Sales Velocity—The Missing Link in Sales Forecasting

Today less than 50% of forecasted sales opportunities turn into closed sales. This is, without a doubt, one of the most frustrating budget breakers in sales. Accurately forecasting your future sales has never been more important, yet getting to an accurate forecast with enough time to DO something has seemed impossible. How can this be happening with all our investments in powerful and sophisticated sales and marketing tools?

Because traditional sales measurement metrics are so one-sided, they do not support the multifaceted needs of today’s sales agility. We need a better way to know "how we are doing” and we need the ability to identify sales performance early enough to be proactive. What we need is the missing link in forecasting—Sales Velocity!

Sales Velocity™ is the measurement of the rate of change within your sales pipeline—both in speed and direction. It is determined by measuring pipeline volume, the movement of the sale cycle, the length of sales cycle, and the average dollar per sale. Sales Velocity takes these four variables and sums them into a single numeric number to reflect whether your sales are on target, accelerating, or decelerating.

Establishing your Sales Velocity requires a high degree of understanding of your sales process. Whether you have a formal or dynamic sales process you should have access to the information needed to calculate Sales Velocity. And for those companies who have an informal “ad hoc” or an unenforced sales process, we highly recommend you deploy a formal sales process—and pronto.

Here's the information you will need to calculate Sales Velocity:

Average Revenue Per Sale
Annual Revenue Goal ($)
Avg. Length of Sale (days)
Sales Stage Probability (%)
Opportunities per Stage (#)
Sales Booked To Date ($)
Stage Conversions Made (#)
Months Remaining In Fiscal Year

From this information, you should be able to determine the four elements that make up sales velocity--Volume, Change, Time, and Value!






























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