Your Guide to Sales Velocity: The Path to Faster Growth & Greater Revenue

"Your Guide to Sales Velocity: The Path to Faster Growth & Greater Revenue" header image
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One guaranteed way to increase revenue is to sell more, faster. Of course, this is easier said than done (otherwise, everyone would be a successful salesperson). Lucky for you, we put together this guide to help you accelerate your sales cycle and bring in more revenue.

A good starting point is to take a close look at your sales velocity and experiment to figure out which levers you can pull to make improvements. In this article, we’ll help you do just that. 

First, let’s explore why sales velocity is one of your most important sales metrics and how to calculate it (including best practices for the most accurate results). Then we’ll look at factors that might throw off your calculation or hurt your velocity, as well as how to maximize your sales velocity for faster growth. 

What is Sales Velocity (and Why Should I Care?)

Sales velocity measures how quickly deals move through your pipeline. It’s a valuable sales metric for teams of all sizes because it helps you estimate how much revenue you’re likely to bring in over a given period.

Tracking sales velocity provides vital insights into your team’s sales performance. Namely, it gives you a clear understanding of how long it takes, on average, for leads to convert into paying customers.

In short, greater sales velocity = more money in your pocket.

By accurately calculating sales velocity—and understanding how you arrived at that result—you can improve your forecasting, optimize your sales cycle, and close more deals in a given period.

The Truth is in the Data: How to Calculate Sales Velocity

You can calculate sales velocity by first multiplying the number of sale opportunities in your pipeline by the average dollar value of each deal and your closed-won rate. Then divide the result by the length of your sales cycle—either in days, weeks, or months, depending on what’s most appropriate for your use case.

The basic formula for calculating sales velocity looks like this:

Image showing the sales velocity formula: Sales Opportunities times Average Deal Size times Win Rate, all divided by Sales Cycle Length

Sales velocity = (Sales Opportunities * Average Deal Size * Win Rate) / Sales Cycle Length

There are four measurements you need to know to calculate your sales velocity. Start by gathering the relevant data to answer the following questions:

  1. How many sales opportunities are in your pipeline?
  2. What’s the average dollar value of those opportunities?
  3. What’s your average win rate overall?
  4. What’s the average length (in days, weeks, or months) of your sales cycle?

Measurement #1: Sales Opportunities

How many opportunities are currently in your sales pipeline? You could also determine this number based on how many opportunities enter your pipeline in a given timeframe. Whichever method you decide to use, it’s important to stick with it for consistent results.

Measurement #2: Average Deal Value

The size of your average deal or how much your average sale is worth (represented in dollar value). Note that higher-value products and services are often associated with a longer sales cycle.

Measurement #3: Average Win Rate

Also known as your closed-won rate or conversion rate, your average win rate represents the percentage of deals that your team successfully closes. Calculate your average win rate by dividing the total sales won by the number of total closed opportunities.

Measurement #4: Sales Cycle Length

The average time it takes a lead to progress through your sales pipeline. How many days, weeks, or months it takes for sales to move from lead to close. Shorter isn’t necessarily better, especially for larger purchases that require additional lead nurturing or complex sales processes that involve more steps than usual.

Best Practices for Getting the Most Accurate Calculation

Depending on your target audience, the steps in your sales cycle, the size of your sales team, and the cost of your product or service, there are a few additional things to factor into your sales velocity equation.

Calculate Market Segments Separately

If you sell to a wide range of customer types, group opportunities into appropriate market segments. For instance, enterprise, mid-market, and SMB clients should each have their own pipeline. By dividing your customers into relevant market segments, you can calculate a more accurate sales velocity for each of these pipelines.

Measure Individual Performance 

If there’s a major discrepancy between how quickly your sales reps can close, it might be worth calculating sales velocity on an individual basis. Just as you might break down the number of sales opportunities and average deal value by market segment, you can separate these factors by sales rep or territory to refine your results even further.

Account for as Much Time as Possible

You can learn a lot more by calculating sales velocity over a long-term period than simply looking at the past week or so. The longer you track your sales velocity for, the more accurate your numbers will be.

Measure at Regular Intervals

It might be a good option to calculate sales velocity on a quarterly and annual basis. Measure at regular intervals so you can compare how your sales team performs over the years while accounting for seasonal changes. For instance, comparing your Q1 sales velocity for the past five years could be more valuable than comparing every quarter, especially if your business experiences predictable highs and lows over the year.

Standardize Definitions Across Your Team

When it comes to quantifying how quickly opportunities are moving through your pipeline, there needs to be a clear understanding of what separates leads from opportunities as well as when a deal can be considered closed. For instance, do leads who reply to cold emails automatically convert into opportunities—or are there additional qualification criteria? Is a deal considered closed-won the moment a verbal agreement is made or once the contract has been signed by both parties?

Common Hurdles and Stumbling Blocks: Why Your Sales Process Isn’t Fast Enough

Sometimes, you can follow the sales process perfectly and still lose out on a sale. But in most cases, you can analyze lost deals to determine the cause and use that knowledge to adapt your sales process.

Drawing of a person stumbling over a relay hurdle, with "Closing the Sale" on the finish line bannera

To save you the trouble of making these mistakes yourself, we’ve identified some of the most common roadblocks that slow down the sales process and derail deals just before the finish line.

Spending Energy on the Wrong Sales Activities

From eSignatures and AI-driven forecasting to automated data entry and admin duties, there are plenty of sales activities that can be tackled more efficiently with technology. Not only does sales automation reduce friction and make it easier for leads to say yes, but it can also save your sales reps valuable time. 

For instance, using an eSignature tool like HelloSign can shave valuable time off of your sales process by making it easy to send, track, edit, and sign documents—without the unnecessary back and forth that comes with paper contracts. Research shows that collecting physical signatures adds an average of 3.1 days to the sales process, with 22% of organizations reporting delays of a week or more.

Failing to Address Customer Objections

There’s a good chance leads are telling you why they aren’t ready to buy. One of the most fundamental (yet often overlooked) basics of sales is listening when a hesitant prospect says they have concerns. Rather than brushing them off or repeating the benefits you already listed, dig deeper to figure out what the prospect really wants. 

For example, are they worried about onboarding their entire team? Highlight how easy it is to get started and reassure that your experts will walk them through the entire process. Are their concerns cost-related? Focus on creating a custom plan that serves their needs and fits their current budget.

Unnecessary Friction and Paperwork

The longer the sales process takes, the less likely you are to close the sale. So, anything that prevents a deal from moving forward should be viewed as a hurdle. That includes too much back and forth between you and the client at the signing stage (for instance, sending and resending the contract to make changes and collect signatures).

How to Maximize Sales Velocity: Improve Every Factor in Your Calculation

Improving your sales velocity requires optimizing the four metrics used in the calculation: number of sales opportunities, average dollar value, win rate, and sales cycle length. In theory, you can increase sales velocity by increasing any of the first three—or by decreasing the length of your sales cycle. Here are some tips to help you optimize each of these factors:

1. Find More, High-Quality Leads

The best way to increase the number of opportunities in your pipeline is to refine your lead qualification process. This might sound counterintuitive since more extreme qualifications mean fewer leads will make it into your pipeline; however, leads and opportunities are not the same. With this approach, you’ll be weeding out low-value leads and focusing more on high-quality opportunities.

You can’t just top up your pipeline with any old leads and hope they convert. Instead, focus on finding qualified leads who are most likely to buy. For example, you could figure out where your most qualified leads are coming from and then look for ways to tap into that source more extensively. If a particular channel gives you access to more opportunities, it could prove to be a goldmine of opportunities that fit your ideal customer profile.

2. Add Value to Every Deal

There are several ways to optimize average deal value, including cross-selling, up-selling, targeting bigger clients, and offering longer contracts. Remember that bigger deals tend to require additional nurturing, which means they tend to take longer to close. This is another example of why you should divide your sales velocity calculations by market segment to ensure accuracy.

3. Perfect the Art of Closing

Don’t let deals fall flat just before crossing the finish line. Instead, improve upon your closing techniques to bump up your win rate. One way to help your team close more deals is to offer training and scripts that can be tailored to specific use cases. However, it’s not always on your reps—especially if there’s an ongoing pattern of late-stage deals that fail to close.

Another approach is to review your pipeline for potential leaks or bottlenecks, particularly in the later stages of the sales process (e.g. during negotiations or contract creation). Identify whether there is a particular step or sales activity associated with a large number of drop-offs. For example, are there any similarities between leads that tend to back out of deals late in the sales process? Consider factors like lead source, contact’s title, budget, and time between responses. Use these new parameters to trim dead-end leads from your funnel.

4. Streamline and Automate the Sales Process

Donut chart showing an 80% decrease in sales turnaround times by using an eSignature solution

If you want to reduce your sales cycle length, the key lies in modern sales tools. After all, the more you can minimize friction, the faster you can close deals. One of the easiest ways to reduce friction in the sales process is to take advantage of sales automation.

By adopting digital content workflows and integrating eSignatures into your sales process, you can make it simple for customers to review and sign agreements. Not only does this provide better customer experiences, but it can seriously shorten your sales cycle. In fact, according to Ombud Open Research, enterprises that deploy eSignatures reduce turnaround times by up to 80%. 

Give Your Sales Team a Competitive Edge

The deeper your understanding of your sales pipeline, the more you can refine your sales strategy and increase revenue. However, sales velocity is just one piece of the puzzle. To get the full picture, you need to apply effective sales strategies that optimize your entire pipeline.

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