Sales velocity: what it is and how to measure it

June 5, 2020 Tarmo Tamm

When it comes to planning quarterly goals, many salespeople reference the amount of potential revenue they have to work with. While this is a great place to start, there are, in fact, other equally important factors to consider.

For example, the average value of their deals, and how many of those deals will actually be closed. One other element that’s often overlooked is the window for turnaround.

Yes, timing really is everything. Hanging hope onto a big potential sale is great.

But if you’re not executing smaller sales in the interim, before your quarter deadline, then you’re not demonstrating sales efficiency.

This is where sales velocity can help.

Sales velocity is a strong, insightful metric that enables sales reps to forecast how much they can sell and how quickly it can be executed.

This article will help guide you through the sales velocity equation: how to calculate sales velocity and how to optimise its four variables so that you bring in more revenue—smarter and faster.

What is sales velocity?

Sales velocity is a simple, yet effective way of measuring how fast your business makes money.

It focuses on how quickly leads move through your sales pipeline and how much value new customers bring in over time. Tracking sales velocity is vital in determining your business’ ability to grow and succeed. And it’s all in the calculation—a relatively simple equation made up of four key components:

  • Number of sales opportunities
  • Average deal value
  • Average win rate
  • Sales cycle length

The top half of the equation, multiplied together, demonstrates how much revenue your sales team can expect to bring in. Dividing that figure by the length of your sales cycle determines how quickly you will bring it in.

Essentially, you are measuring the dollars per day at which you are generating sales.

The greater the number of your sales velocity, the faster you are earning money.

Let’s take a look at an example of the sales velocity equation in action.

Imagine that you (as part of a relatively modest sale team) are working on 5 sales opportunities at once.

All opportunities represent an average deal size of about $2,000. And, to make things simpler, imagine that your personal win rate is 50%.

If the average number of days it takes you to close is 25, your sales velocity is $200 per day. In this case, if you had a quota of $10,000 per sales quarter (number of sales X average deal value), you would be able to determine that from the beginning you would be short by $5,000 (average win rate of 50%).

This is your sales velocity—and it is vital for moving successfully towards targets.

If you’re expected to fall short based on the results of this equation, you must reassess your approach.

But how? Here are some ideas.


Four ways to boost your sales velocity

While it may seem enticing for sales reps to pursue larger deals, the risks can often outweigh the potential for success. Even if, by doing so, you are hoping to make up for a potential sales shortfall.

As with any field, optimising for efficiency is a more effective sales strategy than holding out hope for a windfall. By increasing the value of your deals and win rate, you are working efficiently towards maximising long-term profits.

Calculate your sales velocity, know the results, and put forth actionable steps so that you can improve upon it quickly.


  1. Increase the number of sales opportunities

There are many ways to go about building your list of prospects and turning them into qualified leads. And while it’s always nice to have large numbers on your plate, you should really be focusing on relevant prospects only. Especially if you are serious about continued success.

Sales velocity may be all about speed, but it definitely pays to play the game long-term.

Gathering prospects is typically a joint effort shared between sales and marketing teams. But how you go about turning those prospects into leads rests solely on you, the sales rep.

There are steps that you can use for increasing sales opportunities, such as:

  • Recognise quality over quantity: Focus on quality leads and do not be afraid to disqualify prospects early on. Cramming your schedules with undesirable leads only manages to create headaches in the long run.Recognise and prioritise those opportunities that actually present the potential of turning talk into revenue.
  • Stay in your lane: When prospecting, it is always best to take a realistic approach. Do not overextend yourself.If your typical customer is a small-business owner, it’s best to avoid trying to prospect a multi-billion-dollar operation. One of the major pain points most sales reps experience occurs when they pursue companies outside their ideal customer profile. (Do not, however, take this as discouragement. The opportunity for scoring big-budget leads will come with time).Don’t place all of your eggs in one basket. Tailor your targeting and focus on customers who are currently experiencing value from the service or product you provide. And then consider approaching prospects just like them.


  1. Increase your average deal value

Not always as simple as it sounds, increasing your average deal value can come with some unmovable challenges. Oftentimes, there are limitations set in place by a sales rep’s company (i.e. pricing structure, product mix). Additional roadblocks can be softer in focus, like learning to build relationships with important decision makers.

The key to effectively selling to your prospects is knowing how to link value and price. Here are some steps to successfully achieving greater results when prospecting:

  • Learn to value training: Establishing or improving product knowledge and training should be a top priority of any sales team. In order to prove effective, sales training should be all-encompassing—and frequent.Most successful companies manage to incorporate ongoing training and communications into their weekly work-flows. This way, sales reps know exactly what will be most beneficial throughout their entire sales cycle.
  • Learn to sell smarter: Identify a prospect’s specific goals, needs, and expectations. By doing so, you’ll develop a better understanding of how to approach them in relation to your product or service.This can serve as an opportunity for the prospect to really assess the benefits of working with you. And, more than likely, will lead to a deal.
  • Learn when to let go: Another common pitfall. Do not spend too much time nurturing a prospect who is not interested in what you have to offer. Great sales reps can quickly recognise when a sales discovery call is not going well.When you determine that a prospect’s goals are not aligned with your company’s solutions, move on. Cross them off of your list and seek out more promising and engaging leads.


  1. Make the most of your average win rate

One of the biggest misconceptions in sales is that many deals are lost to competitors.

In fact, most are lost to the status quo. It requires much less effort for prospects to do nothing than for them to move forward with a purchase.

Regardless of whether that purchased solution comes from your company or that of your competitors’. Sales reps have a duty to highlight their products and convince leads that they have the answer to their problems.

If you want to ensure that you are setting yourself up for a deal, consider this:

  • Do not take it personally: Many deals do not make it to the end of the sales cycle. In fact, many dissolve during the initial discovery stage. It happens.If you want to avoid having it happen again, you need to get to the bottom of it. Why is your prospect looking for a new resolution? Find out their pain points and determine the timeline to solving them.
  • Do not discredit competitors: One inevitability of the sales game is coming face to face with the competition. And the best method of coexisting in the same field is not to discredit or attack competitors. In fact, just the opposite.
  1. Reduce the length of your sales cycle

As with any deal, no results are typical. And successful sales reps should not approach potential customers as such.

Typically, smaller business deals take less time to close than larger ones, as there are fewer hurdles to anticipate (gaining approvals, legalities, procurement, revised budgets). These companies are generally eager to expedite and will overlook processes and other requirements to get a deal closed.

Determining the pace at which to sell to your prospects is critical to reducing the length of your company’s sales cycle.

Consider the following tips designed to expedite your closing window:

  • Make the most of your content: Establishing and maintaining a bank of effective marketing content material is an ideal process. This includes case studies, scripts, competitor research, white pages, blog posts and so on. It ensures that you have relevant information readily available to share with prospects.
  • Recognise responsive prospects—and follow up:As any salesperson knows, when you manage to get a lead on the line you need to act fast. If you find yourself engaged with a prospect, timing is crucial.Any lead that engages with your content (i.e. responding to emails, checking out your website/social media accounts) should be contacted in real time. Chances are, they are ready to move to the next stage.
  • Learn how to offer incentives (the smart way): When it comes to increasing revenue, offering prospects attractive incentives to close early may prove beneficial. It is an effective method (when successful) of reducing the length of your sales cycle, thus positively affecting your sales velocity.As with all marketing/sales content, stay up-to-date on product knowledge. Ensure that members of your sales team are well-trained on how to use incentives effectively so as not to diminish revenue. You don’t want to end up in the red for offering more discounts than a potential deal is worth.
  • Include free trials: If you are selling a product, free trials are a great way to engage prospects without too much pitching. Provided, of course, the product speaks for itself. Give the lead some time to assess all of the product’s functions and benefits. Do not follow along too closely. Better yet, consider using analytics to monitor their usage from afar.The key is ensuring that they reach the end of their free trial successfully. And then proceed to purchase without feeling pressured to buy.

As you can see, knowing your sales velocity is an invaluable tool for sales forecasting and growth. It provides dedicated sales reps with insights from the very first day of the fiscal quarter. And, it gives a clear idea of where one can expect to be throughout various stages of the sales journey.

Most importantly, sales velocity significantly reduces stress along the way.

Sales velocity arms sales reps with the tactics necessary to understand and optimise the methods available to them.

By approaching these four methods above strategically, reps and their sales teams can bank on increased sales, shorter turnaround time and effective selling strategies for years to come.

Tarmo Tamm

Tarmo has sold at least 12 different products and services and worked as a Sales Manager on at least 14 projects. The efficient practices described in this book have been successfully implemented for B2B and B2C. These principles have been tested over the phone, in conference rooms, implemented in retail business, at shopping malls as well as in door-to-door sales.