Is Your Organization Achieving Ideal Sales Velocity?

I know what you’re probably thinking: What is Sales Velocity in the first place?

Here’s a simple answer: How much revenue you can expect to bring in each day; calculated by the PRODUCT of 1) the number of opportunities you have in sales pipeline, 2) the average value of your opportunities and 3) your percentage win rate –  DIVIDED by 4) the average sales cycle length in days.

Sales and marketing professionals have always sought to bring order to the complex world of marketing and relationship selling. But as the adage goes, ‘If you can’t measure it, you can’t manage it’.

To that effect, we track a growing breadth of campaign and funnel metrics like social followers and ads, organic website traffic, paid search conversion, digital asset consumption, event sign-ups, inbound calls, emails and contact form-fills, and more. We define precise opportunity sales stages to focus on, with high fidelity, exactly how leads are entering and flowing through our funnel. We define terms like marketing-qualified lead (MQL), sales-ready lead (SRL), sales-accepted lead (SAL) and sales-qualified lead (SQL). We define opportunity stages to align our sales process to the way our customers buy our product and services and we work tirelessly to improve upon our process at every step of the way.

The ability to track, report and influence the sales and marketing funnel is what sets apart proficient sales and marketing organizations from those with a strategy built on hope.

A common mistake, however, is to look at interdependent sales and marketing metrics in isolation. As another adage goes, we ‘lose sight of the forest for the trees’.

For example, an assumption that sales success depends solely on how many leads are fed into the funnel only paints part of the picture. What if the leads entering into the funnel are of low quality with respect to your ideal customers? What if these are low value customers? What if the win-rate of these leads are low, or exceedingly slow to close?

The idea of “sales velocity” is not a new one. In fact, it has been tracked by businesses for years. It’s a measurable objective, a key performance indicator or a sales metric. Call it what you want, sales velocity is a simple, effective and encompassing way to forecast sales growth. It turns the conversation between sales and marketing into a data-driven dialogue based on hard, measurable numbers. It also enables you to drive your budget planning process by knowing where to invest your sales and marketing dollars in the right places.

Measuring your business’ sales velocity factors in the following:

    1. Total number of opportunities in the sales pipeline
    1. Average deal size / contract value / lifetime customer value
    1. Win rate
  1. Average length of sales cycle

As an equation, it looks like this:

Is Your Organization Achieving Ideal Sales Velocity?

For example, say your business has 250 opportunities (#) in the sales pipeline, your average deal size is 80,000 dollars ($). Your average win rate is 18 percent (%) and the average sales cycle length is 120 days (L).

Your sales velocity is $30,000 per day. This means that you are bringing in roughly $30,000 in revenue each day.

Reduce the length of the sales cycle by 25%, down to 90 days, and your the sales velocity is up 33% to $40,000. Now improve the win rate by just 10%, and you’ve more than doubled your original sales velocity to over $62,000 of revenue per day.

It’s simple math. With a larger numerator and smaller denominator, the greater your sales velocity. Sure, more leads flowing into the funnel can improve the numerator, but you should not lose sight of the influence you can have over the value of the opportunities you generate, the win rate, and your sales cycle length. In fact, flooding the funnel with low quality leads will negatively impact all of the other factors.

Define your Ideal Customer Profile (ICP)

One way to influence the value, win rate and sales cycle length of the opportunities in your pipeline is by being acutely aware of your ideal customer profile. Defining your ideal customer empowers you to turn business away that might reduce your sales velocity, and target the customers that will improve it.

When you think about your ideal customer, consider the following:

    1. Industry – what industry are you best suited to serve?
    1. Company size – are your products or services geared towards small, medium or large enterprises
  1. Location – which geographical markets are most interested in your products and services

With a laser focus on the “right” customer set, you can achieve much more efficient marketing spend and, in turn, increase sales velocity by bringing in prospects more likely to close, faster.

Increasing Velocity with CRM Technology

CRM is your tool for helping you to operationalize your ICP and increase overall sales velocity. Here are a few ways to increase sales velocity through the use of modern CRM components.

Is Your Organization Achieving Ideal Sales Velocity?

First, relationship intelligence tools like Hint for SugarCRM allow marketing and sales to better qualify and target prospects. Hint offers incredible data insights and news about prospects – and only requires an email address to start collecting this critical data. Using Hint allows your sales organization to better filter and qualify leads – leading to a more productive and shorter sales cycle.

Second, modern workflow allows for faster and more intelligent routing of leads. Using tools like Sugar Advanced Workflow – with its highly intuitive visual process designer – enables the easy creation of lead routing rules, ensuring leads are followed up on more quickly. In addition, smart discount approval flows can ensure deals do not stall in later stages. These kinds of configurations can shave days off of sales cycles, thus increasing sales velocity.

Is Your Organization Achieving Ideal Sales Velocity?

Also, customer journey management tools provide templates for following sales best practices. For example, the Sugar Customer Journey plugin provides a visual task manager, which can be incredibly useful, especially in complex sales cycles, ensuring every step is followed to bring opportunities to a swift close.

Is Your Organization Achieving Ideal Sales Velocity?

Combining these technical elements with a well identified ICP, allows any organization to better focus and drive higher sales velocity. To better empower sales organizations in their quest for better sales velocity, we’ve created the Sugar Productivity Suite – check it out and see how we’ve put all these powerful tools together to empower more productive sales and marketing teams.


Sign up for the newsletter.

We're committed to your privacy. SugarCRM uses the information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For more information, check out our privacy policy.

Business Email