You’ve designed a sales process, everyone is finally on track, selling and closing deals. But can you tell how fast you’re making money? Sales velocity calculates just that.
It’s a formula that multiplies opportunities by deal value and win rate and then divides that number by the length of the sales cycle (in days).
The result is how much money you’re making per day.
Seems simple, right? That’s because it is. Sales velocity allows you to have a big picture of your business and how well it’s doing. And that picture enables you to continuously improve your sales process, as well as measure the impact of those improvements.
There are several ways to improve your sales velocity, focusing on each variable of the equation:
This is usually the first approach: increasing the number of opportunities. Nurturing your sales pipeline is probably the first thing that comes to mind, and it has a direct impact on the business’ success. However, this variable has a finite potential. Your sales team can only handle so many opportunities. So, if this is an area your process can improve in, it is worth the investment. If increasing opportunities requires you to expand your team and you’re not ready to make that move, no worries. There are three more areas to work on!
Increase deal value
Another option is to increase the amount of money each deal represents. To understand if this is an area you can improve, reflect on some of these questions: Is your pricing optimized? Do you need to review your value proposition? Is your team making the most out of each opportunity? Are you offering the most complete/appropriate solution?
By tweaking some of these issues, you can increase your average deal size – and as little as 10% (as we’re going to see in a moment) can have a huge impact!
Increase win rate
To focus on increasing wins you need to figure out why you lost. There are several reasons for deals to be lost – and most of them have nothing to do with your team’s performance. Sometimes it’s just a matter of timing, for example.
You may need to review your processes to improve lead qualification or provide negotiation training for your team. Take a step back and analyze your processes, learning from the past deals lost.
Decrease sales cycle length
In other words, increase your selling speed. You can analyze each of your team member’s performance and see who is taking longer to close deals – and figure out why. By coaching each person, you can tackle their individual struggles and better prepare them for quick closing.
Another area you should look at is your process. Are administrative tasks delaying your salespeople progress? Can you improve your daily flow with playbooks or scripts? Can you reduce onboarding or training time?
So, even if the number of opportunities stays the same, by increasing deal size and win rate by 10% and decrease sales cycle length by 10% as well, your sales velocity will improve by 34%!
Pro Tip: Attentive can help
With Attentive, you can start to tackle some of these issues immediately. By simplifying the way your sales team interacts with the CRM, the time spent with administrative tasks is dramatically reduced. This will have a direct impact on your sales cycle length.
Also, Attentive gives you an overview, directly on your dashboard, of how your team is performing. Check each rep’s open, executed and snoozed actions and identify areas of improvement.
Were these tips helpful? Do you track sales velocity in your company? Let us know!