Sales Velocity

Posted in Marketing and Strategy Terms, Total Reads: 132

Definition: Sales Velocity

Sales velocity is a measure of how quickly a product is sold i.e. the business deals are closed, after a potential customer shows interest in the form of a lead generation. In other words, it is the speed with which units are sold.

It is a useful measure to estimate the forecast for sales. A higher value of sales velocity is always preferred. A higher value of sales velocity implies that the company is making money faster. The sales velocity depends on a number of factors, such as the average value of the deal, the number of opportunities, win rate and the sales cycle. It increases with increase in the deal value, the number of opportunities or leads and the win rate. The sales velocity is inversely proportional to the sales cycle value. Accordingly, companies try to focus on these factors in order to try and increase the sales velocity.

One of the efficient methods of increasing sales velocity is by adding more opportunities to the pipeline. Maintaining a healthy sales pipeline is important in this regard. Also, learning about the buying processes of prospective buyers/companies could also save time. Spending too much time on a lead which is not all that important could bring down the sales velocity, and so, should be avoided.



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