🏴☠️ ⚡️ The Mechanics of Sales Velocity & Root Levers for Growth (Operating Concept)
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TABLE OF CONTENTS:
The Big Gears: Macro Levers of Sales Velocity
Opportunities
Win Rate
Average Contract Value
Sales Cycle Time
The Pistons: Unit-Level Levers of Sales Velocity
Selling Hours / Week
Time Intensity of Pipeline Stages
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Sales velocity is the ultimate expression of how efficiently and effectively a business converts opportunities into revenue—it's the physics equation of growth, where each variable governs the momentum that propels a company’s success.
By way of analogy, sales velocity is the engine that powers your growth. But like any high-powered machine, sales velocity has different parts that need attention. Think of it as two main components: the big gears that move the whole machine (# of opportunities, win rate, ACV, and cycle time) and the small, intricate pistons that keep everything running smoothly (individual Account Execute / Sales Person capacity). Let’s pop the hood and take a closer look :)
The Big Gears: Macro Levers of Sales Velocity
These are the big, powerful gears that give your business its forward momentum. Each dimension is critical in determining how quickly you convert opportunities into dollars.
Opportunities: The Fuel in Your Tank
Opportunities are like the fuel in your tank. The more you have, the farther you can go. In sales terms, opportunities refer to the number of potential deals in your pipeline. If your tank is full—meaning you’ve got a steady stream of leads—you’re in a strong position to accelerate.
But remember, not all fuel is the same. Premium fuel gives you better performance. In the same way, high-quality leads that fit your Ideal Customer Profile (ICP) are like premium fuel—they’re more likely to convert, giving you better mileage (or in this case, higher revenue). To maximize your sales velocity, focus on filling your tank with high-fit (and therefore high probability) opportunities.
Win Rate: The Grip on the Road
Your win rate is like the grip your tires have on the road. The better the grip, the more control you have, and the faster you can corner and accelerate. In sales, your win rate is the percentage of deals you close. A higher win rate means you’re making the most of the opportunities you have—it’s like having tires that stick to the road, allowing you to drive faster without losing control.
To improve your grip (win rate), make sure you’re targeting the right prospects and equipping your sales team with the tools and training they need to close deals effectively. The better your team’s grip on the sales process, the faster you’ll reach your revenue goals.
Average Contract Value (ACV): The Size of Your Engine
ACV is the size of your engine. A bigger engine generates more power, pushing you faster with each deal you close. In simple terms, ACV is the average revenue from each customer contract. The larger your ACV, the more powerful your sales engine, and the faster you can grow.
You can increase your engine size by developing new products you can sell into a customer (aka up/cross-sell) or improving product penetration across customers. You can also raise prices for the products you have in the market ;)
The bigger the engine (ACV), the fewer deals you need to reach your revenue targets, allowing you to accelerate your growth with less effort.
Sales Cycle Time: The Open Road Ahead
Your sales cycle time is like the length of the road ahead before you reach your destination. The shorter the road, the faster you get there. In sales, this means the faster you can close deals, the quicker you’ll generate revenue. This is the denominator in the sales velocity equation so improvements a reduction in cycle time has a HUGE impact on velocity. As such, it’s typically the first area of focus for optimization.
To shorten the road (reduce sales cycle time), streamline your sales process, eliminate unnecessary steps, and keep your team focused on moving deals forward. The shorter and straighter the road, the faster you can get where you want to go.
The Pistons: Unit-Level Levers of Sales Velocity
While the big gears drive your overall speed, the pistons are the small, precise parts that keep the engine running smoothly. Account Executives (AEs, aka basic sales human) represent the unit-level levers. And you guessed it, AE productivity is a function of their most scarce resource: time.
You can either expand their selling hours (time engaging the market) in a week or reduce the time intensity of a respective stage of the sales process. All to say, you are trying to optimize AE capacity. At a minimum, you need to establish a point of view on an AEs opportunity capacity based on the following:
Number of selling hours per week (usually 35hrs, tops)
Weighted average time per opportunity (1.55hrs per the assumptions below)
Early Stage (Lead Qualification): 60% of total pipeline, .75hrs
Mid Stage (Demo/Proposal): 30% of total pipeline; 3hrs
Late stage (Closing): 10% of total pipeline; 2hrs
Per the above, an individual AE can effectively manage ~23 opportunities at any given point in time.
Selling Hours in the Week: The RPM of Your Engine
The more RPMs (revolutions per minute) your engine can handle, the faster it goes. In sales, this translates to the number of selling hours your Account Executives (AEs) can put in each week. The more time they spend selling, the more deals they can push through the pipeline.
To crank up the RPMs, reduce the non-selling activities that bog down your AEs, like data entry or administrative tasks. By freeing up more of their time for selling, you increase the overall speed of your engine.
Time Intensity of Pipeline Stages: The Efficiency of Your Pistons
In the engine of sales velocity, each stage of your sales pipeline is like a piston. Some stages demand more time and effort, slowing down your overall speed. Here’s where your team spends the most time:
Early-Stage (Discovery Calls and Initial Demos)
Prospect Research: Before the discovery call, your team spends significant time researching the prospect to tailor the conversation. This groundwork is critical but time-consuming.
Discovery Calls: These calls are crucial for understanding the prospect’s needs. They require careful preparation, active listening, and follow-up, making them one of the more time-intensive activities.
Initial Demos: Sometimes, a base / lightly tailored demo is delivered during the discovery call. Any tailoring (based on the ICP sub-segment or the persona on the call) requires time.
Mid-Stage (Multi-Persona Engagement, Deeper Demos, and Preliminary Proposal)
Multi-Persona Engagement (aka Multi-threading to build consensus): Engaging with multiple stakeholders within the prospect’s organization is complex and time-consuming, as each persona has different priorities.
Deeper Demos: These detailed, technical demos require significant preparation and follow-up, particularly as they must address the specific concerns of various stakeholders.
Preliminary Proposal: Creating a proposal that reflects the needs of all engaged stakeholders requires collaboration across teams, adding to the time intensity of this stage.
Late-Stage (Final Proposal, Implementation Scoping, and Closing):
Final Proposal: Finalizing the proposal involves back-and-forth revisions, legal reviews, and approvals, which can extend the time to close.
Implementation Scoping: Some prospects require detailed planning for the product's implementation before signing, adding complexity and time to the process.
Closing: Coordinating final approvals and securing signatures can be slow, particularly if multiple departments are involved, making this a time-intensive phase.
The more efficient each piston (pipeline stage) is, the faster your engine (sales process) runs, leading to a quicker, more reliable path to closing deals.
Wrap Up
Sales velocity isn’t just about speed; it’s about fine-tuning your engine—both the big gears that drive your business and the small pistons that keep everything running smoothly.
So, next time you think about your sales process, imagine you’re tuning a high-performance machine with clear and defined points of operating leverage. Remember to maintain a ruthless sense of priority: a 10% improvement in the number of opportunities, win rate, or ACV has the same relative impact, so start with whatever will give you a 10% improvement for the least effort. As mentioned, cycle time improvements provide outside returns, so inform your activities accordingly.
That’s a wrap - FOR. THE. LOVE. OF. THE. GAME!
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