports and gain actionable insights
Lost deals can be really annoying. But just like any lost opportunity in life, you can really gather information and learn from that to use to your advantage in the future.
It’s important to drill down the information - especially if you have a powerful CRM that can help you compare and contrast information. Try standardizing information to make it comparable, generating different reports to understand your sales from different perspectives or points of view, and testing new solutions to try to improve your results.
- Don’t Forget To Focus On Customer Success Teams
Customer success is key to understanding your potential and future clients.
As Zendesk puts it, “...(they) support your customers as they transition from sales prospects to active users of your products. They’re focused on customer loyalty and building close long-term client relationships, and often stay with the same customers as long as they continue to work with your business.”
Customer success is also in charge of communicating common issues and pain points they discover with leads or customers with the company’s teams, to be able to improve the communication they have, generate quality content for them, to leverage upselling and cross-selling opportunities and guarantee more fidelity and word of mouth referrals.
- Provide Incentives To Accelerate Stalled Opportunities
Reaching a conversion stage at a faster rate will clearly improve sales velocity. This can be done by providing special offers or demos, using lead generation strategies or scheduling into your agenda routine reminders to reach out.
Sales Velocity is a metric made to understand and measure how well your leads or opportunities evolve. Just like any other reporting tool, it’s important to routinely check up on these and analyze where the gaps are or what needs to be improved to provide better results.