Every business owner knows that an effective sale is like the gentle movement of a well-oiled wheel. But what if you could speed up the process? Introducing sales velocity—a concept designed to help businesses close sales more quickly and effectively. This article will delve into critical business strategies to increase sales velocity, simmering it down to the basics for your understanding.
Quite simply, business performance analytics is a process that helps us see insights and meaningful data that we might not otherwise detect. Business analytics focuses on using insights derived from data to make more informed decisions that will help organizations increase sales, reduce costs, and make other business improvements. Do sellers see themselves as lone wolves or as a team?
Some representatives view the sales process as a solo sport: their quota, deals, and accounts. Eventually, this mindset can make collaboration feel, at best, like a waste of time. At worst, working as a group can feel like a direct threat to everything they’ve worked to build. By going solo, internal silos, and technically specialized product knowledge give sellers very little reason to interact naturally.
Of course, when the team starts to consider things from the customer’s point of view, it becomes clear that sending reps out on solo missions may hurt everyone’s performance in the account. A good understanding of the sales cycle can help you adapt your selling techniques to the styles and preferences of your potential customers, which can significantly boost your deal conversion rates.
Understand How The Sales Velocity Analytics Process Helps Optimize Business
To enumerate, Sales Velocity measures how quickly you can move a prospective lead from the initial interest stage to the final purchase stage. This involves understanding four crucial factors: the number of sales opportunities, the average deal size, the conversion rate, and the length of the sales cycle. Increasing the first three factors or decreasing the sales cycle time can often work.
One thing is sure: The essential sales velocity factors can significantly help increase business performance. Understanding these principles is critical to developing strategies to push your business results beyond the norm. Markedly, velocity is at the heart of sales effectiveness. Velocity reflects the levers that impact sales initiatives: Number of deals, deal size, win rate, and sales cycle length.
Sales forecasting is equal parts art and science, right? Well, not so fast. The ‘art’ aspect of sales forecasting doesn’t need to be an educated guess. Having suitable methodologies and best practices throughout the sales process is vital. Adding the best technologies that empower AI Analytics And Machine Learning Algorithms can also make sales forecasting look more like an exact science.
At the same time, the role of effective CRM AI Technology and business management systems is invaluable. Some automation tools and applications like account planning technologies have made sales forecasting more or less a daily activity that updates your salespeople’s activity. It’s no longer about guesswork. It can be articulated effectively to make the most critical business decisions.
Getting To Know How To Workout The Sales Velocity Calculation Formula
On the one hand, Sales Velocity is the speed at which deals move through your pipeline and start to generate revenue. On the other hand, Deal Velocity is how long a deal takes to get through the sales cycle. Deal velocity is typically measured in the number of days and average deal value. Effectively, it’s the same way average product sales cycle length is measured in the business cycle funnel.
Given the ever-evolving cloud technology, as sales leaders become more adept at the sales velocity formula and capturing data, they can measure how quickly their business is moving forward and achieving its growth targets. When used correctly, the business sales velocity calculation formula can help organizations with their sales forecasting for a specific period and bolster their sales efforts.
The formula also allows sales leaders to measure impact and adjust using the four levers, enabling them to create effective strategies to improve revenue growth. Businesses know that dramatic improvements in sales velocity and overall revenue are possible with simple changes. If they increase levers one, two, and three by 10% and reduce four by 10%, their sales velocity can increase by 47%.
- Opportunities: Increase the number of deals you will likely win.
- Valuation: Prioritize higher value opportunities.
- Conversion: Focus on process and methodology to increase win rate.
- Measurement: A successful opportunity management methodology helps close good deals quickly while weeding bad ones early.
It’s important to realize that the sales velocity equation, or formula, differs from the deal velocity calculation formula. In this case, it uses four Key Performance Indicators (KPIs), such that the sales velocity formula focuses on the calculation metric levers for the same period. Still, a working sales velocity equation or formula uses four metrics to help organizations calculate their sales velocity.
- Number of opportunities
- Average deal value
- Win rate percentage
- Length of the sales cycle
Simply put, the higher the sales velocity, the better. Since the sales velocity equation uses only four levers, you can quickly zero in on the strategies and activities that can significantly impact your sales effectiveness. Once you identify the lever where your business performance lags or needs the most improvement, you can redefine targets and goals that yield significant revenue increases.
Making sales velocity an integral metric for your organization lets you see your team’s achievements aligned with their goals to ensure that success is recognized individually and as a team. Another beautiful aspect of the sales velocity formula is its ability to help sellers achieve targets. When you know your sales velocity, you also know what an achievable quota looks like, given the significance of the formula.
The benefits of the sales velocity formula:
- Gives a solid understanding of what needs to be done to meet sales goals
- Helps teams to avoid surprises – the kryptonite of sales leaders
- This formula pinpoints where to go by using a baseline to start with
- The calculation process leads to increases in sales process efficiencies
- It helps identify areas where potential headcount could be used
- Underscores alignment or misalignment with product and pricing
No more need to sandbag sales in your business—everything is transparent, and all sellers know what is expected from them. In addition to setting realistic goals, leadership can also set stretch goals – creating harmony between what the team and each seller can do. Likewise, you can underperform in one area, adjust the other KPIs, and still prosper because you can adjust the levers.
Shifting away from an ingrained lone-wolf mindset to a teamwork effort is a worthwhile process—but it’s also a time-consuming method. One thing is sure: It takes more than scheduling standing meetings or forcing representatives to enter information in a shared database. Instead, the aim is to help the managers and marketers stop thinking as lone wolves and start thinking as a team.
Utilizing Data Analysis Steps For Optimizing And Increasing Sales Velocity
In layman’s language, the role of data analysis in optimizing sales velocity is vast and essential. By analyzing data from the sales process, you’ll gain crucial insights into factors affecting your sales velocity. Be that as it may, a successful data analysis strategy seeks to eradicate all aspects of the existing sales team structure—and keep the core business practices that worked well previously.
For example, many sellers may have solid expertise in different areas that complement their customers. Asking those sellers to trade in their expertise for shallow, far-reaching knowledge isn’t the answer. Sales channels—and the business expertise within them—are one of the company’s greatest success growth strengths. Realistically, frontline sellers will always be the lifeblood of sales success.
Resource Reference: Big Data Analytics Plus The Essential Data Processing Tools
However, they fell short in how these sellers function as a whole. Without a revenue team, the process may not be successful. Data analysis can reveal areas of your sales process that are slower or less effective. Once identified, you can improve these areas and increase your sales velocity. Moreover, a strategic data analysis plan can inform your team on customer behavior and preferences.
This can help you anticipate your prospects’ needs, tailor your sales approach accordingly, and hasten the sales process. However, capturing and analyzing data is a vast and potentially complex task. The missing ingredient is trust. Strategies, tools, and systems have been developed to facilitate this process. Investing in some of these techniques may benefit your quest to increase sales velocity.
How An Effective Pricing And Communication Plan Can Boost Sales Velocity
Pricing is a significant factor when it comes to increasing sales velocity. For instance, if your product or service is priced optimally, you can close deals faster. Therefore, an excellent pricing strategy considers your customers’ perceived value of your product. Think about it like this: If customers believe that your product offers value for the price they pay, they are more likely to make purchases.
However, to achieve this without much deliberation, you should remember that effective pricing is not merely about lowering prices. It’s also about reinforcing the value that your product offers. This can be achieved through unique branding, outstanding customer service, and an unbeatable guarantee. Usually, effective communication is crucial for any business transaction—sale or otherwise.
It could mean the difference between a lost opportunity and a quick close in a sales context. At all costs, effective communication can move your sales process along significantly faster, mainly through well-articulated messages to meet the prospect’s needs from the opening pitch to the negotiation stage to the final closing. This can motivate them to act promptly. Always be more transparent.
Transparency in communication builds trust. When prospects trust you, they are more likely to purchase from you and do so quickly. Consequently, putting considerable effort into improving your communication tactics is undoubtedly worth it. Train your product sales team to communicate effectively, provide the necessary tools, and set distinct communication standards to increase sales velocity.
The Vital Principles For Sales Representatives To Optimize Business Results
By all means, you cannot expect your team to sell better without the right tools, techniques, and strategies. Spend time designing the plays you need them to play daily to hit their targets. Align these plans with customer needs and ensure everyone is on board with how you want them to act. Ensure everyone has all the necessary resources and training to perform their role-plays correctly.
Then, hold them accountable for regularly executing according to plan. Remember, the sales velocity equation uses only four levers. Thus, you can easily and quickly zero in on the suitable strategies that can significantly impact sales effectiveness. Once you identify the lever where your business sales performance needs the most improvement, you can redefine goals to increase your revenue.
Velocity is the speed of something moving in any given direction. At Web Tech Experts, we think about velocity a lot. So much so that we created the sales velocity equation to get sales teams moving in the right direction, which is revenue. How fast you get there depends on four key levers. Understanding your business sales velocity across funnels is one of the most significant advantages.
Resource Reference: How To Achieve Greater Sales Velocity: The Four Success Equations
Sales leadership is a multifaceted and complex task requiring an adept balance of skills and qualities. The advantage of calculating the business sales velocity value is that it enables you and your team members to hone what’s working and what isn’t. Technically, as you work through your business’s sales velocity levers, you will hone in on precisely the metric you want to switch on and off.
Creating a sales strategy is relatively easy. Constant execution and sales discipline are more complex and what separates the great from the mediocre. The overall sales process (or go-to-market strategy) will contain various milestones from business development through follow-up after the sale. As well as refined trigger points, best practices, disciplines, and specific recommended tactics.
For instance, more than dwelling in the ever-evolving marketing sales landscape or plans, open communication and trust are vital to do this. A successful sales leadership team aims to serve your business customers better and for individual sellers to think of their deals as tools that align their values. While there is no one-size-fits-all approach to success, several principles can help guide the way.
1. Build Business On Trust
Building trust is at the heart of everything for effective sales leadership. Before taking over, you may find that some business sellers work primarily alone—there is no unity or trust. In such a case, to turn things around, you would have to start from the ground up. Starting from the ground up means building a seamless business collaboration culture. However, collaboration doesn’t blossom overnight. You’ll need to build a safe environment where sellers can see the value of transparency and let go of a zero-sum mindset.
2. Focus On Core Values
Trying to achieve the same thing in your business space can be a game-changer. As sellers work through their accounts to profoundly understand customers, they inevitably unearth hidden insights. Some of these insights may have less to do with product-specific needs and more with values. Armed with critical insight, design a sales team that reflects your customers’ needs—not the company’s internal divisions. It requires people from far-flung business regions to unite and share the fruits of their unique conversations.
3. Lead With A Purpose
Sales leadership is more about building trust than executing any one particular strategy. Leading with purpose means building trust. Building trust involves focusing on the “why” behind your goals, objectives, and daily activities. Sales teams care less about what they are being told to do and more about why they are asked to do it. Equally important, building trust is also a shared understanding.
4. Target More Sale Deals
For many salespeople, increasing the number of opportunities is the only lever that gets any real attention. The problem is that if you focus most of your time on filling the pipeline, you’ve got less time to increase the chance of winning the deals you already have in your funnel. Being ruthless in the dealership (rigorous qualification) stage gives you a ticket to sales velocity town, population one. By helping sales teams connect with the people that matter and focusing on selling value, Autodesk achieved an increase of 144% in average deal size, a 21% increase in win rate, and an overall enhanced sales velocity.
5. Increase The Deal Size
Companies are fighting harder than ever to win deals. That makes winning as many contracts as possible and maximizing each opportunity essential. Sellers need to focus on higher-value opportunities by aggressively qualifying out lesser-qualified opportunities. Align each specific offer with your buyer’s needs and present the right product at the right time. This is an essential part of great selling. You’ll uncover whitespace and encourage your salespeople to create the most significant possible account footprint.
6. Optimize The Win Rate
Through a thoughtful, defined sales process. The methodology and process are different. Methodology analyzes where you are in a deal vs. the competition. It’s a deductive framework your team consults whenever you learn something new and vital about your contract. Markedly, the B2B Sales Process is a set of steps aligned with your customer’s desire to buy and what you should do next. This process must be linear, prescriptive, and standardized throughout your sales team to achieve the win rates you are after.
7. Shorten The Sales Cycle
A more rigorous approach to the selling cycle will efficiently align your company’s sales process with your prospect’s buying process. A successful opportunity management methodology ensures your team works on deals they are more likely to win, so sellers don’t waste time on opportunities that shouldn’t be in your wheelhouse. You can underperform in one of the first three factors and still prosper. Aim at closing good deals as soon as possible and weeding out bad deals early—it is crucial to sales effectiveness.
8. Integrate Buy-In Methods
The buy-in priority centers around data—there is no time for guesswork. In this case, business managers and marketing leaders can begin to build a comprehensive picture of the organization’s strengths and weaknesses. They may need to think big. Silos can get them into this mess, and thinking within their bounds certainly isn’t going to get them out. The only real solution would need to be universal. So they reach the ladder, securing the backing and buy-in of general managers and senior leaders who sit above the siloed structure. With these on board, the teams can be confident that, when change does come, it will impact the whole organization.
9. Start To Rebuild Strategically
If your core mantra is building trust when transforming the sales team, your secondary motif is change. But change can be scary—getting to the point where the sales team can excel beyond their wildest dreams would require a lot of change. Thus, sales leaders must focus on rebuilding “strategically.” It’s time to tear down their preconceived notions and rebuild their selling strategy from the ground up. To do so, they’d need to ask themselves: where are we now? What don’t we know? And who can make the most impact?
10. Continually Rebuild The Trust
It is good, of course, that representatives can bring in-depth knowledge to sales conversations. Still, their hyper-focused channel selling model may create an unintended consequence. For example, it can create a disjointed approach that leaves the customers feeling perpetually pelted with disconnected proposals rather than support from a reliable partner. Trust in one another, yes, but trust that collaboration wouldn’t mean sacrificing their goals to prop up someone else’s sales numbers. You must help the sales team see that everyone would win more if they pool and share their information. They also need to know better how to position themselves.
There are several benefits to using a sales velocity calculation formula, and many organizations consider it their most important metric. From helping leaders define focus areas to helping sellers meet realistic quotas, the sales velocity equation is integral to your team’s success. Furthermore, those using it will consistently outperform disjointed business teams working with no baseline.
Sales cycle length and number of opportunities are the things sales leaders have the most control over and are often the easiest to tweak. There are different strategies they can use to cut down on sales length, as well as tactics to boost the number of opportunities during a specific timeframe. However, the two levers that are much harder to impact sales velocity are deal size and win rate.
Resource Reference: How Informatica Empower Businesses With ETL Data Management
Part of the blame for the challenge in impacting those two levers lies in the uncertain economic situation we find ourselves in. Uncertainty also equates to deal uncertainty—hiring freezes, budget cuts – all of these things impact sellers as they look to close deals on time. Ultimately, the variability of win rates also impacts average deal size. Big whale deals may take unexpected twists.
In return, most sellers will look towards smaller deals to make ends meet, driving down that deal size and ultimately inhibiting sales velocity. Increasing sales may require a multifaceted approach—like blending a keen understanding of sales velocity factors. As well as effective communication and efficient data use. By doing so, you could see a massive profitability and growth improvement.