June 21, 2022, Comment off
How to Measure and Boost Your Funnel Velocity
You probably have sales targets, whether you’re a startup, a developing mid-market organization, or a well-established multinational corporation.
And the sales target requires more results in less time, right? To put it another way, you want to increase your funnel velocity.
But what is sales pipeline velocity or funnel velocity, and why is funnel velocity an important metric to track?
What is funnel velocity?
Your company’s sales velocity is a measure of how quickly it generates revenue. It examines how quickly deals go through your sales funnel and opportunities become paying customers.
On the surface, funnel velocity is a vital metric for any organization. A measure of it is a measure of your business making it or breaking it. However, there’s a lot more depth to assessing and measuring funnel velocity than just the bottom line cash figure.
Tracking and measuring funnel velocity allows a salesperson to:
- Examine and evaluate their sales process and analyze for strengths, weaknesses, bottlenecks and leaks in the funnel
- Find out what kind of training and coaching your sales staff require
- Accurate sales predictions allow for better goal-setting
Sales funnel velocity analysis can reveal why some sales teams succeed while others remain stuck with median performances and barren of growth. Learn to measure the funnel velocity for creating better sales results.
How to track and measure funnel velocity?
While funnel velocity is an excellent indicator of a sales team’s overall health, efficacy, and productivity, it is a combination of four key contributors. A change in any of them can significantly change the calculation.
When it comes to calculate funnel velocity, there are four typical metrics to consider:
- The quantity of sales opportunities (A)
- Average customer lifetime value (B)
- Percentage of wins (C)
- Time it takes for a sale to close (D)
To measure funnel velocity, multiply A, B, C metrics and divide them by metric D. This gives you the resultant sales velocity.
Formula: A*B*C/D = Funnel Velocity
What is a Good Sales velocity?
Many sales leaders think that your team is on track if they meet 75-85% of their sales quotas. Instead of relying on industry comparisons, use funnel velocity as a guiding light for setting realistic sales targets and understanding the likelihood of achieving them. There is no one size fits all benchmarks for sales velocity.
What is interesting here is that a good sales velocity might hide the problems behind the good numbers. It is important to have an in-depth sales pipeline velocity analysis to draw conclusions. For example, a quota-breaking month for the sales team might look good on paper, but they might lack the retention to sustain the revenue. If your team’s strong velocity is due to higher contract numbers in contrast to a flourishing amount of leads, your team will soon fall behind if your pipeline reduces even slightly.
How to increase your sales funnel velocity?
Any sales team keeping track of funnel velocity will strive to improve their sales velocity. After all, why wouldn’t they? More money comes in with a faster sales velocity.
Let’s talk about the best practices and ways to boost your funnel velocity.
- Increase the number of opportunities available
First and foremost, if you want to increase your sales pipeline velocity, you must win more deals. Increasing the number of possibilities entering your pipeline is the obvious solution to this problem.
However, keep in mind that more leads do not automatically imply more success. Lead quality is significantly more essential than lead quantity.
Your team should focus on creating ICPs and buyer personas that are thoroughly researched and tested. This will ensure that you’re attracting the proper leads in the first place if you want to grow sales faster.
- Increase the average deal size
The most critical component in increasing your average deal is to make sure your offering is priced appropriately for the value it provides to the market.
To put it another way, make sure you’re selling based on value.
- Spend time crafting personalized sales pitches and content.
- Balance your team’s resource allocation between “whale” deals and lower-value, easier-to-close opportunities.
- To increase the value of clients, upsell and cross-sell goals should be employed.
Focus on building genuine connections and transparent communication with your customers; you will automatically see an increase in average deal value.
- Reduce the length of the sales cycle
These are the simple steps that sales teams may take to reduce the sales cycle.
- To begin, ensure that your sales representatives are ready to respond swiftly. Quick service is one of the biggest factors in converting your customer.
- Having standard content, templates and SOP guidelines for follow-ups will help you be swift in your service.
- The correct sales technology solutions assist teams in meeting their objectives efficiently.
These are some of the most effective ways to boost your funnel velocity and improve your sales results quickly.