There are only four factors that impact how much you sell. I use a term called the Sales Velocity Equation and it’s pretty simple. It goes like this. Your Sales Velocity is a function of (A) the number of sales opportunities you work, (B) the average deal value, (C) your win rate and (D) the length of the sales cycle. Simply put; you want to increase A,B and C and reduce D. If you increase A, B and C by 10% and reduce D by 10%, then you increase your sales velocity by 47%. Go on, do the math – it works out.

So, before you read the rest of this blog post, stop and think for a minute, and pick from the following four options the one where you spend most of your time.

- Increase number of opportunities
- Increase average deal value
- Increase win rate
- Reduce sales cycle

I just ran a survey on this – and unfortunately most people are focusing most of their time on getting more opportunities and not trying to maximize the return from the opportunities they have. I suspect that increasing the number of opportunities is, for many sales people, the only activity that gets any real attention.

The problem with this is that if you focus most of your time on filling the pipeline (not an unimportant matter) you’ve less time to increase the chance of winning the deals you have, maximizing the value from those deals, or reducing the sales cycle.

In many cases, this behavior is reinforced by sales management whose primary measure is ‘sales activity’. Questions like “How many calls did you make this week?” or “How much did you add to your pipeline last month?” drive very inefficient behavior.

From the salesperson’s perspective, in many ways adding new opportunities to the pipeline is the easiest thing to do, particularly if that’s how you’re being measured.

*No one said they had to be qualified right? Early qualification would only reduce the size of the pipeline.*

*No one said they need to be deals that you actually have a chance of winning?**You didn’t need to challenge the prospect to uncover how you could really add value (removing price sensitivity and improving your average deal size).**There was no need to ask really tough questions to understand the customer’s buying process so that you could align your selling activity, or negotiate access to the real decision makers to increase your win rate.**And you didn’t need to take control of the sale, or agree a joint selling/buying plan with the prospect, where you could in fact guide the progress and shorten the sales cycle.*

In fact, you didn’t really need any courage at all.

Of course I understand the need to constantly add new opportunities to your pipeline, but indulge me for a minute. Let’s consider it’s not the only thing you should focus on. What happens if you don’t add new opportunities? Does it mean that your sales velocity grinds to a halt? – well not necessarily.

If we apply the sales velocity equation and assume that the number of opportunities stays static, but that you do manage to increase the average deal size and win rate by 10%, and reduce the length of the sales cycle by 10%, your sales velocity would improve by 34%.

So, this week I’d like to give you a challenge. Ask yourself what you can do with the deals you have in your pipeline to impact your deal size, win rate, and sales cycle duration. You might be surprised at the results. Come back and let me know.

# 1 Steven ForthSays:November 14th, 2010 at 1:30 pm

Excellent post. Thank you. I think it is useful to put these four factors together into a little equation (easy to do in a SpreadSheet) and then play with the impact of pulling each lever. It gets more complex when you recognize that you have finite resources and that time/effort invested in one lever is time taken away from the others. I expect to see a number of sales enablement and analytics platforms emerge over the next few years that help organizations optimize effort across these four levers.

Another thing to take into account (at least from a company perspective) is resale (or renewals) and upsales and how the four levers are related to these.

I would like to call out one more point “You didn’t need to challenge the prospect to uncover how you could really add value (removing price sensitivity and improving your average deal size).” Understanding and communicating your differentated value is a critical part of all B2B sales and is one of the most powerful ways to impact sales performance.

# 2 There are 4 sales velocity levers. Are you pulling them all? « SPUTNIK-3Says:November 17th, 2010 at 12:22 pm

[...] Read the Rest of the Article: [...]

# 3 Teicko HuberSays:November 26th, 2010 at 11:04 am

Interesting post. You’ve simplified and done an amazing job of deconstructing the problem. @Steven really has an awesome nugget, How do you go about pulling the lever. Specifically, how do you get 1.0 leaders to think 2.0?

Thanks for your contribution. I “liked” and tweeted it. Nice work.

# 4 Gary StewartSays:November 30th, 2010 at 11:54 am

Very insightful post – thank you!

# 5 Sales Ramp & Velocity — True Sales ResultsSays:January 6th, 2011 at 5:00 pm

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# 6 Bruce WedderburnSays:February 10th, 2011 at 12:30 pm

Donal – very thoughtful and true. This equation forces reps and managers to reconsider how they measure “performance”. Thanks.

# 7 The Sales 2.0 Network | 50 Ways to Love your Lever (with apologies to Paul Simon)Says:August 21st, 2011 at 7:22 am

[...] may have read the previous post where I discussed the levers that impact revenue. If so, you will recall that there are really only [...]

# 8 Dealmaker365 Blog | Sales Metrics That Matter [Infographic]Says:October 7th, 2012 at 7:54 am

[...] previous posts I have written about the sales velocity equation and four levers that impact sales, number of deals, average deal size, win rate, and sales cycle duration. We did [...]

# 9 Sunny MuiSays:January 23rd, 2013 at 11:01 pm

I think the sales velocity equation is the single most foundational measure of sales success. I even created a little graphic to keep posted up and remind me every day about it:

http://globial.com/globialtalksbusiness/the-only-sales-equation-that-matters/

# 10 GuillermoSays:March 19th, 2013 at 5:37 pm

Excellent approach.

I would to know what you think about this: When I Measured a period (example Q1), Deals closed like lost and that were started in previous Periods can have a big impact in the result.

So, when I lost deals in Q1 (deals that started long time ago) it seems the results do not represent the reality of Q1.

# 11 Dealmaker365 Blog | When is your Win Rate not your Win Rate?Says:June 30th, 2013 at 7:19 am

[...] appear to have a much deeper understanding or their win rate and how it plays into their overall sales velocity equation. In addition we have learned that in addition to the variables that play into the two scenarios [...]

# 12 Dealmaker365 Blog | Unpacking Sales VelocitySays:January 24th, 2014 at 4:12 pm

[...] have written about the Sales Velocity Equation before. At its heart it says that there are really only four levers that you can pull to impact how much [...]