You’re familiar with your sales funnel.
After all, it’s the path that your possible buyers will take to get to the point of a closed sale. But are you truly taking advantage of all the resources at your disposal?
I’m not just talking about a good CRM.
There are content resources for your reps, revenue forecasting and tracking tools, and formulas. For instance, you can track your sales velocity (how quickly buyers are entering and moving through the sales funnel) so that you can actually see how well things are working.
Keeping tabs on this number (sales velocity) can help you:
- Determine problem areas in your sales process
- Help split test new ideas, pitches and all other aspects of your marketing/sales
- More accurately determine your future sales and revenue forecasts
- Increase revenue and margins
What is sales velocity anyway?
Well, there’s velocity, which is really just the speed of something. In this case, the speed at which you sell your products/services.
In other words, if your sales velocity is getting better, then your buyers are moving along the path to a closed deal faster.
So, if your velocity is high, then the period between the potential buyer entering your sales pipeline and actually closing the deal is shorter. This is a great way for sales and marketing managers to track their team’s performance.
Not to mention, it’s great for small business owners.
Discovering and properly using your sales velocity will help you increase your margins and will also help you when it comes to managing a sales team, as you inspire them to sell big, sell more often and sell quickly, as they meet their quotas.
How to measure your sales velocity
The way you measure your sales velocity is really easy, and even if other companies have different ways of doing it, it all comes down to the same number.
So you start with the number of qualified opportunities that you have at the top of your sales funnel.
You multiply that number with your sales team’s close rate, averaged. Then, you multiply that number by the average deal value. Take that number that you have now, and divide it by the number of days that it generally takes for a prospect to go from opportunity to signed client.
That final number is your sales velocity, and it also represents how much money your team is bringing in every day.
Sound confusing? We created this visual (below) for one of the posts on LeadFuze to help.
So if you know what your sales velocity is, what do you do with this magic number?
How do you even tell if your number is good, bad, or anywhere in between?
If you’re not tracking your velocity, what you want to focus on is just being able to know what’s your number. That’s step one.
And here’s another thing. It’s not about what’s “good.”
Yeah, that’s right.
The sales velocity number isn’t what matters in this equation. You don’t even need to compare it with anyone else’s, just your own. You’ll want to keep a close eye on your number as it changes from week-to-week and month-to-month.
This is mainly because your sales velocity is there to make sure that your team is becoming better and better at what they do — selling. You want that number to become greater and greater over time. If it gets slower, you want to figure out what the problem is, and then fix it.
How do I improve the number?
Increasing your sales velocity is all about growing the numbers that you used in your first mathematics problem.
- Number of opportunities
- Close rate
- Deal size
- Shorter time in the funnel
The number you start out to improve dependents on you. Look for low hanging fruit and capitalize by fixing those issues quickly.
You’ll want to ask some honest questions. The answers should help you determine where to begin.
- Where are your leads coming from right now? (Inbound, outbound, referrals?)
- What are you doing to increase your opportunities and your leads?
- Are your leads getting hung up in your sales pipeline in any particular place?
- Have you been appropriately teaching your salespeople how to sell?
- Have you figured out the optimum price to charge for your service?
Figure out the answers to these questions. Then, brainstorm ideas to solve them. Here are three to get your mind headed in the right direction.
Getting more leads
The quickest way to getting more leads could vary, but it’s usually either doing more of the best thing you’re doing, or doing something new.
For instance, if you’re currently using Facebook ads (and they’re working), you could increase the ad spend. This should equal more leads. That said if you think it’s topped out and no more leads would come in via ads…
Try something different.
If you are only using inbound traffic to get leads, try cold emailing some prospects you find for yourself or vice versa. If you’ve never tried asking your current clients for referrals —give it a shot.
A new channel for leads is often the lowest hanging fruit for improving your sales velocity.
Shorten the sales cycle
So many companies don’t have the resources that;
a.) Their clients want
b.) Their sales reps need
Which leads me to the number one way to shorten the life cycle — content.
Whitepapers, blogs, tutorials, videos, live chat and a host of other options can be created/implemented to educate and nurture buyers when they’re ready to be nurtured. It’s mind-boggling how many businesses and marketing departments don’t have something written to give to prospects who want to know more.
Get content, and you’ll likely see that average buying time shrink.
Increasing how much you charge is nerve-racking for most business owners (and not possible for the sales and marketing departments).
So, discretion is advised here.
However, many businesses don’t charge enough. This one will take some research and possibly change your value proposition.
Here’s what I mean.
In most markets, there are price ranges — low-end to high-end. Determining where you fit in your industry will take researching the pricing of your direct competitors. If you find yourself on the low-end, figure out if your product has the same features/quality of the higher-end products on the market.
If so, you may need to position yourself a little better. Rolex timepieces sell differently than Casio watches (and to a different customer base).
Proving sales velocity to your sales team
If you’re a small business owner (or sales/marketing manager) trying to get your team on board with the sales velocity method — you may find that it’s easier than you think.
Sales velocity can be very inspiring and help your team track progress and reach higher goals than they have in the past.
Make it easy for your team to keep up with the velocity of the group as a whole, and how it changes.
You can do this by printing and putting up the info on a board or write it out on a whiteboard, or by investing in some cool sales tech. Wherever it is, make sure it’s visible and accessible.
Cover illustration by Udhaya Chandran