You probably already know a lot about your sales funnel or pipeline.
Regardless of what you call it, it’s mostly the same. The way your customers get to your client list, as they start out as merely potential buyers. However, there’s this other (lesser known) aspect of the process called “sales velocity”.
So, what’s sales velocity?
It’s basically the speed at which potential consumers are moving along your funnel or your pipeline.
Velocity is a term you probably learned in high school and haven’t thought of since, but it’s really just a rate of speed. A faster sales velocity means more buyers are moving down your pipeline—spending more money and wasting less time.
Sounds great, right?
Having a high velocity means fewer days for someone to enter your pipeline and go through the process of becoming a paying customer.
It could be a key metric to determining growth for sales managers and executives. By tracking sales velocity, you can determine when you’re performing well or performing poorly.
Let’s take a look the basics of tracking, monitoring and improving your sales velocity.
Sales Velocity Measurement
Measuring your sales velocity isn’t hard at all. All you need are a few numbers.
You start with your total quantity of good leads that will get an opportunity to close. Next, that number is multiplied by the mean price of all of your deals. Then, you’re going to take that number and multiply it by your mean close rate. Finally, you take the number you get and divide it by the amount of days it takes for a consumer to make it through your entire pipeline.
How about an example?
- Total Opportunities in Pipeline (#): 200
- Mean Deal Price: ($): $10,000
- Mean Close Rate: (%): 10%
- Average Pipeline Life: (L): 20 Days
- Sales Velocity (V): 10,000
200 (#) x 10,000 ($) x 10 (%) = 200,000 / 20 (L) = 10,000 (V)
The (V) number is your sales velocity and can help determine how much your sales team is bringing in every day.
What Do You Do With It?
Just knowing this number isn’t really good for anything, especially if you have nothing to compare it to. It’s a digit that is unique to your organization to track your own progress and how your company is changing over time (e.g. buffering, grinding to a halt, or running smooth).
Essentially, you’re boiling down the sales process into a single number that’s easy for all to understand if it’s going up or down.
Higher conversion rates, quicker turnaround, and better revenue in a single data point. An increasing number is better, and the team should work to achieve that goal. So, how do you go about improving this number?
Let’s break our equation back down into steps and pieces.
Increase Your Number (and Quality) of Leads
Getting qualified appointments to your closers is the best way to increase your conversions and your velocity.
This process starts right at the top of the funnel.
Poor quality leads flowing into your pipeline means fewer prospects that are genuinely interested in your products. A sales process full of people who aren’t going to buy lengthens the amount of time leads spend in the funnel—lowering your sales velocity.
Even though this sounds logical, many organizations purchase lists of leads and push them through a rigid, impersonal sales process.
Getting a list isn’t necessarily a bad thing.
It’s how leads are treated and nurtured that really matter. Here are a few ideas to help you handle the contacts that will increase the number of opportunities.
- Data: Much of the information on lists is unreliable. The contact may not be the decision maker, the email could be old, etc. Using a tool that can help you fill the holes in your data will go a long way toward helping your reps.
- Content: Once leads are on the inside, they want to research your offers. Give them everything they need (white papers, webinars, blogs). The more resources the warmer your leads will become over a shorter amount of time.
- Clarity: Taking a look at your current clients and figuring out common characteristics can help you come up with buyer personas to find and target the right kind of leads for your company.
Making Bigger Sales
Not charging what your products are worth is a common problem in the business world. Financial problems almost always boil down into two categories.
- Not selling enough of your product/service
- Not charging enough for your product/service
If you’re (for the most part) satisfied with your conversions and the quality of leads that are coming into your pipeline, but not all too happy with the overall revenue—it’s likely that you need to raise your prices.
Doing this is industry specific, but here’s a decent guide to get you started.
Bonus Tip: Research your competitors and position your brand and your products in similar ways to move your prices toward the higher end.
Increase Your Close Rate
Tons of leads and high-priced products won’t mean that much if you aren’t closing.
Increasing your conversion rate isn’t always a problem with your pitch. Many times, the other pieces of your funnel puzzle cause bad leads to end up on the phone with your reps. We went over having better leads going into the pipeline.
There are a few ways to ensure that hot leads are getting to your closers and that they are better equipped to seal the deal.
- Communication: Successful organizations have reps that are specifically geared towards educating and qualifying leads and setting up qualified appointments for closers. Segmenting your sales process could rapidly improve your velocity number.
- Objections: Finding the common objections and giving your reps the best ways around them are crucial to closing those leads who are still “on the fence” toward the end of the sales call.
- Post-Sale: Switching solutions or learning a new process is harder for consumers to justify. Explaining the post-sale process to potential clients could be the nudge that converts those who are timid to change.
Slashing The Sales Cycle
The amount of time leads spend in your pipeline will vary. Shortening this time is a good thing, but it’s possibly the least concerning of all the other elements of sales velocity. If leads are moving through and not getting stuck—great.
If they are, you may need to work on some things. Here are a few of them:
- Response Time: Getting a hold of the lead is one of the most troublesome portions of the sale process. When contacts reach out, it is crucial to contact them within minutes.
- Qualifying Call: Talking to leads on the phone is a great way to warm them up and to see how close they are to buying your products. A 20-30 minute call could shorten your sales cycle.
- Resource Ready: Many companies have resources that leads want, but aren’t easy to find. Or, reps aren’t aware that they can give them to prospects to move them down funnel.
Sales Velocity and Growth
One number can give your sales team a snapshot of performance. And tweaking one aspect of the equation can dramatically improve sales velocity. Using this strategy to measure and achieve growth could give your team a rally point and a focus to improve the overall health of your sales process.