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6 Steps to Measuring Sales Velocity

Measuring sales velocity is a critical aspect of any sales strategy. It refers to the speed at which deals move through your pipeline, and it's a metric that can help you identify areas where your sales process is slowing down and take action to speed it up.



In this blog post, we'll discuss six easy steps to measuring sales velocity.



Step 1: Understand the Sales Velocity Formula


The first step in measuring sales velocity is to understand the formula. Sales velocity is calculated by multiplying the number of opportunities in your pipeline by your average deal size and conversion rate, and then dividing by the length of your sales cycle. The formula looks like this:


Sales Velocity = Number of Opportunities x Average Deal Size x Conversion Rate / Sales Cycle Length


By understanding the formula, you can begin to identify the factors that contribute to your sales velocity and take action to improve them.



Step 2: Measure Your Conversion Rates


The second step in measuring sales velocity is to measure your conversion rates at each stage of your pipeline. This might include tracking the percentage of leads that move from the qualification stage to the proposal stage, or the percentage of proposals that convert to closed deals. By measuring your conversion rates, you can identify areas where prospects are dropping out of your pipeline and take action to optimise your sales process.


According to a study by SalesHacker, companies that track their conversion rates are 19% more likely to be high-performing.



Step 3: Calculate Your Average Deal Size


The third step in measuring sales velocity is to calculate your average deal size. This might involve looking at historical data to determine the average value of your closed deals. By understanding your average deal size, you can identify areas where you might need to focus your sales efforts to increase deal size.


According to a study by Aberdeen Group, companies that focus on increasing deal size see a 6.4% increase in revenue.



Step 4: Determine Your Sales Cycle Length


The fourth step in measuring sales velocity is to determine your sales cycle length. This might involve tracking the length of time it takes for leads to move through each stage of your pipeline, from initial contact to closed deal. By understanding your sales cycle length, you can identify areas where your sales process might be slowing down and take action to speed it up.


According to a study by Salesforce, companies that reduce their sales cycle length see a 15% increase in win rates.



Step 5: Identify Your Sales Velocity Metrics


The fifth step in measuring sales velocity is to identify your sales velocity metrics. This might include tracking the number of opportunities in your pipeline, your average deal size, your conversion rates, and your sales cycle length. By tracking these metrics, you can identify areas where you might need to focus your sales efforts to improve your sales velocity.


According to a study by InsideSales, companies that improve their sales velocity by 10% see a 30% increase in revenue.



Step 6: Use Data to Make Data-Driven Decisions


The final step in measuring sales velocity is to use data to make data-driven decisions about your sales process. This might involve analysing your sales metrics, tracking your sales performance over time, and using A/B testing to optimise your sales messaging. By making data-driven decisions, you can ensure that your sales efforts are focused and effective.


According to a study by Aberdeen Group, companies that use data-driven decision-making are 5% more likely to achieve their revenue goals.



In conclusion, measuring sales velocity requires a combination of understanding the sales velocity formula, measuring your conversion rates, calculating your average deal size, determining your sales cycle length, identifying your sales velocity metrics, and using data to make data-driven decisions.


By following these six easy steps, you can optimise your sales process, identify areas for improvement, and ultimately increase your revenue. By continually measuring your sales velocity and making data-driven decisions, you can stay ahead of the competition and improve your bottom line.

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