We’re often asked, what is a good metric other than pipeline contribution and conversion rates we should consider. Here’s a metric that is often overlooked – Pipeline Velocity. Pipeline Velocity is a metric many marketing and sales organizations could benefit from using because it measures the rate of change within your pipeline—both in speed and direction. If you haven’t calculated pipeline velocity before, you may want to consider using this metric as a way to provide insight into how Marketing is affecting the business. To calculate your pipeline velocity you are going to need to know the following four variables:
- Pipeline Volume
- Sales cycle movement
- Length of the sales cycle
- Average dollars/sale
By taking these four variables, sometimes metrics in and of themselves, and summing them into a single number you can assess whether your sales are accelerating, decelerating, or remaining status quo. You may also need to review how your collecting data related to the number of opportunities and conversion rates so that you can properly calculate the Pipeline Velocity metric.
Other information helpful in assessing your Pipeline Velocity include:
a. Annual Revenue Goal ($)
b. Avg. Length of Sale (days)
c. Sales Stage Probability (%)
d. Opportunities per Stage (#)
e. Sales Booked To Date ($)
f. Stage Conversions Made (#)
g. Months Remaining In Fiscal Year
Once you begin to track your pipeline velocity, it may become evident that you need to revisit your marketing and sales processes to determine whether any adjustments are needed.
VisionEdge Marketing, Inc, is a leading data-driven metrics-based strategic and product marketing firm located in Austin, Texas. The company specializes in consulting and learning services that help organizations use data to make fact based decisions to address market, customer, and product opportunities and to improve and measure marketing performance. For more information, go to www.visionedgemarketing.com.
About Nathan Kaiser
