Sales velocity is a critical metric that measures how quickly your sales team generates revenue. By understanding and optimising this metric, businesses can enhance their sales processes and drive growth. Let’s delve into what sales velocity is, why it matters, how to calculate it, and strategies to improve it.
What Is Sales Velocity?
Sales velocity refers to the speed at which deals move through your sales pipeline and generate revenue. It provides insights into the efficiency of your sales process and helps forecast future revenue.
How to Measure Sales Velocity (Step-by-Step)
One thing I’ve learned working with sales teams is this: if you don’t measure your sales velocity, you’re basically driving blind. Knowing how fast money is moving through your pipeline helps you plan better, set realistic targets, and avoid those “end-of-the-month surprises.”
So, here’s exactly how to measure sales velocity:
The Sales Velocity Formula
The formula is simple but powerful:
Sales Velocity = (Number of Opportunities × Average Deal Size × Win Rate) / Length of Sales Cycle
Let me break it down:
| Component | What It Means | How to Get It |
|---|---|---|
| Number of Opportunities | The total number of qualified leads or deals in your sales pipeline. | Use your CRM to count how many potential deals are in progress. |
| Average Deal Size | The average value of each deal you close. | Add up the value of all closed deals and divide by the number of deals. |
| Win Rate (%) | The percentage of deals you actually close. | Divide the number of closed deals by the total opportunities, then multiply by 100. |
| Length of Sales Cycle | The average time it takes to close a deal, usually measured in days. | Check how long it typically takes from first contact to deal closure. |
Example of Measuring Sales Velocity
Let’s say in one month:
- You have 40 qualified opportunities.
- Your average deal size is $2,000.
- Your win rate is 25%.
- Your average sales cycle is 30 days.
Sales Velocity = (40 × 2000 × 0.25) / 30
= (20,000) / 30
= $666.67 per day
This means your team is generating $666.67 in revenue each day from the current pipeline.
Why Measuring Sales Velocity Matters
When I worked with a small SaaS company last year, we realized that while they had many leads, the sales cycle was way too long, around 90 days. After tweaking their process, focusing on more qualified leads, and cutting the cycle down to 45 days, their sales velocity doubled.
That’s the power of measuring it. It’s not just numbers — it tells you where the real problem is. Are you talking to the wrong leads? Are your deals too small? Is your process too slow?
How Often Should You Measure It?
- Monthly: Great for fast-paced industries like e-commerce or SaaS.
- Quarterly: Suitable for industries with longer sales cycles like real estate or enterprise solutions.
- After Major Campaigns: If you’re running a big promo or changing your strategy, always check how it impacts your sales velocity.
Pro Tip:
Always compare your current velocity with past months. Trends tell you if your sales process is improving or if something is slowing down your revenue flow.
Why Is Sales Velocity Important?
Understanding sales velocity is crucial for several reasons:
- Revenue Forecasting: It helps predict future revenue based on current sales performance.
- Process Optimisation: Identifying slow-moving deals or stages in the sales cycle allows for targeted improvements.
- Resource Allocation: By knowing which deals are likely to close faster, sales teams can prioritise their efforts effectively.
- Performance Measurement: It serves as a benchmark to assess the effectiveness of sales strategies and team performance.
How to Improve Sales Velocity (Detailed Breakdown)
From my experience helping businesses optimise their sales process, improving sales velocity isn’t about working harder — it’s about working smarter on the four key levers in the formula. Let’s break down exactly how to boost each one effectively:
#1. Increase the Number of Opportunities (More Qualified Leads)
It’s not just about more leads — it’s about the right leads. Filling your pipeline with people who are likely to buy is where the real magic happens.
How to do it:
- Use Content Marketing: Create valuable blog posts, ebooks, webinars, and guides that attract your target audience.
- Leverage Referrals: Encourage happy customers to refer others by offering referral incentives.
- Network Actively: Attend industry events (online and offline), webinars, and LinkedIn groups where your ideal clients hang out.
- Invest in Paid Lead Generation: Use targeted Facebook, Google, or LinkedIn ads to bring in qualified leads.
Real-life insight: One of my clients saw a 40% jump in pipeline opportunities just by adding a simple lead magnet on their website (a free checklist download).
#2. Boost Average Deal Size (Make Every Deal Worth More)
Growing your deal size is one of the fastest ways to increase your sales velocity — even if your win rate or cycle time stays the same.
How to do it:
- Upsell and Cross-sell: Recommend add-ons or upgrades to customers at the point of purchase.
- Bundle Offers: Package services or products together at a slightly discounted rate to encourage bigger purchases.
- Target Higher-Value Clients: Adjust your outreach to focus on companies or individuals with higher budgets.
- Clearly Show ROI: Help prospects see the value of choosing a premium package by focusing on outcomes, not just features.
Personal tip: I once worked with a coaching business that doubled their average deal size simply by adding a premium “done-for-you” package alongside their basic offer.
#3. Improve Win Rate (Close More Deals)
A high number of leads means nothing if you’re not closing them. Here’s how to turn more “maybe” into “yes”:
How to do it:
- Invest in Sales Training: Focus on objection handling, consultative selling, and relationship-building skills.
- Refine Your Value Proposition: Make it crystal clear why your solution is the best option — what problem are you solving better than anyone else?
- Qualify Leads Early: Use qualification frameworks like BANT (Budget, Authority, Need, Timeline) or MEDDIC to focus only on real opportunities.
- Align Sales and Marketing: Ensure that marketing is attracting the right type of leads that the sales team can actually close.
What I’ve seen: In one case, just by improving the discovery call questions, a team I worked with increased their win rate from 20% to 35% within two months.
#4. Shorten the Sales Cycle (Close Deals Faster)
The longer it takes to close a deal, the more chances something will go wrong. Speed is key.
How to do it:
- Simplify the Buying Process: Reduce the number of approval steps or decision-makers if possible.
- Use Automation Tools: Automate follow-up emails, meeting scheduling, and proposal generation with tools like HubSpot or Calendly.
- Handle Objections Early: Don’t wait until the final stage to address common objections — bring them up and solve them early.
- Create a Sense of Urgency: Offer limited-time discounts or bonuses, or clearly explain the cost of inaction.
Common Mistakes to Avoid (With Solutions)
Here are the mistakes I’ve seen too many teams make (and how to fix them):
#1. Neglecting Lead Qualification
- The Mistake: Chasing anyone with a pulse.
- The Fix: Use clear qualifying questions from the first conversation. Focus only on leads who actually fit your product or service.
#2. Overlooking Sales Cycle Bottlenecks
- The Mistake: Letting deals get stuck at certain stages for weeks.
- The Fix: Regularly review your pipeline. Identify where deals slow down and ask why — is it waiting on paperwork? Too many decision-makers?
#3. Ignoring Data Analysis
- The Mistake: Making decisions based on gut feelings, not numbers.
- The Fix: Track metrics like sales velocity, win rates, and cycle length. Review them weekly or monthly to spot trends and adjust quickly.
#4. Lack of Alignment Between Sales and Marketing
- The Mistake: Marketing brings leads that sales can’t close.
- The Fix: Schedule regular meetings between the two teams. Define what a “qualified lead” means and make sure both teams agree.
#5. Focusing Only on One Part of the Formula
- The Mistake: Obsessing over lead volume without looking at deal size, win rate, or cycle time.
- The Fix: Remember — sales velocity is the combination of four factors. Improving just one won’t work if the others are broken.
Tools That Help Improve Sales Velocity (Detailed Breakdown)
One thing I always tell teams I work with is this: even the best sales strategy will struggle without the right tools in place. The good news? You don’t need to overcomplicate it. Below are some of the best tools to help you improve sales velocity across the four key areas.
#1. CRM Systems (Customer Relationship Management)
Your CRM is your sales command centre. It helps you track every lead, deal, and interaction — all in one place.
- HubSpot CRM:
Great for small to midsized businesses. It’s free to start and very user-friendly, with built-in automation and reporting. - Salesforce:
Best for larger teams that need deep customisation, advanced analytics, and integration with other tools. - Pipedrive:
Focuses on simplicity and pipeline visibility, making it perfect for businesses that want to track deals without the learning curve.
How it helps sales velocity:
Keeps your pipeline organized, prevents leads from slipping through the cracks, and provides easy access to sales cycle data.
#2. Automation Tools (Save Time, Move Deals Faster)
Automation can take care of the repetitive stuff — so your sales team can focus on closing deals, not scheduling calls or chasing signatures.
- Calendly:
Makes it easy for prospects to book meetings directly into your calendar — no back-and-forth emails. - PandaDoc:
Streamlines your proposal, quote, and contract process with templates and e-signature support. - DocuSign:
Simplifies contract signing with secure, legally binding e-signatures, cutting down delays in the sales cycle.
How it helps sales velocity:
Reduces the time wasted on admin tasks and speeds up decision-making.
#3. Lead Qualification Tools (Find and Focus on the Right Leads)
Stop chasing the wrong leads. These tools help you find qualified prospects who are actually ready to buy.
- ZoomInfo:
A powerful database of business contacts and companies, helping you identify decision-makers and gather insights. - LinkedIn Sales Navigator:
Advanced search and lead recommendations on LinkedIn — great for B2B sales and building meaningful connections.
How it helps sales velocity:
Ensures your sales team spends time on leads that fit your ideal customer profile.
#4. Data & Reporting Tools (Measure and Optimise)
If you can’t measure it, you can’t improve it. These tools help you track sales velocity and other important metrics.
- Google Sheets (with Integrations):
Simple, affordable, and flexible. You can connect your CRM data and visualise your sales performance. - Tableau:
A powerful data visualisation tool that turns raw sales data into easy-to-read dashboards and reports. - Power BI:
Microsoft’s data visualisation tool — great for syncing with other Microsoft products like Excel and Dynamics 365.
How it helps sales velocity:
Gives you the insights to see what’s working, what’s not, and where deals are getting stuck.
FAQs About Sales Velocity
What is a good sales velocity?
A “good” sales velocity depends on your industry and sales cycle length.
- For SaaS or e-commerce, faster cycles (like 15–45 days) with daily revenue generation are common.
- For real estate or enterprise sales, longer cycles (90–180+ days) are normal, but higher deal sizes compensate for the slower speed.
The key is improvement over your own past performance, not comparing with unrelated industries.
How often should I measure sales velocity?
- Monthly: Best for fast-paced sales environments.
- Quarterly: Suitable for longer sales cycles.
- After major campaigns: Always check how promotions or process changes impact your velocity.
The more often you track, the quicker you can spot problems (like slow-moving deals).
Does sales velocity apply to small businesses?
Yes! Whether you’re a solo entrepreneur or a small team, knowing how fast your deals close and how much they’re worth helps you plan better.
In fact, small businesses often benefit more from sales velocity tracking because even small improvements can make a big difference in cash flow.
Can I use sales velocity for service-based businesses?
Absolutely. Whether you’re selling products or services, the formula still applies:
Number of projects × Average deal size × Win rate / Sales cycle length.
For service businesses, your “deal” is your project or contract. The focus remains on speeding up how quickly you turn proposals into signed deals.
Sales Velocity vs. Sales Forecasting: What’s the Difference?
Many people confuse sales velocity with sales forecasting, but they are not the same thing. Here’s a clear breakdown:
| Aspect | Sales Velocity | Sales Forecasting |
|---|---|---|
| What it measures | Speed of revenue generation (pipeline flow) | Predicted future revenue based on pipeline analysis |
| Focus | Current efficiency of the sales process | Planning and budgeting for future periods |
| Purpose | Process improvement and deal acceleration | Revenue prediction and goal-setting |
| Timeframe | Focuses on what’s happening now | Focuses on what’s expected to happen later |
| Main Use | Operational improvement | Strategic decision-making |
In simple terms:
Sales velocity helps you fix your pipeline speed.
Sales forecasting helps you prepare your financial future.
Conclusion
Sales velocity is a vital metric that offers deep insights into the efficiency and effectiveness of your sales process. By understanding its components and implementing strategies to optimise each one, businesses can accelerate revenue growth and achieve their sales goals. Are you ready to take a closer look at your sales velocity and unlock your team’s full potential?
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