You may be doing everything right in your sales cycle. You find quality leads, nurture them to a T, and get them to become paying customers.
But if your sales cycle is moving at a snail's pace, then you're missing the mark on one vital sales metric: sales velocity.
Your sales velocity is the speed and efficiency with which you close deals and make money. You want to keep this value as high as possible.
After all, a slow sales process stalls revenue growth, makes leadership anxious, and kills morale. All are scenarios you want to avoid at all costs.
To help do just that, we’ll peel back the layers of sales velocity in this article. By the end, you’ll be up to speed on how to calculate your sales velocity, strategies to improve it, and automation tools to support the process.
What is Sales Velocity?
Sales velocity is a sales metric that measures how fast prospects move through your pipeline and generates revenue. It’s otherwise known as tunnel velocity or pipeline velocity.
At its core, sales velocity is a measure of speed. The idea is, the faster you close deals, the more revenue you rake in. Simple enough, but there's more to it than just speed.
Your sales velocity also reflects the health and vitality of your sales process. It's particularly useful in sales forecasting, resource allocation, and sales enablement.
To paint a picture, if your pipeline is a river, tracking sales velocity helps you spot the rocks and debris blocking your flow—whether that’s complex processes, unqualified leads, or something else.
Remove those obstacles, and you reap the rewards of a smooth-flowing, high-velocity sales pipeline.
The Sales Velocity Equation
In dollar terms, your sales velocity represents how much revenue you can predictably generate over a set period.
Ready to crunch the numbers? There are four main components to the sales velocity equation:
- Number of Opportunities: How many qualified leads are in your pipeline?
- Average Deal Value: What's the typical price tag of your product or service offers?
- Win Rate: What's your average conversion rate? Two out of five? Three out of 10?
- Sales Cycle Length: How long does it typically take you to close deals, given your sales cadence?
Here's the formula:
To put things in context, let's say you have 20 qualified leads in your pipeline with an average deal value of $5,000 and a 30% win rate. If your sales cycle lasts for 60 days, here's how your sales velocity plays out:
It’s worth noting that there are different ways to apply this formula. Some sales managers calculate their sales velocity on a team-level basis, whereas others track it per sales rep. In any case, the sales velocity number is useful in estimating revenue over time.
And the best part? Even a small (positive) tweak in any of its components can have serious compound effects on your bottom line.
How to Improve Sales Velocity
As you’d probably expect, improving your sales velocity means optimizing the four key components that make up the sales velocity formula.
Let's break down actionable steps to amplify each one:
Rack Up More Opportunities
Opportunities aren’t just leads—they’re qualified leads. A lead is someone who has expressed surface-level interest in your offers. But a qualified lead has been vetted by your sales reps and deemed more likely to convert.
To create more opportunities in your sales funnel, consider the following strategies:
- Double down on lead generation: Think of this step as widening the funnel at the top. You can attract opportunities in many different ways, including via organic/paid search, social media, webinars, word-of-mouth, etc. For B2B teams, you can explore B2B lead generation strategies or use a tool like Instantly B2B lead finder to access over 160 million verified leads.
- Harmonize marketing and sales efforts: Getting high-quality leads is a by-product of an alignment between marketing and sales. Start by getting everyone on the same page about your buyer personas and ICP. Then, seal the deal with tailored messaging, user-friendly website/landing pages, and constant optimization.
- Consider referral programs: Satisfied customers are your best advocates. Capitalize on your success with current customers by asking them to refer their like-minded peers in exchange for incentives (e.g., discounts).
Increase Your Average Deal Value
Your average deal value—also known as average deal size—is the dollar figure of your offers. Boosting this metric means increasing your current package's value or encouraging customers to upgrade to your big-ticket items.
But there’s a golden rule: the ROI of your additional offers must justify the price increase. Can you save them more time or energy? Will a bigger deal help them generate more revenue? Make the additional value loud and clear.
You can calculate your average deal value as follows:
To improve your average deal value, consider the following:
- Master upselling and cross-selling: Show customers how your additional features can solve more of their problems. Upselling means offering an upgrade to the initial purchase, while cross-selling involves suggesting related products or services that complement the customer’s needs.
- Focus on decision-makers: Another great strategy to boost your deal value is to target larger businesses and/or C-suite individuals. These groups have bigger budgets and can green-light larger deals. Do your homework and tailor your pitch to their high-level concerns.
- Highlight ROI: Don't just talk about features. Show prospects the cold, hard numbers of how your solution will make their lives better. When prospects see the quantifiable benefits, they'll be more likely to invest more.
Improve Your Win Rate
Your win rate represents what percentage of opportunities you end up converting. Though there are many angles to approach this metric, they all boil down to one thing: make it easier for customers to buy.
Here’s the formula for calculating the win rate:
To close more deals, consider the following:
- Qualify leads rigorously: Not all leads are serious about converting, so it's important to filter them based on set criteria. How? Use lead scoring software to effectively qualify leads. This way, you focus your resources and energy on prospects most likely to convert.
- Tailor your pitch: One-size-fits-all sales pitches are destined to fall flat. Instead, personalize your approach for prospects by hitting home on their pain points to build strong connections. Beyond that, go the extra mile to anticipate and resolve potential objections before they become roadblocks. Your win rate will thank you for it.
- Leverage social proof: Let your success stories do the talking. Share case studies and testimonials that resonate with your prospect's industry or challenges. It's like having your best customers in the room, vouching for you.
Shorten Your Sales Cycle Length
Your sales cycle length is the only sales velocity component you want to keep as low as possible. A lengthy sales cycle means it takes you a disproportionate amount of time to close deals. It's usually an indication of deeper issues or clogs within your processes.
To speed up your sales cycle, observe the following:
- Streamline your processes: Map out your sales cycle and identify bottlenecks. Maybe it's the hand-off between marketing and sales or a slow internal approval process. Whatever it is, find the friction points in your sales management process and smooth them out for shorter sales cycles.
- Use automation wisely: Let technology handle grunt work like follow-ups, scheduling, and data entry. This frees up your team to focus on what really matters—building relationships and closing deals.
- Develop a content library: Give your team the right resources to answer common questions and objections. This way, when a prospect asks about security features or implementation time, your reps can respond in minutes, not hours.
Sales Velocity Tech Stack for Sales Success
Technology and automation have become part and parcel of sales. Case in point, a McKinsey study found that a third of all sales tasks can be automated. Translation? Automation is a no-brainer for high sales velocity.
Interestingly, the same study tells us that only 26% of businesses use automation in their sales cycle. Talk about a golden opportunity.
The question is, which automation software should you use for truly exceptional outcomes? Let’s find out.
CRM Systems
If you work in sales, then you’re no stranger to CRM (Customer Relationship Management) software. Not only do these software help consolidate customer data, but they act as the brains of your entire sales operation.
A good CRM neatly organizes customer data and gives you a bird's-eye view of your sales funnel. But a great CRM—like Instantly—takes things a step further by helping you optimize every stage of your sales cycle for hyper-efficiency.
Instantly is a top choice for sales teams everywhere—and for good reason. Among its many features, Instantly helps you:
- Run multichannel outreach across email, SMS, and calls with superb deliverability
- Find and nurture leads from the first contact to the closed deal
- Automate workflows so no lead slips through the cracks
But it gets better! Instantly CRM doesn't just show you what's happening—it helps you make things happen faster for higher sales velocity.
Plus, with built-in automation and analytics features, you essentially get a sales supercomputer to drive your operations. Try it out for free!
Sales Automation Tools
Sales automation tools are tireless assistants and force multipliers for your sales team. They handle routine, repetitive tasks to free up your sales team for strategic, meaningful activities.
With the right tools, your sales engine is sure to be firing on all cylinders. And the outcome? Higher sales velocity.
Here's a quick look at some must-have sales automation tools for your tech stack:
These tools are vital for sales teams serious about ramping up their sales velocity. Want to go down the rabbit hole of sales automation tools? Check out our roundup of the 10 best sales automation software 2024 has to offer.
Best Practices for Improving Sales Velocity
Observing strategies is important, but it also helps to know what practices to adopt for accurate, sky-high sales velocity. Let’s take a quick look.
- Velocity is a marathon, not a sprint: Sales velocity isn't a one-time calculation. Measure your velocity monthly to track progress and identify areas for fine-tuning.
- Data is your best friend: Sales velocity thrives on accurate data. Integrate your CRM with marketing automation tools to get a holistic view of your sales funnel.
- Calculate over a longer period: While there’s no concrete timeframe for measuring sales velocity, it’s advisable to calculate for longer periods (usually four months and above).
- Be consistent: Use the same variables, definitions, and timeframes across your calculations for accurate results.
- Empower your reps: Equip your sales team with the resources they need to succeed, be it automation software, product training, and relevant content for lead nurturing.
- Celebrate the wins (big and small): Recognition goes a long way in raising team morale. Celebrate milestones and improvements in sales velocity to keep your team motivated.
Key Takeaways
Your sales velocity shows you the speed at which leads in your pipeline become customers. This way, you can optimize their flow to generate more revenue in the shortest possible time.
Sales velocity is a function of four data points: number of opportunities, average deal value, win rate, and sales cycle length. Tracking and optimizing these metrics with the help of automation tools is the surest way to send your sales velocity through the roof.
That said, using automation to power up your sales velocity is table stakes. To really move the needle for your sales operations, you need a software partner that’s up to the task.
Instantly is that partner. So, if you’re:
- Tired of leads sitting in your pipeline for months on end
- Keen to boost your sales velocity for higher revenue generation
- Looking for an experienced provider with the right resources and best-in-class tools
Instantly is your one-stop shop. Why not take it for a risk-free spin? Sign up for a free trial today!
