Table of contents
- What is Sales Velocity?
- How to Calculate Sales Velocity (With Examples)
- 4 Strategies to Increase Sales Velocity
- The Impact of Discounts on Sales Velocity
- Tracking and Improving Sales Velocity
Sales teams are always looking for ways to close more deals, hit targets faster, and grow revenue predictably.
While many metrics can help guide sales performance, one of the most critical—and often overlooked—is sales velocity.
More than just a number, sales velocity reflects the health of your sales process and shows how quickly deals are moving through the pipeline and turning into revenue.
Understanding this metric is key to making better decisions, forecasting more accurately, and enjoying higher revenue.
In this guide, we’ll explore what sales velocity is, the factors that influence it, and actionable strategies that can help you enhance yours.
Let’s get started.
What is Sales Velocity?
Sales velocity is a measurement of how quickly your business generates revenue.
It’s not merely about how fast deals close, but how efficiently your sales process moves from prospecting to closed deals.
The formula for calculating sales velocity combines four critical factors:
- Number of deals
- Average deal size
- Win rate
- Sales cycle length
Tracking and understanding sales velocity is vital because it provides insights into the health and efficiency of your sales process.
Source: Goodmeetings
Here are a few key reasons why it’s essential:
1. Enhanced revenue forecasting
Sales velocity offers an accurate gauge of how much revenue your team is generating within a given period.
By tracking this metric, businesses can make more reliable revenue predictions that help with budgeting, financial planning, and setting realistic sales targets.
Knowing how fast deals are closing gives companies insight into future cash flow.
Related: How to Calculate Projected Sales – A Complete Guide (2024)
2. Improved sales efficiency
Sales velocity breaks down the sales process into measurable components like win rate, deal size, and sales cycle length.
This clarity helps identify bottlenecks, which allows businesses to optimize processes. For instance, if you notice long sales cycles, you can streamline your operations to shorten them, leading to faster deal closures and increased revenue generation.
3. Better resource allocation
Sales velocity also helps in efficiently distributing resources. By understanding which parts of the sales process are more productive, you can prioritize efforts in areas like lead generation, prospecting, or deal negotiations.
This targeted approach maximizes ROI by investing resources where they’ll have the highest impact.
4. Competitive advantage
In competitive markets, having a clear understanding of your sales velocity can offer a critical advantage.
Companies that can quickly convert leads into paying customers not only grow faster but also stay ahead of competitors who are slower in their sales process.
Regularly tracking and improving sales velocity ensures that you remain agile and responsive to market changes.
Related: What is Sales Acceleration? – Tools and Tactics Included
How to Calculate Sales Velocity (With Examples)
The formula for calculating this metric:
Sales Velocity = (Number of Deals × Average Deal Size × Win Rate) ÷ Length of Sales Cycle
Source: Goodmeetings
Each variable in this formula represents a key factor of your sales performance:
- Number of deals: This is the total number of opportunities or deals your sales team is handling within a specific period.
- Average deal size: This is the average revenue generated from each deal.
- Win rate: Often expressed as a percentage, this is the ratio of closed-won deals compared to the total number of opportunities.
- Sales cycle length: This is the average time it takes to close a deal, it’s typically measured in days or months.
Example 1
Let’s take an example of a B2B e-commerce company with the following data for six months:
- Number of deals: 20
- Average deal size: $5,000
- Win rate: 40%
- Sales cycle length: 60 days
Using the formula, the sales velocity calculation would be:
Sales Velocity = (20 deals × $5,000 × 40%) ÷ 60 days
Sales Velocity = $667/day
This means the company is generating $667 in revenue per day.
Example 2
Imagine a salesperson who handled 100 opportunities in a quarter. If their average deal value is $5,000, your win rate is 20%, and the average sales cycle length is 90 days, then your sales velocity would be calculated as:
- Number of deals: 100
- Average deal value: $5,000
- Win rate: 20%
- Sales cycle length: 90 days
Sales Velocity = (100 deals × $5,000 × 20%) ÷ 90 days
Sales Velocity = $1,111 per day
In this case, the salesperson is earning $1,111 in revenue per day.
Related: How to Create a Go-to-Market Strategy? A Complete Guide
4 Strategies to Increase Sales Velocity
Let’s check out some top strategies that can help you boost your sales velocity.
1. Increase the number of opportunities
The more opportunities in your sales pipeline, the more potential for closing deals.
Increasing opportunities can be achieved by expanding lead generation efforts through targeted marketing campaigns, social media engagement, and exploring new market segments.
Aligning marketing and sales departments (to ensure consistent lead quality) and using lead nurturing tactics can also help to drive more potential customers into the pipeline.
For instance, by enhancing content marketing and leveraging inbound marketing tools, your company can attract a higher volume of qualified leads.
Sales intelligence platforms can also help you track prospect engagement and identify which leads are worth pursuing.
Pro tip: Increasing opportunities doesn’t simply involve generating more leads—it’s about bringing in quality opportunities. Higher-quality leads are more likely to convert, resulting in a faster and more predictable sales cycle.
Related: 15 Best Sales Methodologies You Need to Know
2. Boost average deal size
Increasing the average revenue per deal enhances sales velocity by making each opportunity more valuable. Some ways to do this include:
- Upselling & cross-selling: Recommend premium products or services, and bundle related offerings to existing customers. Bundling, in particular, can increase the overall deal size by offering more comprehensive solutions.
- Customized offers: Offer add-ons or customizable packages that provide more value to customers; this will encourage them to invest in higher-tier products or services.
3. Improve win rates
Improving your win rate is a critical aspect of boosting sales velocity and overall revenue. Here are some ways to enhance yours:
- Sales training: Equip your sales team with negotiation skills and objection-handling techniques to close more deals. Continuous training ensures they’re prepared to deal with different buyer objections effectively.
- Personalized sales approach: By leveraging CRM data, sales reps can tailor their outreach to individual customer needs and pain points, which can lead to a higher conversion rate.
- Clear value proposition: Refine and communicate your value proposition to align closely with the prospect’s needs. If customers see the value of your product or service, they’re more likely to move forward with the purchase.
- Use data analytics and customer relationship management (CRM) tools: Leveraging these platforms can give your team valuable insights into patterns that help improve win rates.
Related: 6 Proven Ways To Close More Deals
4. Shorten the sales cycle
Reducing the time it takes to close deals is key to increasing sales velocity.
One way to do this is by identifying bottlenecks in your sales process and eliminating unnecessary steps.
For example, using automation tools to streamline follow-ups or approvals can reduce delays in the sales pipeline.
Shortening the negotiation process by having pre-approved discount structures or using contract management software can also cut down the time to close.
What’s more, being upfront about pricing and addressing customer concerns early on prevents roadblocks later in the cycle.
The Impact of Discounts on Sales Velocity
Discounts can significantly influence sales velocity by accelerating the pace at which customers make purchases.
When customers perceive they’re getting a deal, they’re more inclined to act quickly. These discounts can even help you reach new customer segments who may be hesitant to try a product at full price.
Plus, if your business needs to hit short-term sales targets or clear inventory, discounts can provide a quick revenue injection.
However, there are potential downsides to consider. While discounts may boost immediate sales, they can erode profit margins, especially if they’re not applied strategically.
Additionally, frequent discounting can devalue your brand over time, making customers expect lower prices as the norm.
Apart from undermining your ability to sell at full price in the future, this may also attract “discount hunters” who are unlikely to become loyal, repeat customers.
Source: Goodmeetings
Tracking and Improving Sales Velocity
For any sales team that aims to understand the efficiency of their sales processes, the need to track sales velocity can’t be understated.
Fortunately, there are several tools and software that can help you track and optimize this metric. Some of these tools:
1. Customer Relationship Management (CRM) software
Example tools: Salesforce, HubSpot, Zoho CRM
CRM platforms are the backbone of any sales operation.
They allow businesses to track interactions with potential and current customers—from initial contact through to closing the sale.
CRM software helps track various components that affect sales velocity, such as the number of deals in the pipeline, win rates, and the average deal size.
How it helps with sales velocity:
- Centralizes customer data, making it easier to see the status of all deals.
- Provides insights into how quickly deals move through different sales stages.
- Offers detailed analytics and reports, helping sales teams identify trends that impact velocity, like slower-moving deals or unproductive sales activities.
Why you need it: CRMs give sales managers real-time visibility into sales velocity metrics, helping them make data-driven decisions to keep deals moving forward efficiently.
Related: 15 Best AI Sales Tools & Software [2024]
2. Sales analytics & reporting tools
Example tools: InsightSquared, Tableau, Microsoft Power BI
Sales analytics tools allow businesses to dig deeper into sales data and uncover insights that might not be readily apparent from raw data in a CRM.
These tools often integrate with CRM platforms to provide advanced reporting capabilities and dashboards that break down the elements of sales velocity.
How it helps with sales velocity:
- Visualizes sales velocity metrics, such as time spent at each stage of the sales funnel.
- Tracks historical performance, making it easier to forecast future velocity.
- Identifies patterns in sales cycles, enabling sales leaders to pinpoint areas for improvement.
Why you need it: With the ability to monitor sales velocity over time, sales teams can quickly spot bottlenecks and implement strategies to speed up the sales process.
3. Sales pipeline management software
Example tools: Pipedrive, Monday Sales CRM, Freshsales
Sales pipeline management tools help sales teams organize, visualize, and manage their sales process.
They provide a clear overview of deals at every stage so teams can easily see where delays are occurring and how those delays are impacting sales velocity.
How it helps with sales velocity:
- Offers a visual representation of the entire sales pipeline, making it easier to spot slow-moving deals.
- Helps sales teams focus on high-priority deals to ensure they close faster.
- Tracks the time deals spend in each pipeline stage and offers valuable insights into which stages need optimization.
Why you need it: These tools simplify pipeline tracking and allow sales teams to push deals through the pipeline more quickly by eliminating unnecessary delays.
4. Sales enablement platforms
Example tools: Highspot, Seismic, Showpad
Sales enablement platforms equip sales reps with the resources they need to engage prospects effectively.
These tools help ensure that sales teams are always armed with the most up-to-date content, presentations, and product information. In turn, this reduces the time wasted searching for assets or working with outdated materials.
How it helps with sales velocity:
- Provides quick access to sales content, shortening the time reps spend preparing for customer interactions.
- Enables better customer engagement by ensuring reps can deliver personalized content at the right time.
- Offers analytics on content performance to help reps focus on what works and optimize future pitches.
Why you need it: Sales enablement tools cut down the time it takes to prepare for sales calls and meetings. They help reps focus more on selling and less on administrative tasks.
Related: Sales Enablement Strategies 101: A Beginners Guide to Success
5. Meeting insights software
Example tool: Goodmeetings
Getting actionable insights from meetings can significantly impact the success of your team.
Rather than spending time on manual follow-ups and post-call summaries, sales leaders need tools that can capture key moments, analyze conversations, and provide detailed performance metrics.
Source: Goodmeetings
Goodmeetings is a comprehensive AI-powered platform that’s designed to address these needs.
By automating key aspects of sales meetings, this tool enables teams to improve productivity, enhance coaching, and make data-driven decisions that accelerate revenue growth.
Features of Goodmeetings include:
1. High-quality call recordings, transcriptions & summaries
Goodmeetings makes key conversation insights easily accessible with top-quality recordings, transcriptions, and summaries.
Sales teams can leverage these resources to quickly reference crucial discussion points, improving both preparation and response times.
This, in turn, leads to more informed decision-making, shorter sales cycles, and ultimately, a faster sales process.
2. Meeting performance insights
This tool also offers detailed analytics on meeting effectiveness and engagement levels.
Plus, it provides real-time coaching suggestions and performance insights based on call data to help reps improve their skills continuously.
3. Automated action items
Goodmeetings automatically creates action items after each meeting to ensure that follow-up tasks are completed promptly.
This reduces delays in follow-ups and helps sales reps move deals through the pipeline faster.
4. AI-generated key moments
With Goodmeetings, you can access critical meeting moments. This feature empowers your reps to identify and leverage key insights that can accelerate deal closure.
5. CRM integration
Goodmeetings also seamlessly integrates meeting insights into the CRM to reduce manual data entry.
This frees up more time for selling by automating administrative tasks, enabling faster progression through the sales pipeline.
6. Custom reporting and dashboards
Goodmeetings also provides customized reports and dashboards for comprehensive call review. You can use these to make data-driven decisions and optimize your sales strategies.
Related: A Complete Guide to Sales Call Reporting: Tips, Templates & Tools
7. Lead-level reporting and scoring
This tool also offers insights into why leads didn’t convert and assigns a predictive score to future leads. With this feature, your reps can better prioritize high-potential leads.
8. Keyword-based call auditing
This next feature streamlines the compliance process for sales calls.
By automatically auditing calls for specific keywords set by the client, it eliminates the time-consuming task of manually listening to each conversation.
This ensures that sales reps consistently disclose necessary information and adhere to compliance protocols.
9. Rubric-based inference
Goodmeetings also generates insights based on client-defined rubrics to provide actionable intelligence to sales leaders.
This can lead to improved meeting quality, better customer engagement, and faster deal closure.
Related: 12 Best Conversational Intelligence Software 2024Want to try Goodmeetings at no cost? You can sign up for a 7-day free trial or book a free demo.
Increase Your Sales Velocity with Goodmeetings
Wrapping Up
Understanding and improving your sales velocity is crucial for driving growth and achieving revenue targets.
In this guide, we’ve explored the definition of sales velocity, its importance, and the top strategies to boost it.
By implementing these strategies and using tools like Goodmeetings, you can create a streamlined, efficient sales process that fosters consistent revenue generation.
