Sales Velocity is a metric that measures performance of both Marketing and Sales because it is influenced by both. So can be a bridge for discussion on how and what to optimize. Not a bad job for a lagging indicator.
People tend to forget about velocity as something to consider when measuring revenue analytics. Especially in Marketing, where we can be seduced into thinking volume and conversion are more immediate things to consider. And how long it takes to nurture a lead can be individual and difficult to standardize. And then Sales Velocity, seems to be something on the other side of the fence that measures Sales performance.
Sales Velocity has the power to pull together all the things that Marketing is concerned with – volume, expected value, and conversion.Velocity has the power to show the interplay of these aspects and give us an ongoing picture of growth.
Sales Velocity as a metric is calculated for a period as:
As a financial figure, it is a lagging indicator when solely using historical information. It is a measure of how we are doing based on what we have done. Most financial figures measure performance this way. Though, when we step back and look at trends in Sales Velocity, it can tell us something about our rate of growth. It also can lead credibility to our forecasts, when we base them on the trends in Sales Velocity. Or do projections based on possibly variations bands.
Not just a metric for Sales teams
So, if this is a key metric for Sales teams, why would it also be important to marketing teams? Because marketing activity can have a direct impact on the number. By optimizing marketing activity to produce a higher volume of quality leads that convert quickly. I know, easier said than done.
Sales Velocity can be impacted by campaigns directed at optimizing the pieces.
- Increasing Conversion Rates
- Optimizing Deal Size and Lead volumes
- Decreasing Sales Cycle Length
Marketing teams can set campaign objectives to optimize Sales Velocity
Marketing teams can consider these aspects when setting objectives for campaigns. Especially when considering how they might work together, and how they may direct the quality of our leads.
For example, a campaign focused on promoting a special offer or discount may seem to bring down the average deal size, while increasing volumes. And result in a more predictable growth trend in Sales Velocity.
Focusing on activities or channels that produce better quality leads can result in increased conversion rates. And as a result, impact Sales Velocity.
Nurturing leads up front in marketing can help to reduce Sales Cycle length. A better informed and engaged lead may buy faster.
The point is to keep it in the mix of measurements you look at on a regular basis. It is a metric that measures performance of both Marketing and Sales because it is influenced by both. So can be a bridge for discussion on how and what to optimize. Not a bad job for a lagging indicator.