The sales velocity equation has become a universal concept—like the law of physics for sales. I can’t claim to invent it—I believe Altify were the first to articulate it—but I’ve used it for years to accelerate growth.
Over the years, I’ve found that while the formula is sound—and simple—putting it into play isn’t always easy.
If you’ve struggled to apply a blueprint like this to your sales operations in a way that generates tangible momentum, it could be because one or more of these key capabilities and strategies is missing from your approach.
A sales ecosystem
Before we can start pulling on all four levers—opportunities, close rates, average deal size and sales cycle—we need to be able to account for them in a unified system that everybody across the sales and account management teams has fully bought into.
That requires an ecosystem of technologies, people and processes that monitor and measure impact. At Eyewitness Surveillance, where I now lead sales, we spent an entire year pulling our ecosystem together in preparation for sales acceleration. Today it includes a marketing-and-sales stack, staff training, policies and processes designed to collect the right information, enable the right activities and set the right cadence to inspect what we expect. (read more in my article on How to Build a Sales Technology Stack to Support Growth)
Clearly defined terms
The sales velocity formula is made up of several key metrics, and while some are easy to quantify, others are trickier. Just as our ecosystem needs to create unity and coordination, the definitions applied to our sales funnel create a consistent language for discussing sales velocity and measuring the impact of certain tests or investments.
For example: calculating opportunity count—that’s easy. Just add up the number of current opportunities in the pipeline. And average deal size: that’s a simple calculation of revenue divided by the number of deals.
But what about the sales cycle? How do you conduct a cohort analysis unless everyone is using the same criteria to define each stage in the funnel? Also, what will the standard period of measure be? One year, six months?
The conversion or close rate is another tricky one. First, we needed to look at every single funnel stage. Then we decided whether we should make calculations based on when the opportunity is first opened or when it’s actively engaged.
When is an opportunity stalled? What does it mean to be in “proposal sent?” How long is the close window? How does the close rate change when we extend it? There are so many variables and unless every one of them is defined—with everyone across marketing and sales using the same definitions—the data you collect is not going to tell a consistent story.
(To take a step back and understand how to calculate core sales metrics, read 4 Sales Pipeline Metrics Growth-Oriented CEOs Must Know.)
A solid baseline
You need to measure against something to know whether the levers you pull have an effect. Once you’ve established a sales ecosystem and defined your terms, you can start to establish metrics that form the baseline you’ll be measuring yourself against.
Your baseline may take time to establish. At Eyewitness, the ecosystem we put in place is still young and adoption is even younger: at this point, I can say that I have confidence in three of the four baseline numbers, with the sales-cycle number still evolving. It’s not perfect, but it still gives us enough to start generating monthly reports and comparing the numbers.
A month or two may not give you enough to identify a trend, but within 12 months, you’ll start to see your growth rate clearly and be able to see how different tactics are influencing sales velocity.
Another variable that has to be considered is the typical length of your sales cycle. Though this circular process is an attempt to define it, if, on average or even anecdotally, you have a six- or 12-month cycle to start with, you need 12 to 18 months of data to measure impact.
We built our ecosystem on the founding principle that everything we implement and every decision we make needs to make life easier for the salesperson, customer and everyone across the sales cycle.
Salespeople are notoriously bad at the data-entry stuff. Even the best salespeople are sometimes the most disorganized. When I consulted with VPs at sales organizations, one of my first questions was: “How would you rank your outside sales team on their CRM usage? A C- or a D+?” No one gave themselves the C-.
That’s why it’s important to design a system that encourages adoption, so the Sales Leader needs to own the deployment and configuration, not IT. We built our ecosystem on the founding principle that everything we implement and every decision we make needs to make life easier for the salesperson, customer and everyone across the sales cycle. By making it easier or enabling them to be more independent in closing a deal, we incent the team so they’ll actually use it.
Case in point: we got our salespeople to enter accurate information about the contract phase by integrating DocuSign and eOriginal (another LLR portfolio company) into our process. Now all that important contract data always gets plugged into our system because our salespeople know that using those tools enhances their credibility and moves the sale forward faster. Building a system that encourages adoption can make all the difference in accelerating sales velocity.
Specialized roles – the way to impact all 4 factors at one time
Sales teams at smaller organizations are usually staffed with highly capable people who straddle a number of roles. But to gain sales velocity momentum, you need to let people take off some of those hats and focus on a single area of expertise.
When I arrived at Eyewitness, we had one person to manage marketing and inside sales in our organization: she’s now transitioning into a marketing-only role, while a new inside sales director is hired to focus on developing that team to the speed of potential. This will let her to focus on one thing—getting more opportunities in the pipeline—and that’s going to move the dial. We’re also splitting off the outside and inside sales teams, with outside salespeople getting in front of customers and inside salespeople just doing business development.
We’re doing this because we see our people getting maxed out. They hit that point where things aren’t getting done, or aren’t getting done as well. The rubber band is at a breaking point and, when that happens, you have two options: put on the brakes and grow at a slower rate, or invest in growth and increase headcount. As the team grows, you can leverage specialized skills, make better use of your best performers’ talents and maximize returns on expensive resources, such as outside salespeople. In doing so, these investments (as measured by the sales velocity equation) should turn out to be the least expensive ones you make through increased growth rates.
Here’s the bottom line.
“Don’t sacrifice good for great” is a saying we use a lot in my organization. Once you start implementing and analyzing your growth formula, it’s so easy to spend weeks figuring out the different ways to slice and dice the information. You may gain a better formula, but you’ve also lost time, and at a certain point, you’re going to get diminishing returns on all those hours spent poring over the numbers.
Don’t beat yourself up too much trying to get every single possible scenario figured out. If you get 90% of it, you’ll have a 90% accurate equation and that’s a lot better than 100% of nothing.
Once you’ve got a good-enough plan in place, get started and expect to fine tune and course correct on the fly— at least now you have a blueprint in order to make those minor adjustments.