Demystifying Sales Pipeline Velocity: Meaning, Formula, and Key Steps for Driving More Revenue

Sales success is not just about how many deals you close. Sales success is also about how fast you close those deals and generate revenue for your business. 

This is where a metric like sales velocity comes into play.

Picture this. The sales process is a well-oiled machine. You want it to run smoothly, efficiently, and without unnecessary friction. However, the efficiency of your sales process depends on multiple factors—and even if one of them is not aligned with the sales cycle, you may lose out on precious time and resources.

Sales velocity is the metric that helps you identify these road-blocking factors. Similar to a loose screw or rusted parts in a well-oiled machine, bottlenecks in the sales process can prevent your sales reps from achieving peak productivity and slow down the buyer’s journey to the end goal, that is, converting into paying customers.

In this blog, we will help you demystify the sales velocity metric for your sales team, in a way that enables them to understand its relevance, how to calculate it (with examples!), and how it can be improved to maximize pipeline efficiency. Let’s get started!

What is Sales Pipeline Velocity?

Sales velocity, or sales pipeline velocity, is the speed at which a potential customer moves through a company’s sales pipeline and generates revenue for that business. 

It also indicates areas where the sales process can be enhanced, as well as the overall health and productivity of your sales team. 

Sales pipeline velocity is a key sales metric, as evidenced by this Reddit thread, because it includes four different metrics in one: the number of opportunities in the pipeline, average deal sizes, win rates, and the length of your sales cycle (discussed in detail below).

Moreover, it is also very useful in sales forecasting. Companies are better able to predict future revenue when they have a better understanding of how often and how quickly customers buy something from them. This enables businesses to allocate their resources and budgets more effectively based on anticipated profits and losses. Thus, tracking sales velocity is important, even if your company is growing exponentially, to optimize your sales process in line with the ever-evolving demands of customers and stay ahead of competitors.

Why is it Important to Track Sales Pipeline Velocity?

As discussed above, tracking pipeline velocity gives you a comprehensive idea about the efficiency of your sales team and helps you set realistic expectations about the kind of revenue your business can generate within a given time period. But that’s not all!

Measuring sales pipeline velocity can tell you whether the sales process your reps are using is working and, if not, what’s causing your potential prospects to stall while closing the deal. 

The latter is one of the biggest benefits of knowing your product’s sales velocity. 

It can provide you with actionable insights into your sales process, enabling data-driven decisions, such as adjusting your sales strategies and optimizing resource allocation to help prioritize and close high-value deals. 

Sales velocity can also inform inventory velocity, another critical sales metric. Sales velocity for set-price products heavily depends on market demand and the time it takes to manufacture them. Inventory velocity is a metric that tracks the latter and helps businesses prevent understocking issues and cater to market demand in a sustainable way. 

How To Calculate Sales Pipeline Velocity? (+ Examples)

So, how can you calculate the sales pipeline velocity for your products? 

The formula takes into account four factors, which include:

• Number of opportunities (#)
• Your average deal size ($)
• Your conversion (or win) rate (%)
• Your sales cycle length (L)

Let’s understand these in detail.

• Number of Opportunities (#): This indicates the number of qualified leads in your pipeline. Qualifying your leads can save time and effort. The more qualified opportunities a sales team has, the greater their potential for generating revenue.
• Average Deal Size ($): This refers to the average amount of money a prospect spends to buy your product(s). You can focus on the sales velocities of individual products if you sell them at fixed pricing. However, it is advisable to use the average purchase amount if you sell product bundles on a sliding scale.

• Conversion (or Win) Rate (%): This is not a readily found figure, meaning you must calculate it before computing sales velocity. To find your win rate, divide the total number of sales won by the number of qualified opportunities (#) in your pipeline at any given point. You can increase your win rate by generating more qualified leads.
• Length of the Sales Cycle (L): This is the time it takes from initial contact with a prospect to closing the sales deal. It is ideally meant to be as short as possible since the quicker you can sell to one prospect, the faster you can move on to the next.

Now that you know what each of these factors quantifies, here is the formula for calculating sales pipeline velocity:

Sales Pipeline Velocity (V) = [Number of Opportunities (#) * Average Deal Size ($) * Conversion (or Win) Rate (%)] / Length of the Sales Cycle (L)

Are you still a little foggy about the details? Here are some examples to help you understand how to compute your sales velocity 

Sales Pipeline Velocity Calculations — Examples

Picture this. Company X has 80 opportunities in its sales pipeline. The average deal value is $8,000, and their win rate is 25%. It takes them an average of two months to close a sale.  

In calculating their sales velocity, we find that they generate $80,000 in revenue per month.  

Now, compare this to Company Y, which has 60 opportunities in its pipeline. Their average deal value is $12,000, and they have a higher win rate of 35%. However, it takes them three months to close deals.

In this case, Company Y’s sales velocity comes out to $84,000 per month.  

These examples highlight that even with fewer opportunities, having higher win rates and average deal values can significantly impact sales velocity.

In order to make sure that you calculate your sales velocity effectively every time, we would also like to recommend certain best practices, as follows:

• Collect Accurate Data: Ensure that all relevant sales data is being recorded accurately to weed out any human errors and inconsistencies.

• Track Sales Metrics Regularly: Monitor the number of qualified opportunities, average deal values, win rates, and the length of your sales cycle on a regular basis.

• Analyze Patterns and Trends: Look for patterns to identify trends in your sales velocity data that pinpoint areas for sales process optimization.
• Share the Results: Communicate your sales velocity data with your sales team regularly to foster transparency and collaboration and drive continuous improvement.

To implement all these best practices, we suggest investing in a pipeline management tool like SalesIntel. This software provides sales teams with trusted data on their prospects, helping them prioritize buyers and target in-market accounts to improve sales velocity. 

How to Increase Sales Velocity and Maximize Pipeline Efficiency?

Knowing your sales velocity is only step one in optimizing your sales cycle to generate more revenue. Want to take it a step further? In that case, you must understand how to leverage your sales velocity data to identify bottlenecks in your sales process and take measures to mitigate them, thereby maximizing your pipeline efficiency.

Many factors may impact sales velocity, including the number of steps in your buyer’s journey, your pricing plans, your brand’s standing in the market, your product’s time-to-value for the customer, and much more. As evidenced in this Reddit thread, you must first evaluate your end-to-end sales process based on these factors.  

Based on our research, we have grouped these factors into four categories of roadblocks that you may face in your sales cycle as follows, along with solutions to resolve them:

Low Opportunity Counts

Opportunities don’t just fall out of trees. You must focus your efforts on generating qualified leads. This is primarily based on intent data available during the customer journey. 

Here are four ways to boost qualified opportunities in your pipeline:

• Enhance Lead Generation: Use diverse channels like social media, email campaigns, and lead magnets (e.g., free trials or webinars) to attract more prospects.
• Focus on Lead Qualification: Implement frameworks like BANT or MEDDIC and use lead scoring to prioritize high-quality opportunities.
• Align with Marketing: Collaborate with marketing to create targeted campaigns and leverage account-based marketing (ABM) for high-value leads.
• Expand with Cold Outreach: Train your team for personalized outreach and leverage partnerships or referrals to tap into new networks.

Focusing on quality and volume in tandem can enable you to maintain a steady flow of high-potential opportunities, ultimately accelerating your sales velocity.

Low Average Deal Sizes

Average deal sizes depend on whether you are selling individual products or itemized bundles. Based on this, each product can have its own sales velocity metric.

Here are four ways to boost your average deal values and increase sales velocity:

• Upsell and Cross-Sell: Train your sales team to offer complementary products or services to increase the overall deal value.
• Target High-Value Prospects: Focus on larger accounts or enterprise customers with higher-value potential through account-based marketing strategies.
• Promote Premium Offerings: Highlight upgraded versions or premium features that provide additional value and emphasize their ROI.
• Revaluate Pricing: Introduce tiered pricing or incentives for larger-volume purchases to encourage bigger deals.

Implementing these strategies can drive larger deals which, in turn, will generate greater revenue for your business and improve your sales velocity.

Low Conversion (or Win) Rates

Win rates are not only about the quality of leads. Win rates are also about the kind of relationships you build. 

Here are four ways to refine win rates and enhance sales velocity: 

• Improve Lead Qualification: Prioritize high-potential leads using frameworks like BANT, ensuring your team focuses on the most promising prospects.
• Refine Sales Messaging: Tailor pitches to address specific pain points, demonstrating how your solution meets each prospect’s unique needs.
• Build Stronger Relationships: Foster trust and nurture connections through personalized communication and value-driven interactions.
• Leverage Social Proof: Use testimonials and case studies to demonstrate proven success, helping prospects feel confident in their decision.

Converting leads into paying customers requires empathy and a thorough understanding of the prospects’ pain points. Your sales reps must learn these values to improve sales velocity.

Longer Sales Cycles

The longer it takes to close the deal, the more likely your prospect is to find a competitor’s product. This is why it is imperative to ensure a shorter sales cycle. 

Here are four ways to reduce the length of your sales cycle and improve your sales velocity:

• Streamline the Sales Process: Remove unnecessary steps and automate repetitive tasks like follow-ups and document sharing to speed up the process.
• Leverage Technology: Use CRM systems and automation tools to track leads, schedule meetings, and send tailored messages, reducing communication delays.
• Offer Limited-Time Incentives: Create urgency by offering time-sensitive discounts or promotions, encouraging prospects to make faster decisions.
• Improve Sales Training: Ensure your sales team is well-equipped to handle objections quickly and close deals more efficiently through ongoing training.

These actions drive sales in a faster and more effective way, shortening the length of your sales cycle and automatically accelerating your sales velocity. 

BONUS: A lack of skilled sales agents can also reduce your sales velocity. We suggest investing in top talent and providing them with all the necessary resources to close their sales deals. A bigger sales team can not only help with more outreach to fill your pipeline with qualified leads, but you can also train promising supersellers to take over specific industries or territories, helping them become more specialized and increase their win rates. 

Final Thoughts

Sales pipeline velocity is an important metric for measuring a sales team’s performance as well as uncovering bottlenecks in your sales processes. However, you need to get your hands on the right data to calculate this metric accurately.

For this purpose, you need to use a solution that offers reliable B2B contact data, like SalesIntel. As evidenced above, securing qualified leads is among the most important factors in improving your sales velocity. SalesIntel is excellent at this, not only because it provides you with human-verified B2B lead data but also because you get accurate and actionable insights about in-market prospects looking to buy your products. Using this data, you can personalize your marketing campaigns to generate more qualified leads.

Leverage SalesIntel to fill your pipeline with high-value prospects and the sales velocity metric for your sales team. Book your demo with us today!