What is Sales Velocity and Why Should You Measure it?
Analytics & Reporting : 9 min read

What is Sales Velocity and Why Should You Measure it?

Sales velocity is one of the more technical terms associated with the sales process.

(Maybe the term itself elicits terrible memories of high school physics or struggling to grasp basic algebra.)

But today, sales velocity is gaining some popularity as a metric to track. It goes beyond the last generation’s measures of success, like the number of calls made or quotas met. Yes, these metrics still matter, but they don’t reveal much about the “why” behind sales productivity.

See, what the term actually refers to is the speed at which you turn your leads into paying customers.

More specifically, sales velocity measures the speed at which a prospect moves through the sales cycle: how long does it take to go from qualified lead to customer?

Below, we’ll look at how to calculate sales velocity and what it can reveal about your strategy.

What is sales velocity?

When developing a plan for hitting sales goals, reps often look at the potential revenue hanging out in the pipeline. So, more deals and bigger deals mean higher commissions, right?

Well, not exactly. Focusing on dollar value alone won’t help you close the amount needed to meet your quota.

That’s where sales velocity comes in. This metric allows reps to forecast how much they’ll sell and how long it will take them to do so.

The typical sales velocity equation is composed of four variables:

  • Average deal value — The average amount sold per sale.
  • Total opportunities — The number of leads you’ll work through over a period. Calculate this number on an organizational level or break it down by rep, region, or customer type.
  • Conversion rate — The percentage of leads that turn into paying customers over a given timeframe.
  • Sales cycle length — How long does it take for prospects to move from lead to customer? This number depends on the product, price, and the number of steps in the sales cycle.

Changing up any of these four areas can impact your sales velocity. So, you’ll want to monitor each metric so that you can optimize your pipeline.

How do you calculate sales velocity?

To find your sales velocity, multiply the number of opportunities in the pipeline by the value of your average deal and win rate. From there, divide that amount by the number of days in your average sales cycle.

Let's break down the formula:

sales velocity formula

Your CRM should be equipped to provide most sales metrics, so getting velocity right is just a matter of plugging in the variables, algebra-style.

The top portion of the equation reveals how much revenue you’re likely to bring in. That number, divided by the length of the sales cycle, shows how much you can expect to bring in over a designated period.

Why is sales velocity an important part of the sales strategy?

Sales velocity is an essential tool as it shows you how long it takes to complete an opportunity or the time it takes to close the deal (or abandon ship). This matters because understanding how people move through the pipeline and where they get stuck highlights problems at every stage from lead generation to close.

And this is most useful when you need to measure the impact of changes in your product or your strategy—plus it can help you identify areas where you might experience a longer sales cycle and plan accordingly.

It’s important to remember that consistency matters when it comes to tracking and optimizing velocity. What counts as a conversion? How do you decide when a lead becomes an opportunity?

Of course, this varies by organization, but it’s important to define your variables and maintain consistency over the long term.

Improve sales velocity, one variable at a time.

Like all sales metrics, tracking performance is the first step on the road to improvement. If the results of your sales velocity math don’t add up to an effective sales strategy (prospects stay in the consideration stage longer than average or drop off right after receiving a free trial), you’ll need to do some work on one or more of the four variables mentioned above.

You can increase opportunities, win rate, or average deal size, as well as speed up the cycle. Here’s how you can use these metrics to drive more sales.

1. Improve conversions.

Quality beats quantity when it comes to leads.

Your average conversion rate is directly tied to the leads in your pipeline. Improve this metric by spending more time attracting quality leads. This means you need to target the companies most likely to get value from your product/service. What industry are they in? What is their ideal use case?

Prospects unlikely to use your solution the “right” way will likely churn quickly if they even make it through the pipeline. Don’t be afraid to disqualify prospects who aren’t a good fit.

Review how you guide prospects through the pipeline.

If your primary focus is on getting that “commitment” at the end of the call, prospects may go silent. They’re trying to weigh their options and don’t want the pressure that comes with every single interaction.

Notice the difference between the buyer’s and seller’s perspectives and where the two align:

sales process alignment model.

As you can see, the sales process is all about the prospect. Listen more than you talk and be sure to ask open-ended questions that guide them (gently) toward a solution.

When it comes time to ask for the final decision, follow these steps:

  • Go over the prospect’s priorities
  • Ask if the prospect has any additional questions
  • Highlight benefits that show the value of your solution
  • Finally… go in for the “ask”

Always follow up.

According to research from Marketing Donut, 80% of all sales require five follow-ups to close the deal. And 44% of the surveyed reps said they stop following up after just one rejection or ignored message.

With a CRM like Copper, you can sync your emails—and phone calls—with your Opportunities in progress. As you can see in the screenshot below, this feature allows you to track all follow-ups and keeps all your information centralized in one location.

how to increase sales velocity in copper crm.

2. Increase the number of opportunities.

No sales rep will complain about a pipeline brimming with prospects. However, if your pipeline contains too many leads who probably won’t end up buying, you’re just creating more work for yourself.

Look at areas where leads are getting stuck in your CRM. If for some reason there are several leads that stop progressing at a certain point, something is wrong with your leads or your funnel.

In Copper, you can look at the Pipeline Summary Report and see how many opportunities are currently in progress. This report also shows you the average time prospects spend in each stage, which can serve as a baseline for what’s normal for your organization.

copper crm's pipeline summary report

Develop a set of criteria that defines how you qualify leads—this will help you quickly disqualify leads that will clog the pipeline later on. Which questions reveal whether someone is likely to buy? Do they have the budget? Are you talking to the right person?

If you are finding that few leads progress after receiving a price sheet or stay in the evaluation stage for way too long, you might want to consider adjusting your pricing or creating more marketing material to help prospects evaluate your product.

It’s also worth pointing out that reps should stay in their lane if they want to increase velocity.

For example, if you usually work with mid-market software companies, going after a company like Microsoft isn’t the best way to spend your time.

You’ll get better results by pursuing leads that match your customer profile. Understanding the customer is a massive undertaking, as you can see in our piece on behavioral segmentation. Still, spending some time here will allow you to target the leads most likely to covert.

3. Shorten the length of your sales cycle

Sales cycle length depends on several factors such as efficiency, pricing, and alignment between Marketing and Sales.

It’s common knowledge that the biggest deals often take the most time to close, while small to midsize companies want to move fast. Knowing this, reps should respond to smaller deals quickly.

Factors that can move things along:

  • A well-stocked knowledge base: Answer frequently asked questions, address common objections, and reveal more about the sales process through a range of content.
  • Discounting at the right moment
  • Responding to questions quickly

Dive deeper into this metric by reviewing velocity by customer segment. Seek out patterns by looking at velocity by region, company size, type, or whatever else and use your findings to inform your strategy.

For example, you might find that mid-size manufacturing companies close faster than your e-commerce accounts. Insights like these can help you plan how much time you’ll spend working each deal, as well as how you approach your pitch.

4. Increase your average deal size.

Sure, a whale of a client will have a positive impact on your velocity—and that sweet commission check. But, the key to a successful sales strategy lies in the team’s ability to create a fully loaded, balanced pipeline.

How do you do this? By striking a balance between high- and low-value opportunities.

Bigger deals represent more revenue, but they often take longer to close as more decision-makers and regulations enter the mix.

By adding smaller companies to the pipeline, reps can move those lower-value sales through the process faster—then working to increase deal size through upsells, strategic discounts, and bundled deals.

That said, it’s important to get the prospect talking about what they want from your product. Ask

open-ended questions that reveal the following information:

  • What business challenges is the customer facing? Be prepared to present all possible solutions (aka more products/services)
  • How does your solution address customer problems?
  • Are reps offering the right package to customers?
  • Are reps asking discovery questions that reveal additional pain points?

The point is, reps need to uncover areas where they can swoop in with a solution. It’s that ability to be helpful and address pain points that can boost the value of your deals.

Bottom line: sales velocity demands our attention.

Sales velocity shows you the overall health of your organization and presents four clearly defined areas where you can refine your strategy.

Whether that’s creating a more balanced pipeline, tweaking your sales pitch to better align with customer pain points, or targeting better leads with a laser focus, running velocity numbers can reveal where your efforts are paying off.

Sales velocity may be all about speed, but it pays to play the long game. Focus on quality leads and don’t be afraid to disqualify prospects early on. Review data on an ongoing basis so you don’t miss an opportunity to increase closing speed.