Leveraging the Sales Velocity Metric for Explosive B2B Growth

As a sales leader, you might have seen many must-have metrics, strategies, and 'game-changers' from influencers and sales gurus. But there's one metric that consistently stands out as a true indicator of a company's revenue-generating prowess: sales velocity. Today, we're going to share why this metric matters and how you can use it to supercharge your B2B sales.

What's the big deal about sales velocity?

Think of sales velocity as your company's speedometer. It tells you how fast you're generating revenue by looking at four key factors:

1. The number of deals in your pipeline

2. Your average deal size

3. Your win rate

4. Your sales cycle length

When you combine these factors, you get a holistic view of your sales health. It's like taking the pulse of your entire sales operations in one go.

How to calculate sales velocity

Don't worry – you won't need a science degree to figure this out. Let's break it down with a real-world example.

Imagine you're leading a B2B software company. You've got 160 potential deals (opportunities) in the pipeline, your average deal is worth $5,500, you're winning about 40% of your deals, and it typically takes 27 days to close a sale.

Here's how you calculate your sales velocity:

1. Multiply your opportunities by your average deal size: 160 x $5,500 = $880,000

2. Multiply that by your win rate: $880,000 x 0.4 = $352,000

3. Divide by your sales cycle length: $352,000 / 27 = $13,037

There you have it. Your sales velocity is $13,037 per day or $352,000 per sales cycle. But what does this number mean for your business?

Why should you care about sales velocity?

Understanding your sales velocity is like having a superpower in the world of B2B sales. Here's why:

1. It's your early warning system. If your sales velocity starts to dip, it's a sign that something in your sales process needs attention. Maybe your win rates are slipping, your deals are shrinking, or your sales cycle is dragging too long.

2. It helps you b2b sales forecast. While it's not a crystal ball, tracking your sales velocity over time can give you a good idea of where your revenue is headed.

3. It's a great benchmark. Want to know if your latest sales initiative is working? Keep an eye on your sales velocity.

4. It gives you focus. In the chaotic world of sales, it's easy to get distracted by shiny objects. Sales velocity keeps you focused on what really matters: closing deals efficiently.

How to improve your sales velocity

Now that you know why sales velocity matters, let's discuss how to improve it. Remember, we're not trying to work harder here – we're aiming to work smarter.

1. Pump up your pipeline: The more quality opportunities you have, the better your chances of closing deals. But don't just focus on quantity. Make sure you're attracting the right leads.

2. Increase your average deal size: This doesn't mean pressuring clients to buy more than they need. Instead, focus on understanding your clients' needs deeply and offering solutions that provide more value.

3. Boost your win rate: Quality is everything. Refine your qualification process, invest in training your team, and make sure you're communicating your value proposition clearly.

4. Shorten your sales cycle: Look for bottlenecks in your process. Can you automate any steps? Are you responding to inquiries quickly enough? Every day you shave off your cycle improves your velocity.

A word for product-led growth folks

If you're running a product-led growth company with a self-serve model, you might wonder if this applies to you. Good news – it does! Just swap out "opportunities" for "leads" in the formula, and measure your sales cycle from when a lead first engages to when they become a paying customer.

Putting sales velocity to work

Here's the thing about sales velocity – it's not just a number to calculate and forget. It's a tool to drive your decision-making. Use it for:

• Identify where your sales process breaks down

• Figure out where to invest your resources

• Set realistic goals for your team

• Motivate your reps with clear, measurable targets

Remember, the goal isn't to obsess over a number. It's to use that number to guide your sales strategy and grow your business.

Your next steps

So what now? Start by calculating your current sales velocity. Don't worry if it's not where you want it to be – that's your starting point. Then, look at each component of the formula and brainstorm ways to improve it.

Could you generate more leads? Could you offer more value to increase deal sizes? Is there room to improve your win rate or streamline your process?

Pick one area to focus on and make a plan to improve it. Then, watch your sales velocity for the next few months. I bet you'll be surprised by the impact even small improvements can make.

Remember, in B2B sales, it's not just about being fast – it's about being efficient, effective, and consistently delivering value to your customers. Master your sales velocity, and you'll be on your way to predictable, scalable growth.

Ready to harness sales velocity for your business? Forecastio offers cutting-edge tools for sales velocity monitoring and real-time sales performance insights. Don't let valuable data slip through your fingers. Book a demo with Forecastio today and discover how to transform your sales strategy with precise, actionable insights.