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What Is Lead Velocity Rate?
Lead velocity rate is a dynamic sales metric that measures the month-to-month growth in leads, offering vital insights into pipeline health, future revenue, and business growth.
Beyond simply counting new leads, LVR reveals the rate at which your business attracts potential customers.
After all, quantity alone doesn’t guarantee growth.
Quality does.
For an accurate reflection of positive momentum, it’s essential only to include qualified leads—those more likely to become customers—in LVR calculations.
Additionally, it’s beneficial to complement LVR with other sales metrics, such as the marketing qualified lead (MQL) to sales qualified lead (SQL) conversion rate. This metric provides deeper insights into how leads are progressing through the sales funnel for a more comprehensive understanding of sales performance.
But before diving into that, let’s further explore LVR’s role in a sales strategy.
Note: It’s not the same thing as sales velocity. Sales velocity measures how quickly potential customers move through your sales pipeline and start generating revenue.
Why Is Lead Velocity Rate So Important in Sales?
LVR is invaluable for several reasons:
- Strategic Forecasting: LVR offers real-time insights into the growth trajectory of qualified leads, predicting future revenue and providing strategic foresight beyond immediate gains. It presents a clear forecast for the business’s direction in the months ahead.
- Measuring Performance & Identifying Trends: Evaluate lead generation effectiveness and identify patterns (growth, decline, or stability) over time. Sales leaders can then investigate the underlying factors and refine strategies accordingly.
- Provides Consistent Insights: Reduces the influence of variables like seasonality and team performance by focusing on growth rates over raw numbers, thereby delivering reliable insights despite fluctuations.
- Resource Allocation: Understanding which lead generation channels or campaigns bring in the highest quality leads enables a sales manager to allocate resources—budget, time, and manpower—accordingly.
- Alignment with Marketing: Strengthens the collaboration between sales and marketing, aiding both departments in optimizing lead generation efforts to boost revenue growth.
- Optimizing Sales Velocity: Highlights your pipeline’s health and the importance of consistently filling it with quality leads. This steady influx provides ample engagement and conversion opportunities for your sales team, increasing sales velocity and driving revenue growth.
With LVR, you can anticipate and address changes before they even unfold, unlike lagging metrics that look back. If qualified lead counts are low, you have time to adjust and increase them before month-end.
However, your velocity rate indicates potential—not actual—revenue.
More leads don’t mean much if your follow-up or deal closure process is inadequate. Relying exclusively on LVR might overlook potential inefficiencies in these processes, just as using only revenue metrics might misrepresent pipeline health.
For instance, an increase in the average deal value might suggest improved sales performance but fail to accurately represent how effectively you’re generating and qualifying leads.
To accurately gauge sales growth, you should pair LVR with both conversion rate and financial sales metrics, ensuring you’re not just filling the pipeline but effectively moving leads through it to close.
Moreover, maintaining consistency in your qualification criteria and calculations is key to effectively using LVR.
Now, let’s look at how to measure qualified lead velocity rate accurately.
How to Calculate Lead Velocity Rate: Examples + Benchmarks
The formula is:
LVR = ((Current period's qualified leads - Previous period's qualified leads) / Previous period's qualified leads) * 100
For example, if you had 300 leads in the current period and 200 leads in the previous period:
LVR = ((250-200) / 200) * 100 = 25%
You can calculate your velocity rate at multiple levels and compare rates across regions, teams, channels, and target segments.
For example, consider a software provider serving both government and SaaS sectors.
Due to intricate procurement and stringent security demands, government leads may take longer to materialize. In contrast, the SaaS sector often enjoys quicker lead acquisition, driven by high demand for efficient digital solutions and adoption processes.
Segmenting your calculations uncovers trends and areas needing improvement. This focused approach allows you to tailor marketing, product development, and sales strategies, thereby enhancing lead generation, conversion rates, and sales growth.
How Often Should You Measure LVR?
For timely insights into trends and changes, measure LVR monthly or quarterly. It may need to be more frequent if you’re implementing changes to lead generation or conversion processes to gauge immediate impact.
While this metric can reduce the impact of variables like seasonality, it doesn’t eliminate them. Account for seasonal fluctuations by comparing performance against historical data from equivalent periods.
Additionally, your sales cycle length might affect how (and how often) you analyze LVR results.
For businesses with a shorter sales cycle, prompt feedback from LVR can indeed be valuable. However, immediate insights may not capture genuine, lasting shifts in lead velocity. Therefore, while regular reviews are crucial, more meaningful insights into sales outcomes will likely emerge over a broader timeframe.
For companies with longer sales cycles, quarterly reviews of your velocity rate may suffice. In these contexts, LVR serves as a better indicator of future revenue potential than more immediate sales performance.
What’s a Good Lead Velocity Rate?
Specific LVR targets vary widely. As such, identifying an optimal LVR requires a tailored approach. Establish your own benchmarks by considering your specific growth goals, historical performance, and industry norms.
A low LVR might indicate that the sales team isn’t attracting enough qualified leads to maintain or increase revenue growth. Conversely, positive month-over-month LVR signals a growing customer base—a fundamental element of sales success.
However, an exceptionally high LVR isn’t always a good thing for two major reasons:
- Without a corresponding uptick in sales volume, a high LVR might indicate a preference for a higher quantity of leads over quality.
- Even if your qualification process is strong, LVR peaks may not be sustainable long term.
You should always aim to enhance operational efficiency without compromising the standards of your qualification process in pursuit of faster growth.
Consistent growth, even modest, is nearly always more valuable than sporadic spikes. But what if it’s too modest?
If you’re uncertain about how to boost LVR—fear not!
We’re about to uncover five key steps to supercharge your qualified lead velocity rate.
How to Improve Your Lead Velocity in 5 Actionable Steps
One of the most effective ways to enhance LVR is to perfect your qualification and nurturing strategies, particularly in the early sales pipeline stages.
These processes are critical in ensuring each qualified lead that enters the sales cycle is a promising sales opportunity and should be as targeted and efficient as possible.
Here are some actions you can take to optimize your lead management:
1. Improve Cross-Functional Collaboration
Ensuring clear communication between the marketing and sales team is crucial as lead generation often starts long before direct sales engagement.
Initiating collaboration early on lays the groundwork for a quicker sales cycle. Aligning marketing operations with sales goals greatly increases the likelihood of generating a sales qualified lead. As an SQL is more likely to be a potential customer than a marketing qualified lead, this early alignment accelerates the overall sales process.
Moreover, incorporating marketing automation tools can further streamline processes, enhancing efficiency and effectiveness.
This approach also ensures smoother handoffs and equips every sales rep with essential information needed to close deals effectively.
2. Refine Lead Qualification Processes
Adopt structured frameworks like MEDDPICC for a systematic approach to identifying each qualified lead. This sales methodology is imperative for promoting consistency in qualification criteria and lead scoring processes across sales teams, which in turn streamlines pipeline management.
Integrating sales CRM and marketing automation tools can enhance lead scoring and qualification processes, ensuring that the sales team pursues only the most promising leads.
Also, a sales manager must regularly refine criteria based on sales feedback and conversion rate data, enhancing targeted messaging and resource allocation for optimal results.
3. Leverage Data and Sales Analytics
Gain valuable insights into the behavior and preferences of each potential customer through data and sales analytics. Analyze prospect interactions, such as website visits, email opens, and content consumption, to tailor interactions and improve your sales conversion rate.
Data-driven insights allow you to optimize various touchpoints in the sales process, including follow-up calls, personalized emails, and product demos, for more meaningful and effective interactions with leads.
4. Consider Other Key Sales Metrics
For additional context into actual sales, pipeline health, and growth potential, consider the following sales pipeline metrics:
- MQL-to-SQL Conversion Rate: The percentage of MQLs that become sales qualified leads. This metric assesses how effectively you’re qualifying and nurturing each potential customer.
- Lead-to-Opportunity Conversion Rate: The ratio of leads that turn into opportunities, indicating the efficiency of your nurturing efforts and the potential for pipeline growth.
- Win Rate: The percentage of opportunities that result in a sale. It’s key for evaluating the effectiveness of your sales team’s closing abilities.
- Customer Acquisition Cost (CAC): The overall cost of getting new customers, including marketing and sales expenses. It’s essential for understanding the investment required to expand your customer base.
- Customer Lifetime Value (CLTV): The average revenue businesses can expect from a customer account throughout their relationship. This sales metric reveals which accounts have the most potential for repeat business.
- Customer Churn Rate: The percentage of customers who stop doing business with you over a certain period. It helps gauge customer satisfaction and retention efforts.
- Pipeline Value by Stage: The total potential revenue from all deals in each stage of your sales pipeline. This metric provides insight into future revenue and where deals are getting stuck.
- Sales Cycle Length: The average time it takes for a qualified lead to progress from initial contact to closing a sale. It’s crucial for understanding sales process efficiency and forecasting sales timelines.
- MRR Growth Rate: The rate at which your monthly recurring revenue grows month-over-month. It’s vital for assessing the health and scalability of subscription-based business models.
- Year-Over-Year Revenue Growth: The increase in revenue compared to the same period in the previous year. It’s a key indicator of overall business growth and market position.
5. Resolve Tech Stack Issues
Maintaining clean and up-to-date data, tracking lead sources accurately, and ensuring data consistency across systems are crucial for maximizing the effectiveness and reliability of LVR as a performance metric.
If lead velocity rates aren’t translating into actual sales, it’s time to investigate potential process weaknesses and pinpoint the bottlenecks.
Common culprits include tech stack issues or sales CRM systems. Traditional CRMs can be complex and inefficient for the sales team, resulting in inconsistent data entry and compelling reps to rely on manual, cumbersome spreadsheets.
This issue not only complicates tracking critical metrics like LVR but also significantly slows down the entire sales process.
To counter this, a sales CRM add-on designed to provide clear insights into both LVR and actual deal outcomes is invaluable.
Enter Scratchpad: the definitive solution for effortlessly managing all your deals!
Sharpen LVR Insights to Skyrocket Revenue Growth with Scratchpad
Streamline your sales process and stay on top of every deal with Scratchpad!
Achieve unparalleled efficiency in your pipeline management with Scratchpad’s intuitive interface, eliminating the need to switch between multiple platforms.
This indispensable add-on transforms workflows for sales leaders, sales ops, and each sales rep, allowing your team to zero in on closing deals rather than wrestling with software complexities.
Scratchpad empowers you to automate Salesforce updates and effortlessly track deal progress through every stage of the sales funnel.
Now, let’s explore in detail how Scratchpad can elevate your sales strategy:
- Ditch manual note-taking thanks to Scratchpad’s intelligent AI Sales Assistant. It provides AI-powered transcripts, post-call summaries, and even updates required by Salesforce fields so that reps don’t miss details and managers get more context.
- Embrace the simplicity of automations that you can customize based on your sales process and automatically create Deal Rooms in Slack for better cross-team collaboration.
- Streamline your workflow with quick updates to Salesforce fields, objects, and actions through advanced grid views, ensuring your data is always up-to-date and at your fingertips.
- Boost your sales team’s efficiency and collaboration by customizing workflow tiles for instant access to essential data for streamlined daily operations.
- Spot missing fields and pipeline gaps with deal spotlights, ensuring accurate sales forecasting and alignment with expected close dates.
- Collaborate effortlessly and edit, share, templatize, and sync your notes directly with Salesforce for a seamless flow of information and insights.
Maximize Sales Momentum with Strategic LVR Insights
In the fast-paced sales world, mastering your lead velocity rate can be the game-changer your team needs.
LVR provides a crystal-clear perspective on your pipeline’s health and growth potential, especially when bolstered by consistent lead scoring and qualification standards. And with our strategies for calculating and improving LVR, you’re set to kickstart a cycle of robust lead management and sustained sales success.
Tools like Scratchpad amplify these efforts, simplifying your sales workflow and ensuring your sales team stays focused on what matters most—sealing deals and boosting revenue.
Ready to ramp up your LVR?
Begin with Scratchpad for free today, and set the stage for sales mastery, refined pipeline management, and extraordinary growth.
