What is deal velocity?
Deal velocity refers to the speed that a sales opportunity moves from the initial lead stage to the final close. Think of it like the pace of your sales journey. It’s an essential metric that you need to measure to manage your sales efforts effectively.
For instance, consider that you’re managing the indirect sales channel for a fintech company. One of your partners has identified a lead and registered the deal. Now, the clock starts ticking. The time it takes from this point to when the deal is officially closed — whether it’s weeks or months — that’s your deal velocity.
Calculate the average over time, and then across regions, industries, and partners and you’ll get a detailed look at which partners are moving deals through the pipeline more quickly, and which types of customers sign fastest.
Why is measuring deal velocity important? Here are a couple of reasons:
- Efficiency: Faster deal velocity means streamlined and efficient sales efforts, saving time and resources.
- Optimizations: By calculating different deal velocities, you may find that some partners aren’t engaged and missing out on sales, or that certain types of customers simply eat up too many resources to be worth the value.
- Forecasting: Understanding your average deal velocity allows for more accurate revenue forecasting, which can help with financial planning and resource allocation.
- Customer satisfaction: Faster deal closures can lead to happier customers, as delays and bottlenecks are minimized on your end.
- Competitiveness: A faster deal velocity allows your business to respond quickly to market opportunities to gain a competitive edge.
- Motivation: Seeing deals close quickly can boost the morale of your internal sales team and channel partners, encouraging higher productivity and performance.
- Faster go-to-market: Accelerated deal velocity enables quicker product launches and market penetration.
Of course, the goal isn’t necessarily to rush the deal but to eliminate unnecessary delays from your company or partners. Each industry and deal will have its unique timeline. What’s most important is to understand your average deal velocity and work towards improving it over time. This will not only boost your sales performance but also enhance your relationships with your partners and customers.