🕵🏻‍♂️ How to measure pipeline velocity?

Hey ,

In today’s newsletter, I’ll show you why and how to measure pipeline velocity. Detailed explanation, no fluff.👇

Let’s get right into it.

Sales pipeline velocity demonstrates a trajectory of your revenue in a given period of time based on 4 metrics:

(𝚆𝚒𝚗-𝚁𝚊𝚝𝚎 × 𝙰𝙲𝚅 × 𝙽𝚛. 𝙾𝚙𝚙𝚘𝚛𝚝𝚞𝚗𝚒𝚝𝚒𝚎𝚜)

—————————————————————

(𝚂𝚊𝚕𝚎𝚜 𝙲𝚢𝚌𝚕𝚎 𝙻𝚎𝚗𝚐𝚝𝚑 / 𝙿𝚎𝚛𝚒𝚘𝚍 𝚒𝚗 𝙳𝚊𝚢𝚜)

Example.

You generated 50 inbound sales opportunities in Q3.

Your ACV (annual contract value) is $75k.

And your win rate is 30%.

The sales cycle length for inbound opportunities is 80 days.

Sales pipeline forecasts your revenue:

⚡️Quarterly: $1.293k

⚡️Annual: $5.132k

But why should you track sales pipeline velocity in the first place?

1. 𝐀𝐜𝐜𝐮𝐫𝐚𝐭𝐞 𝐟𝐨𝐫𝐞𝐜𝐚𝐬𝐭𝐬.

Pipeline velocity helps companies with long sales cycles make more accurate sales forecasts.

You may not be able to see the immediate impact of your marketing programs on sales. However, you can see positive changes in pipeline velocity, which proves the effectiveness of your marketing.

2. 𝐂𝐡𝐚𝐧𝐧𝐞𝐥 𝐚𝐧𝐝 𝐩𝐫𝐨𝐠𝐫𝐚𝐦 𝐜𝐨𝐦𝐩𝐚𝐫𝐢𝐬𝐨𝐧.

You can compare pipeline velocity for different programs and channels.

In this example, I made a simple comparison of inbound and outbound programs.

If by default, a company sees that outbound and inbound perform the same way, they usually would be willing to invest more in outbound.

But that's not the right way to go about it, .

Let's say the outbound sales cycle is 105 days, while inbound is 80 days.

While other metrics remain the same (ACV, win rate, and # of opportunities), the inbound function helps you hit revenue targets more quickly.

𝐎𝐮𝐭𝐛𝐨𝐮𝐧𝐝 𝐩𝐢𝐩𝐞𝐥𝐢𝐧𝐞 𝐯𝐞𝐥𝐨𝐜𝐢𝐭𝐲:

⚡️Quarter: $985k

⚡️Annual: $3.857k

𝐈𝐧𝐛𝐨𝐮𝐧𝐝 𝐩𝐢𝐩𝐞𝐥𝐢𝐧𝐞 𝐯𝐞𝐥𝐨𝐜𝐢𝐭𝐲:

⚡️Quarter: $1.293k

⚡️Annual: $5.132k

==> 𝟯𝟬% 𝗺𝗼𝗿𝗲

This is why pipeline velocity is a powerful tool for evaluating, comparing, and prioritizing different GTM motions.

It refocuses marketers from top-of-the-funnel metrics on what actually matters:

Revenue.

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