How to Measure and Improve Sales Velocity

by Matan Mostov
August 19, 2023
Sales Efficiency
Sales Execution
Guided Selling
Sales Enablement Best Practices
Sales Performance
Sales Productivity

Sales velocity measures how quickly your business generates revenue. More specifically, it measures the speed at which leads move through your sales pipeline and the value each customer provides within a specific period. The quicker prospects turn into customers, the more successful your company will be.

How to Measure and Improve Sales Velocity

The adage “time is money” is far from new. It was first coined in 1748 by Benjamin Franklin in his essay Advice to a Young Tradesman, who meant to say that work in general and productivity, in particular, are important. This is also true in sales: the quicker prospects turn into customers, the more successful your company will be. 

Sales velocity is the metric that allows you to track time and money. 

What is Sales Velocity

Sales velocity measures how quickly your business generates revenue. More specifically, it measures the speed at which leads move through your sales pipeline and the value each customer provides within a specific period.

How do you measure sales velocity?

Four metrics comprise the sales velocity formula.

  1. The number of opportunities. How many qualified prospects do you have in your pipeline? 

You always have a certain number of opportunities in your pipeline. When things are done right, these should be qualified opportunities. If that doesn’t happen and you have many unqualified or bad leads in your pipeline, your chances of closing deals are low and will impact your bottom line.

  1. Average deal value. What is the average value of each prospect’s deal or purchase? If your products are sold at a set price, you can measure the value of individual products. 

To increase average deal value, ensure you offer your prospects additional solutions that will make their life better or easier. 

  1.  Win rates. The total number of sales won is divided by the total number of sales opportunities.

This variable is closely tied to the amount of qualified leads in your pipeline, since qualified leads are more likely to make a purchase, increasing your win or conversion rates. 

  1. Sales cycle length. You should aim for a short sales cycle. The shorter, the better, which makes this variable the only one you don’t want to increase.

There are various ways to decrease the length of your sales cycle, for example, by improving the efficiency of your sales process and by optimizing your playbook

What is the sales velocity equation?

The sales velocity equation is as follows:

*Note that the result of this equation is your sales velocity unit, which is represented as a dollar amount. 

What is a good sales velocity?

Naturally, the higher the velocity, the more money the company makes, but what’s considered a good sales velocity varies from one company to the next.

Although many sales leaders agree that a good sales velocity is meeting 70-80% of the sales quota, it's better to look at sales velocity as a guide to help you understand how likely you are to reach your sales goals. 

What does high velocity mean in sales?

When your sales teams manage to quickly move leads through the sales pipeline and turn them into winning deals, it translates into a high sales velocity. 

In his enlightening Forbes article Why Time Kills The Most Sales Deals—And What You Can Do About It, Brian Cristiano, business and success strategist and creator of Bold CEO, explains just how important high velocity is. 

“In my experience, time is the No. 1 killer of sales deals. Specifically, the more time a potential customer takes to go from the top of the sales pipeline to the bottom, the less likely they will convert into a paying customer. I've found that many sales professionals do not realize the impact time has on sales deals. Unfortunately, you can have everything else right and still lose a deal because of timing.”

What is sales velocity in SaaS?

Sales velocity in SaaS is as vital as any other business, no matter the size or sector. The reason for this is that the result of the sales velocity equation reflects just how healthy your business is, how effective your sales team is, and how and where your sales productivity can increase to improve your bottom line. 

In other words, it allows SaaS sales leaders to improve sales, forecast revenue, speed up the sales cycles, and optimize the resources allocated to sales teams.

How to Increase Sales Velocity

As you probably understood, calculating sales velocity is pretty simple. The hard part is working to improve it. 
Here are some tips on increasing velocity. This will help you improve this important metric.

  1. Coaching

When you discover that a salesperson has low sales velocity, you can help them improve by coaching them. If your sales enablement software offers real-time access to relevant and converting content, it can propel your coaching efforts forward by eliminating sales reps forgetting curve. This is vital, especially when you take into account a report by SAVO Group, which found that most employees forget 65% of the information they learned within seven days of their training. 

But, if the results of your sales velocity show that several salespeople struggle in one or more areas, consider improving your sales enablement.

Either way, make sure you pinpoint the areas that need improving, for example:

  • Look into how sales reps conduct demos and what can be improved.
  • Examine your lead qualification process. 
  • Set strategies to identify high-value prospects. 
  1. Sales Process

If your sales cycle needs to be shorter, identify bottlenecks by breaking your sales process into separate steps. This will allow you to understand which stage is moving too slowly. It will also help you understand which software and even specific features can help speed things up. 

There are a few steps you can take to shorten the length of your sales process:

  • Have a very clear value proposition. Make sure that: your reps know exactly how your solution is different, your value proposition differentiates you very clearly, and prospects can quickly understand how you can meet their specific and unique needs. 
  • Talk to the person that matters. Talking to decision-makers is the fastest way to make your sales process shorter. The higher their level, the better. If that is not possible at first, try to gain access to decision-makers as soon as possible. 
  • Cultivate confidence. Prospects naturally ask themselves if they can make good on your promises during the demo. So, instead of just talking about it, show them case studies and examples of how you helped other similar companies. This will help them make up their minds faster.
  • Let them try it out. To make it easier for your prospects to make a buying decision, allow them to try your service or product out, offer a pilot program, or take similar steps to help your customers feel comfortable buying what you offer, even if it comes with a hefty price tag. 
  • Automate repetitive steps. According to Hubspot, sales reps spend 21% of their time writing emails and 17% of their time prospecting and researching leads. Plus, many salespeople spend long hours organizing and inputting information while what they should be doing is selling. 

To speed things up, check which tasks can be automated and work with good sales enablement software so that you can pour all the research and data your sales reps need into one accessible resource. Such software can even allow you to create email templates that will save your sales team a lot of time and effort. 

  1. Deal size

As it usually takes longer to close bigger deals, the key to improving your average deal size is creating a good balance between high and low-value sales opportunities. 

You can do this by combining discounts, tiered pricing, and cross-selling. This will also help your reps better manage their time and understand where they need to invest more.

In addition, consider using sales enablement software that allows your team access to upsell and ROI calculators they can use in real-time to increase deal size. 

  1. Win rates

Before you can improve your conversion rates, you must determine at which stage your prospects exit the pipeline and then focus on improving it. 

In addition, follow the tips below to increase win rates. 

  • Do your sales discovery right. In general, a thorough sales discovery right from the get-go will help you understand your prospect’s needs and exactly how your solutions can add value to them.
  • Customer relationships are more important than you think. According to a recent CSO Insights research, “customer relationship levels have an even greater positive impact on performance than sales processes. For example, average win rates for those considered Trusted Partners were 59.9% versus a mere 39.5% for those who were considered Approved Vendors.”

    What this means is that personal connections matter. A lot. The stronger the connection, the higher the win rate.
    The same CSO Insights report found that organizations with sales enablement are more likely to have those Trusted Partner customer relationships than organizations without sales enablement. 
  • Customer relationship VS process. Another research by CSO Insights found that although both process and relationship impact win rates, “the impact that a strong relationship has is more profound.”

    The researchers added an example of how powerful relationships' effect on win rates is, saying that offering perspective and insights on customers’ business instead of only product knowledge leads to higher win rates, especially with B2B clients.
  • The process still matters. Although researchers encourage you to build strong relationships instead of putting all your focus on the process, it does not mean you need to get rid of the process altogether—quite the opposite. Clear and consistent processes allow relationships to thrive.

    A good process that clearly moves prospects through the sales cycle builds trust. It also helps make sure that the prospects that move from one step to the next are the right ones and are qualified to reach the final stage. 

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