Is Your Sales Dashboard Missing This Crucial Pipeline Metric?

Sales dashboards display key metrics to help assess performance at the organizational, sales team, and individual seller levels. However, their adoption is often hindered by two primary factors: lack of alignment with audiences’ priorities or failure to provide actionable insights. But what if we said all you need to track is a single metric to address both these challenges? 

If you’re a B2B sales leader struggling to connect insights from your sales dashboard to seller activities, you can’t miss having pipeline velocity on your dashboard. In this Gartner research-based primer, [1-3] we’ll explain the basics of sales pipeline velocity and why it’s the one pipeline metric that should be featured in all sales dashboards. We’ll also recommend tips for maintaining a healthy sales pipeline velocity as well as tech tools to track this crucial sales metric.

Sales pipeline velocity, also known as sales velocity or pipeline velocity, is the speed at which qualified leads move through your sales cycle and, by extension, how much you can expect to earn through sales activities for a given period of time. 

To calculate sales pipeline velocity, multiply the number of opportunities in your pipeline by your sales team’s average deal size and overall win rate. Then, divide the result by the average duration of your sales cycle. The final answer is your sales velocity in dollars for your chosen duration. Most sales teams track sales velocity quarterly or monthly for shorter sales cycles. [1]

Sales velocity = (Opportunity volume x Average deal size x Win rate) / Average sales cycle

See below for descriptions and formulas of the sales pipeline metrics needed to calculate sales velocity.

The good news is that these metrics are ones that any effective sales team would be tracking to begin with. If they’ve somehow slipped your radar, you’ll want to explore the sales pipeline analysis feature of whichever sales tools you’re using (more on that later).

Here’s why pipeline velocity is an important sales metric for businesses of all sizes: 

• It sheds light on performance discrepancies. For example, it can track how quarterly sales velocity has trended at the regional level over the past two years. From here, your team can explore more meaningful questions such as “Why is one region outperforming another?” or “What’s the root cause for this sudden increase or decline in velocity?” [1]

• It impacts forecast accuracy. In a Gartner survey, 40% of surveyed chief sales officers (CSOs) identified accurate and actionable forecasting as a top-three internal challenge in 2022. [2] Because sales velocity tells you how quickly you’re generating revenue, you can better project your future revenue, adjust your strategies, and allocate resources.

• It equips sales reps better. Understanding your strongest reps’ performance enables you to set realistic targets focused on activities relevant to revenue outcomes, such as training on early-stage qualification activities or cross-selling and upselling techniques. [3]

• It helps find ways to accelerate the sales cycle. By diagnosing areas of weakness or friction in the sales process, sales managers can provide additional support and coaching to sellers who need it.

Generally speaking, a higher sales pipeline velocity is better because it means your business is generating more revenue. However, you shouldn’t always take a high sales velocity score at face value. In fact, the biggest mistake you can make as a sales manager is to concentrate solely on sales velocity without considering accompanying metrics that are more directly influenced by your reps’ actions, such as opportunity volume, deal size, win rate, and average sales cycle.

Rather than striving for the highest sales velocity, use this metric as a tool for setting realistic goals for your sales team and understanding the likelihood of reaching them.

The key to maintaining a healthy sales velocity is to coach your team on increasing the sales opportunity volume, deal size, and success rate while simultaneously reducing the sales cycle length. Here are a few ways to do this:

• Share strategies to identify high-value, high-quality leads from the outset.

• Review sales process mastery and tactics to ensure reps are prepared to engage with potential customers and understand their motivation. 

• Assess whether reps are articulating value and following your sales strategy at every pipeline stage.

Perhaps the most important way to maintain a healthy sales velocity is to shorten the sales cycle. Coach reps on closing deals as quickly as possible and not to keep dead deals in their pipeline. If their sales cycle length goes unchecked, reps run the risk of undoing their sales efforts.

There are a number of tools you can use to track and/or improve sales velocity:

• Sales performance management software lets you create, track, and manage sales target quotas, goals, and incentives for your sales representatives.

• Sales force automation software enables you to manage and automate sales processes, including contact management, customer relationship management, and sales activity tracking. Sales automation systems may also provide insights for pipeline management, opportunity management, and forecasting.

• Sales tracking software, as we mentioned earlier, allows your sales team to monitor pipelines, manage steps in the sales process, and track key performance indicators (KPIs).

• Your customer relationship management (CRM) tool is another great way to track sales velocity. CRM platforms allow you to organize customer data, predict future sales using sales pipeline and potential leads, and scale up the entire sales process. 

Of course, any tool you use to track KPIs is only as good as the data you enter into it. Make sure reps are consistent in their data entry. You’ll also want to ensure reps aren’t inflating the size or number of opportunities in their pipeline to superficially increase the sales velocity, which they could sometimes feel pressured to do.