Sales Velocity

When sales numbers were read one at a time, there was no answer to what to fix first. Four people arrive at a meeting with four numbers. One says there aren't enough deals. One says the win rate is low. One says the contracts are too small. One says everything takes too long.

All four are right, which is why the meeting ends without a decision. There's no way to compare improving one item by 5 percent against improving another by 20 percent. So the item that gets worked is usually the easiest to touch, and that slot goes to making the list longer. If the win rate falls by as much as the list grew, the result is unchanged — and a quarter has gone by with everyone busy.

Sales velocity exists to put those four numbers into one formula so they become comparable. Calculate how much daily revenue moves when you change one of them and the question of where to spend effort is settled before the meeting starts. The formula doesn't decide anything on its own; it converts four opinions into one unit.

Multiply the number of open deals by average deal value and win rate, then divide by duration.

The four inputs are these.

1. Open deal count — how many deals sit in the pipeline right now. Only ones with confirmed budget and intent are counted, which means a name collected at a conference doesn't belong in the number.
2. Average deal size, the mean value per deal — last quarter's closed amount divided by deal count.
3. Win rate, the share of worked deals that close — six wins out of twenty worked deals is 30 percent.
4. Sales cycle, the time from first contact to signature, in days.

Worked through: 60 deals, $10,000 average deal size, a 30 percent win rate, and a 60-day cycle gives 60 times $10,000 times 0.3, which is $180,000, divided by 60, which is $3,000 a day. Across a 90-day quarter that's $270,000.

The number on its own is useless. What the formula does is let items be compared. In that example, raising the win rate from 30 to 36 percent takes it to $3,600 a day. Cutting the cycle from 60 days to 50 also gives $3,600. So improving close rate by a fifth and shortening duration by a sixth are worth exactly the same, and the team knows which of those is actually easier for them.

Watch out for the four inputs being coupled. Loosen the list criteria to double deal count and the win rate falls with it, leaving the result where it was. A calculation that assumes only one input moved belongs to planning; once something has actually moved, remeasure all four, because the coupling is where the surprises live.

There is no benchmark for the absolute value. What you sell and who you sell to set it, so comparing against another company's figure means nothing.

Three things are worth reading.

1. Movement under the same conditions. Measure it the same way each quarter and watch whether daily revenue rises — and record which of the four inputs moved. If the rise came only from deal count, it may be the result of hiring, and then it needs rereading per rep.
2. Contribution by input. This is where the formula earns its place. Find the input that got worst last quarter and the input that's easiest to move. When those are different, start with the easy one. The worst input is often the one you have least control over, and a quarter spent failing to move it is a quarter lost.
3. The value split by segment. When team contracts run a 34-day cycle and enterprise contracts run 90, the blended figure is useless for either plan. Read alongside pipeline coverage — the multiple of the target sitting in open deals — and you also learn whether today's pipeline supports next quarter's target.

Don't attach this number to individuals. Few of the four inputs are things one rep can move alone: average deal size is set by pricing policy and the cycle is set by the customer's own procedures. Individual targets go on quota, the revenue target assigned to a rep, while this figure is for deciding what the organization fixes.

"We're at $3,000 a day, and six points of win rate gets us to $3,600. That's faster than growing the list."

Two options compared inside the formula.

"Velocity went up but headcount doubled. Let's reread it per rep."

Checking why the number moved.

"I blended enterprise and team deals and the result is unusable."

The segments weren't separated, so the figure means nothing.

At Pagedeck, Grace produces this figure in two versions every quarter, one for team contracts and one for enterprise. Last quarter the team-contract figure fell, and setting the four inputs out showed deal count and value unchanged while the win rate had slid from 32 percent to 24.

The cause was the list. Companies arriving from a new ad Ravi had launched clustered in the twenty-person range, and that group signed but closed at a low rate. So what got fixed was the list criteria, not the selling. Without the formula, the team would have seen a low win rate and gone to work on how reps negotiate.

The most common reading is that a rising number means things improved. Daily revenue went up, so the inference is natural. But deal count rises when you hire or when you extend the list, and both of those cost money. If going from two reps to four doubled the figure, efficiency is flat and payroll doubled. To know whether the organization improved, divide by headcount, and read that per-rep figure across several quarters rather than one.

The other frequent error is setting the formula itself as a target. Four inputs sit inside it, so an instruction to raise the output looks like an instruction to improve all four. In practice the input that moves most easily moves first. The cycle is the denominator, so shortening it lifts the output fastest — and a rep told to shorten the cycle stops opening the large deals that take a long time. Average deal size then falls with it, leaving the output flat while revenue drops. Use the formula to choose what to fix, and hang performance targets on one input at a time.