Definition
Pipeline Velocity is the rate at which sales opportunities move through the sales pipeline, from initial contact to closing. It quantifies how quickly revenue is generated over a specific period. Businesses use sales pipeline analytics to assess sales team effectiveness and overall business growth.
Why Use
- Identify sales process bottlenecks to improve efficiency.
- Forecast revenue with greater accuracy and confidence.
- Shorten sales cycles and increase win rates.
- Align sales and marketing strategies for growth.
- Monitor the impact of new sales initiatives quickly.
Core Concepts
- Number of opportunities currently in the pipeline.
- Average deal size calculated over a set period.
- Win rate, showing the percentage of deals closed.
- Average sales cycle length in days or weeks.
- Formula: (Opportunities x Win Rate x Deal Size) ÷ Sales Cycle Length.
Examples
If there are 40 opportunities, an average deal size of £5,000, and a win rate of 25%, with a 30-day sales cycle, Pipeline Velocity = (40 x 0.25 x 5,000) ÷ 30 = £1,667 per day. This means £1,667 moves through the pipeline daily.
Common Pitfalls
- Ignoring changing deal sizes over time.
- Misjudging the impact of long sales cycles.
- Failing to update opportunity data regularly.
- Overlooking the role of lead quality.
See Also
Related terms include Sales Qualified Lead, Lead Scoring, and Conversion Rate for further reading.
