Categories Articles, Sales and Marketing

How fast are opportunities moving through your sales pipeline on their way to being Closed/Won deals? Sales velocity, much like actual velocity, can easily be found by using a simple math equation. But instead of using rate/time, pipeline velocity is:

Qualified Opportunities x Win Rate x Deal Size / Length of Sales Cycle

If you use this equation and find your pipeline is full of slow-moving, old opportunities, this is bad news for your business and means you need to take immediate action. You know that opportunities with high velocity are more likely to close, but how can you increase your team’s pipeline velocity? These four metrics are the critical drivers of sales velocity that sales managers must measure and improve to track sales success.

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1. Qualified Opportunities

What is the maximum number of opportunities in your pipeline that could close within this month or quarter? This is the first factor that goes into calculating your overall pipeline velocity.

In this report, you can see how your entire pipeline is growing over time, factoring in the opportunities that have exited the pipeline because you’ve either lost or won a deal. The number of net new opportunities is due to efforts from your marketing team and other lead generation tactics. Ideally, this number should be constantly increasing, as it is here – driven by a combination of Inbound and Outbound marketing, partner referrals, and Sales Development Reps who find, nurture and qualify new leads for closing sales reps. If this number isn’t where you’d like it to be, it’s time to pull the levers on marketing and drive more lead creation.

Learn More about the Inflow/Outflow of Your Sales Pipeline»

2. Win Rate

If your entire pipeline is growing and healthy, the next metric to explore is the overall win rate for your sales team. Of the opportunities in your pipeline today, you know realistically that a large number of them will drop out as they move through the pipeline and are disqualified or opt not to buy. Once you learn the team’s total win rate, you can drill deeper to look at conversion rates from lead to Closed/Won.

This report shows your team’s sales conversion rates as opportunities move through the pipeline, from Present Solution and Technical Fit to Closing. With the right sales coaching and focus on your team, you can increase conversion rates as opportunities move through the pipeline and become a deal – which can improve your lead velocity as well.

3. Deal Size

The average value of Closed/Won deals can also have a major effect on pipeline velocity. Generally, larger deals move more slowly and smaller deals more more quickly. But the size of the opportunities your business focuses on usually depends on the price of your product, your target customer profile, ideal market and more.

By using historical data about past deals won by your sales team, you can clearly see the average deal size you have had most success closing. In this report, you can see that larger opportunities above $10K are much less likely to close, compared to smaller deals. This can help your team better target opportunities that are likely to close, to increase your average win rate and target slightly larger deals strategically.

4. Sales Cycle Length

If it’s taking your team too long to push leads through the pipeline, converting from stage to stage, this can kill sales velocity. You need to know exactly how long your sales cycle is, and continuously work on decreasing it.

In this report, you can see the total sales cycle, as well as how the sales cycle has been changing over the past 12 months. By coaching your sales reps, you can help them improve the length of time that opportunities spend in each stage of the cycle. By decreasing this final metric, you will also be able to increase the total pipeline velocity.

Learn more about sales cycles »

This may seem like a lot of different factors to juggle, but by improving all of these metrics, you will be able to improve your pipeline velocity. Just focus on growing your pipeline, improving your win rate, decreasing the sales cycle and keeping an eye on deal size to see results. With the right balance of efforts, you can get the faster sales velocity you’re dreaming of.

 

Cara Hogan
Cara Hogan is a Content Marketing Manager at InsightSquared, where she is a constant contributor to Ramp, the InsightSquared blog, and the host of Ramp, the SaaS analytics podcast. Cara studied Journalism at Boston University and has written extensively about the intersection of technology and business.
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