Deal velocity is a measure of how quickly a business is able to close deals and generate revenue. It is a key performance indicator (KPI) for sales and marketing teams and is used to track the effectiveness of a business's sales and marketing efforts.
Deal velocity is typically measured by the time it takes for a lead to move through the sales pipeline and become a paying customer. This includes how long it takes sales to complete lead qualification, the time it takes for the sales team to engage with a lead (otherwise known as speed-to lead), and the time it takes for the deal to be closed.
Why is deal velocity important?
A high deal velocity means that deals are closing quickly, which is desirable because it means that revenue is being generated more quickly. Conversely, a low deal velocity means that deals are taking a long time to close, which can be problematic because it can lead to cash flow issues and can cause sales teams to miss their revenue targets.
In addition, deal velocity is an important metric for identifying bottlenecks in the sales process. By tracking and analyzing deal velocity, sales teams can identify areas where deals are getting stuck and take steps to address those issues. This can lead to a more efficient and effective sales process, which can improve overall sales performance and drive revenue growth.
How do you improve deal velocity?
There are several ways to improve deal velocity and speed up the sales process. Here are a few strategies:
Streamline your sales process: Take a close look at your sales process and identify any unnecessary steps or delays. Simplify and streamline the process wherever possible to speed up deal progression.
Prioritize your leads: Focus your efforts on the leads that are most likely to close quickly. Use lead scoring and qualification techniques to identify the most promising leads and prioritize them for follow-up.
Improve communication: Ensure that communication between sales reps and prospects is clear and timely. Respond promptly to inquiries and follow up quickly after meetings.
Optimize your sales tools and technology: Use sales enablement tools like CRM software and sales automation software like Distributely to improve efficiency and effectiveness.
Provide sales training and coaching: Invest in sales training and coaching to improve sales reps' skills and knowledge, and help them close deals more quickly.
Improving deal velocity can have a significant impact on a business's revenue and profitability. By closing deals more quickly, businesses can generate revenue faster and improve their cash flow, which can help to fund further growth and expansion.
A final word of caution
Deal velocity should not be improved at the expense of your sales process. A sales process is there to ensure that companies are able to win deals at an ideal rate and size. A prospect will tend to lose trust when deals are progressed too quickly, decreasing both the value of the deal and the likelihood of winning the deal at all. Companies with a very high deal velocity tend to have lower deal values and less complex solutions compared to those with a lower deal velocity.