Sales are what make the B2B world go round and the faster you can land them the more successful you will be. It all comes down to your sales velocity – how quickly you can convert new leads. If you can increase your sales velocity, then you will be increasing your success. Or in other words, be making money faster!
While sales velocity may be the buzzword of the moment, it is basically a new way of approaching an age-old challenge faced by sales and marketing teams the world over. How can you make more, or higher sales, in a shorter span of time?
ROI and sales velocity
There is a simple formula for working out sales velocity, which means it can be a useful KPI to measure. Content marketers can easily use this formula, working together with sales in order to grab the right figures, to demonstrate the return on investment (ROI) being generated. When service level agreements (SLAs) exist between marketing and sales teams, these numbers can be jointly monitored, in order for work to be done on improving them over time.
To work out your sales velocity, you will need the following data:
- Number of leads
- Conversion rate % (win rate)
- Average deal size (monetary value)
- Average number of days to close (average sales cycle)Now you’re all set, you just need to put those figures into the following formula:
What to do to increase your sales velocity
So what can you do to improve on your figures?
Start by avoiding the biggest and most common trap that teams can fall into – placing too much focus on the number of leads being generated, and on getting more and more in, no matter what the quality of those leads may be. It is a huge time waster, which will use up precious resources that could be put to better (more valuable) use.
Yes, it is ultimately just one big numbers game. And yes, if you get more leads your sales should increase. But there are better, more effective ways to up your sales.
Ask yourself, is it better to have loads and loads of poor quality leads, or a few high quality opportunities? What would you rather be spending your time and effort working on? The aim should always be quality over quantity.
Putting it another way (and just assume for a second that all sales are worth the same) – getting 20 quality leads and converting 60% of them is going to be worth far more than getting 100 leads and only converting 10%. Especially in terms of the time spent trying to qualify and nurture leads along.
Every part of the sales velocity equation is equally important and can have a huge impact – without the need to increase the total number of leads.
Increasing your sales velocity by 34%
It is possible to increase your sales velocity by as much as 34% by making some key adjustments. The secret lies in making small but smart changes to all the other elements of the equation and by doing so, to increase your overall result.
The aim here is to keep your supply of leads steady but to work on improving each of the other 3 factors by 10%. If you can increase the average deal size and your win rate by 10%, and reduce the length of the sales cycle by 10%, you’ll achieve a 34% increase in sales velocity overall.
So what can you do to improve on each of the three factors?
First a word about leads and conversion rate
How many of your incoming leads are converting into customers? This figure will be heavily influenced by how you define what a ‘lead’ is and sales and marketing may have very different views on this. You need to make sure you are clear on what this figure is and how it is worked out. Check you’re always comparing apples with apples!
For example, someone who just browsed your website and never got in touch (but you were able to identify through Lead Forensics software for example) is technically a lead and marketing may count them within their ‘lead’ figures. But they are very much at the beginning of the journey and haven’t yet been qualified. Little will be known about them and their true potential to become a customer. Counting these types of leads within your conversion figures will get you a very different, and potentially misleading, result to one that instead focuses on hot leads.
1) Increase your conversion rate
Sales ready leads are the ones to look at here – the leads that marketing have qualified and deemed ready to be handed over to sales. Agreeing exactly what a sales ready lead is and when marketing should hand them over to sales is something the two teams need to discuss and agree on. There are many different options here so try them out, keep track of the results and analyse the data. Use it to help you make any decisions over changes to the strategy, using the reports and what they reveal to help you.
Now you’re clear on the figures you will be including, think what other factors may also be having an effect on your conversion rates. For example, is more training needed? Do you need to update your sales strategy? Are there new tools you could introduce that will help support the team in generating better results? Analyse your entire sales process to spot gaps and opportunities to improve.
Remember, the one action that will have the biggest impact will be to focus your efforts on getting high quality, highly targeted leads, who are going to be the best fit for your company. Focus on getting more of these opportunities and your conversion rate will increase.
2) Grow your deal size
When looking at this number and ways to improve it, there are some key influencing factors to think about:
- Is your pricing optimised?
- Are discounts used strategically enough?
- Is your value proposition correct?
- Do your sales reps offer the correct, most appropriate package?
- Would teams benefit from more negotiation training? Or training in other areas?
- Are you spotting all opportunities to grow accounts, through upselling and cross-selling?
Bear in mind there is often a clear connection between the size of a deal and the length of a sales cycle. Usually smaller deals can be completed in a shorter timeframe.
Look at your data and analyse it to find your ‘sweet spot’ – the ideal time and deal size, which is the perfect fit for your company. It is these deals that make the most sense for you to focus on, in order to increase your sales velocity.
3) Decrease your sales cycle
If pushing an opportunity on from one stage to the next takes too long, it will kill your sales velocity. Break the sales process down and work out what the maximum amount of time should be for each stage a lead goes through.
Now think what you can do to decrease the time it takes to move the leads through each stage. For example, do touch points need to be increased? And do you need to bring in technical support sooner, or later?
You want to spot and cut away any dead wood that may be clogging up the pipeline at each stage. Look for ways you can better qualify leads and then move them along quicker.
Know your numbers
We have put together a simple spreadsheet to help you track your numbers. Log your activities then you will be able to make informed decisions about the best steps to take to improve your sales velocity, what’s working and where you should shift focus.
You will also be able to see what impact the various changes are having (which could be huge!). In the example provided, after 12 months sales velocity was increased by 50%, as a result of each factor increasing by just 10%.
Try it for yourself and you could soon be flying high, with an enviable sales velocity and your foot firmly on the gas.