Sales/Pipeline Velocity: How to Calculate and Improve It
Sales/Pipeline Velocity: How to Calculate and Improve It

Pipeline velocity otherwise known as sales velocity is a function of how fast and how much flow of pipeline is moving through your funnel over a period of time and moving to closed deals. So you can think about the velocity of a car similar to velocity of pipeline via.

 Calculation is

Pipeline velocity equals win rate times ACV times number of qualified opportunities generated during that period divided by sales cycle length over number of days in the period.

So imagine measuring pipeline velocity per fiscal quarter okay so you have the win rate of all of the deals that closed during that quarter.
So you had let's say 10 that came close one and 30 that became closed lost.
So you won 25% of total opportunities.
That would be your win rate on closed ops.

You have a number of qualified opportunities created which is a creation metric.
So how many opportunities moved into whatever you call qualify, which is probably stage two or stage three, how many of those happen during the same period of time, the ACV of closed opportunities, not pipeline closed opportunities.
And so out of the 10 opportunities that you won, what was the annual contract value associated with those 10 opportunities on average divided by the sales cycle length of closed opportunities that's over 91 days and a quarter on average.
So you can do that entire mathematical calculation. It will come up with a relative metric of how much pipeline or revenue is moving through your pipeline over a period of 91 days or a fiscal quarter.

The thing that is loved most about this metric is that it includes lagging the deeply lagging metrics associated with revenue three out of the four metrics are based on closed Won deals.

So the historical performance of those three metrics is then used as a feed forward to predict future performance of the qualified opportunities that you generated during this period.

The thing that's really sort of impactful and important about this is that it doesn't it's not only about pipelines.
So a lot of companies are only looking at pipeline creation, not sales cycle length, not win rates or conversion rates, not ACVs.

 So they're just looking at overall pipeline creation and in order to be able to drive growth and revenue you can play with any four of these metrics individually and make just as big of an impact.
 So only looking at net new pipeline creation obviously that's a good lever to to move on but doubling your win rate would give you the exact same outcome and would create more scalability.

 And so as marketers and growth people right like this is actually like going all the way across from marketing and sales so i'm gonna consider it growth or GTM right now.

 Looking at all four of these things, you have way more freedom and flexibility of what metrics to move and what will make the most impact in the business.

Because you're able moving all four of them:
moving ACV up 
sales cycles down 
win rates are going up 
and pipeline is going way up

 And when you put all four things together, you get a much more efficient system that can continuously scale and drive revenue.

And then an interesting experiment that people could do once you make the equation broadly across maybe all marketing pipelines or your company's total pipeline you calculate sales velocity across all of it.
Then you start breaking it down by pipeline source and when i'm looking at that is how do buyers enter our pipeline.