There is a good old saying that only a complicated mind can simplify things. I really can’t find a better quote to explain what Sales Velocity actually is. It’s so simple to understand, yet have a complex design under the hood makes it more fascinating.
In any B2B / enterprise or a SaaS org, the marketing team focuses on maximizing reach in their addressable market, driving the quality audience to site/event/webinars etc, provide better customer experience, convert a visitor to a prospect and maintain pipeline health. When the sales teams take over, their focus is to make the most of the available opportunity/leads. They do that by enhancing lead scoring, pipeline reach, close rates, etc.
When Sales Velocity becomes a common metric, it opens up incredible opportunities for both teams to understand and enhance their processes in a much more sophisticated and scientific way.
Sales velocity has just 4 components:
- Total opportunities
- Average deal size
- Close rate / Win rate
- Length of the sales cycle
And the formula is extremely simple:
Graphic source: Marketo Blog
Now comes the complexity under the hood. EACH METRIC IS INTERCONNECTED.
For instance, 1000 opportunities with an average deal size of 200K at a 26% win rate that takes 90 days to convert is good. But imagine when marketing drives 600 opportunities of high intent with a potential 250K average deal size and the sales team achieved a 43% win rate with an average sales cycle of 64 days!
This is what makes sales velocity extremely powerful. It helps both marketing and sales be more efficient and razor-focused on a common goal and has more room for constant improvement.
For marketing, embracing Sales Velocity means it has to pivot their focus on accounts and prospects with high awareness of the product or service, great propensity to spend and are in consideration/evaluation stage of the funnel. This might have an impact on aspects of marketing.
- Media mix: Re-targeting spends might be increased. This doesn’t mean the prospecting spends gets reduced (which will affect the re-targeting pool in the long run). It just might be you might have to avoid targeting placements that do not align with your core objective.
- Account-based marketing (ABM): It doesn’t make sense to chase SV without ABM in place. ABM fuels the Sales velocity engine. ABM helps both marketing and sales to enhance their execution rigor. Without ABM, it’s impossible for marketing to find target accounts with high intent and drive more leads from that account OR reach out to the buying committee. Sales can use ABM to focus on account with larger potential deal size, and with the availability of behavioral insights of the prospect, they can reduce the sales cycle as well.
- Creative expression: Once embraced, your creatives will look different and simpler than it was a year ago. You will have both data and clarity on the role of each medium (thanks to ABM), which will help you in your marketing communication. Not just communication, even an off-line event will have a clear role in the SV engine which will be visible right from the theme to the event swags to the case studies presented in the venue.
- Content strategy: With a new media mix, the content will play a huge role in the marketing process. Right from blogs to webinar topics the messaging and data harvesting should reflect the role of the content in the larger scheme of things.
While the objective of generating leads will not change from the marketing perspective, scale and precision might change the nature of the marketing outcome, for good.
Based on their learnings from Sales Velocity, the sales team can engineer their sales approach, pitch strategy, account re-prioritization, sales collaterals, etc. The SV number will keep evolving since the teams will be constantly fine-tuning each component. We can even go one step further and create an SV logic for a channel, individual, teams, etc.
As mentioned in this Marketo blog post, one-off calculations don’t actually reveal much about the health of your business. To get the full picture, you need to put these numbers into context. The true value comes from consistently tracking sales velocity at regular intervals and using it to compare the effects of changes in your sales process.