## The sales velocity equation

It uses four KPIs as levers and the levers are for the same period, for example, quarterly.

Take the number of qualified sales opportunities, times the average deal size, times the average win rate percentage, divided by the average sales cycle length in days, and that gives us the sales velocity metric which is measured in sales revenue dollars per day.

A higher sales velocity is better.

The higher the sales velocity, the faster you're making money.

With the sales velocity dollars per day, you can get other numbers for week, month, quarter, and year.

### Average deal value

Also called average deal size, and many know this already but to level set, it's the total revenue for a given period divided by the number of deals for that same period, both closed won and closed lost.

It's typically measured in annual contract value or net new ARR.

### The average sales cycle length

This is measured in days.

This is the total number of days between each deal created and closed, divided by the number of deals closed won, or lost for the same period.

### The number of opportunities

It's the number of qualified deals worked for that same period, both closed won and lost. And then the fourth, average win rate percentage, which is the number of won deals divided by the number of all deals worked for that same period, again closed won and lost.

## Go Deeper

Within an organization, seller A and seller B could generate the same amount of revenue in a given quarter and have the same sales velocity metric, yet they may have completely different ways of getting to this outcome.

So understanding sales velocity highlights what's different about the means to their similar end.

We take both sets of KPIs as inputs for both sellers and get the sales velocity metric of sales revenue dollars per day for both sellers. You can see that it's the same. Once we have that number, we can calculate the quarterly and annual numbers. We could also calculate the numbers for months and weeks if we wanted to.

The sales velocity equation allows leaders to make adjustments and measure impact.

So when you start capturing your data, it allows you to measure how quickly your business is moving forward and achieving its growth targets.

It gives you insight into where leadership should focus more efforts. It also allows you to see your team's achievements aligned with their individual goals to ensure that individually and as a team you're recognizing success.

It can also be used to set sales targets, allowing you to have an achievable quota but also a stretch goal and have harmony between what the team can do and what each seller can do.

And because you can adjust the levers, you can underperform in one area, adjust the other KPIs, and still prosper.

Uplift is achieved by improving one or more of the four KPIs by a realistic number such as 2, 5, or even 10 percent.

It's a best practice to look at the sales velocity in any place your sales motions differ and in the spirit of continuous improvement, compare past and present results, especially after making changes in your business.