When it comes to sales, you want to ensure that you’re doing everything possible to increase your lead velocity rate. This guide will provide you with tips and tricks on achieving this goal to see an increase in your bottom line. Follow these tips and watch your business grow! Let’s get right into the details!
What is the Lead Velocity Rate?
Lead Velocity Rate (LVR) is a metric used to measure the rate at which qualified leads are generated for your business month-to-month basis. It is a key indicator of your sales pipeline’s effectiveness and the potential for future growth. By closely monitoring this metric, you can gain valuable insight into the performance of your sales team and take corrective actions as needed. With a strong LVR, your business will be in a better position to scale and succeed in the long term.
The LVR indicates how efficient your processes are at generating qualified leads, so it is important to keep an eye on this metric and act quickly when you see any changes. By optimizing your sales pipeline and understanding the underlying factors that drive conversions, you can ensure that your business is continually driving growth.
Why Is It Important For Startups To Track This Metric?
Lead velocity rate (LVR) is an important metric for tracking the progress of prospects through the sales funnel. Tracking LVR can help a business understand the effectiveness of its marketing activities, identify where improvements need to be made and ensure that sales reps are getting the right number of qualified leads.
There are several reasons why tracking lead velocity is beneficial. Firstly, real-time growth visibility can provide important insights into changes in sales trends and help the company adjust its activities accordingly. Secondly, tracking LVR can highlight any customer experience issues hindering lead progression, enabling steps to be taken to improve the customer journey. Thirdly, poor lead velocity can damage the marketing department’s credibility with other departments. Finally, LVR also impacts revenue, as a low-velocity rate can mean fewer customers and less revenue from marketing efforts.
To make the most of the lead velocity rate, it is essential to ensure that all leads are tracked and closed, as well as tracking other metrics such as sales-qualified lead rates and the journey to closed business. With this information, businesses can make informed decisions that will help improve their lead velocity rate and maximize their ROI.
How do you calculate the Lead velocity rate?
Lead Velocity Rate = (Number of qualified leads in the current month – Number of qualified leads last month) ÷ Number of qualified leads last month x 100
If you generated $1 million in the newly qualified pipeline last month and have achieved a 10% increase with $1.1 million this month, your lead velocity rate (LVR) is 10% month over month. This suggests that, given an average sales cycle length, your sales will increase by 10%.
Depending on the current revenue run rate, LVR growth targets may vary. For instance, if your run rate is $2 million, then an LVR goal of 10% per month may be set, while with a $4 million run rate, an LVR goal of 8% per month could be sufficient to achieve at least 100% growth. Achieving LVR goals monthly or quarterly will likely lead to revenue growth, supported by a constantly improving sales team and up-to-date product.
What factors affect Lead Velocity Rate?
There are many factors that affect a company’s lead velocity rate. The most important is how quickly a company can convert leads into customers or prospects. This includes having an effective lead-generation strategy in place and responding quickly and effectively to new inquiries. If a company is slow in responding to leads, it will decrease its lead velocity rate and could result in lost opportunities.
In addition to the speed of response, other factors that affect a company’s lead velocity rate include its pricing structure, overall marketing strategy, the quality of leads they generate, and the consistency of follow-up activities. Companies need to ensure that they have an effective sales process and are constantly monitoring and improving their lead conversion rate. If any of these factors are lacking, it can significantly impact their overall lead velocity rate.
What is a good Lead Velocity Rate?
The Lead Velocity Rate (LVR) is a critical metric for B2B companies to pay attention to. It can tell you a lot about the performance of your business, but it’s important to understand that the number alone does not tell the whole story.
Variables such as industry, product type, and target market can all affect the LVR. An increase in leads is a good sign, but it only means a little if all are turned into actual sales. That’s why tracking LVR is so essential; it helps you to understand the effectiveness of your sales and marketing efforts. Once you achieve the leads every month, you will see the business’s future in 12-18 months.
What is a bad Lead Velocity Rate?
When a company has a low Lead Velocity Rate (LVR), the rate at which leads are converted into customers is too slow. This is a sign of poor lead generation or ineffective sales and marketing processes, which can be detrimental to the business’s overall success.
Low LVR also indicates a need for more understanding of the customer journey, which can lead to missed opportunities for generating interest and converting leads. Low LVR is associated with decreased revenue and profits, so ensuring your lead-generation process is optimized for maximum efficiency is important.
What are examples of Lead Velocity Rates?
Suppose in April 2022; a B2B SaaS startup had 125 qualified leads, which dropped to 100 in May. However, the number of leads increased again in June, reaching 140.
- Qualified Leads, April = 125
- Qualified Leads, May = 100
- Qualified Leads, June = 140
In general, the increase in potential conversions is seen as a positive development. For instance, if there were ten conversions in May and 12 conversions in June, this would indicate growth.
- Number of Conversions, May = 10
- Number of Conversions, June = 12
In May, the sales conversion rate was higher than that in June, despite having 40 additional qualified leads for the latter month.
- May 2022
- Lead Velocity Rate (LVR) = –25 / 125 = –20%
- Sales Conversion Rate = 10 / 100 = 10%
- June 2022
- Lead Velocity Rate (LVR) = 40 / 100 = 40%
- Sales Conversion Rate = 12 / 140 = 8.6%
At the end of the day, June presents greater prospects for generating revenue through conversion, yet its 8.6% sales conversion rate highlights potential issues hindering its growth.
How can Lead Velocity Rate Predict Future Revenue?
LVR is a powerful revenue forecasting tool that businesses can use. It helps to measure the success rate of qualified leads (MQLs and/or SQLs) in becoming customers. However, it is important to note that LVR does not consider customer churn rate or the number of customers that discontinue their service with a B2B company in any given period.
If the churn rate is too high, LVR will not be able to make up for the lost revenue. Lear more about churn rate(insert link).
In these cases, it is beneficial to combine LVR with MRR (monthly recurring revenue) to ensure that a company’s revenue stays consistent. MRR is vital for many SaaS companies and should be monitored closely.
5 Best Ways to Optimize Your SaaS Lead Velocity Rate
In WisdonPlexu’s writing, the SaaS experts vote on some of the best ways to boost LVR. However, the respondents found the most effective strategy is to optimize follow-up strategies. Here’s a summary according to Databox for the best options Saas experts founded to boost lead velocity rate.
Let’s get right into each strategy!
Optimizing The Follow-Up Strategy
The Lead Velocity Rate (LVR) is a key indicator of how successful your business is in terms of acquiring and retaining leads. When the LVR dips, it is usually a sign that changes need to be made to improve lead acquisition and retention. To ensure a steady net positive number of leads, follow-up strategies must be kept up to date. Alina Clark from CocoDoc expresses that “a dip in LVR is, more than often, a call to have a look at our follow-up strategies. If any part of the follow-up process fails, it can lead to significantly lower qualified leads.” Therefore, staying on top of your lead retention rate is essential for a successful LVR.
Improving Content
Content marketing is one of the most effective ways to generate organic leads. It takes a reader from an initial source, such as a search engine or direct link, and leads them to the desired action, such as signing up for your newsletter. However, if the content is of low quality, it won’t encourage visitors to take further action.
If you notice any of thee content marketing lead generation metrics declining, it could be time to reconsider and refresh your content or strategy for a better lead velocity rate:
Time on page: An ideal blog post should keep readers engaged for around 3-5 minutes. If the average time on the page is shorter than this, it could be an indication that readers are bouncing.
Email opt-ins: Email newsletters can be a great way to generate leads, so tracking the sources of your opt-ins is key. A dashboard such as Google Analytics can help you identify if your content isn’t contributing.
Improving The Lead Nurturing Strategy
Having a sound lead nurturing plan in place is crucial to keeping your Lead Velocity Rate (LVR) climbing. Here are some tips from experienced sales professionals to help you out:
- Create a well-defined follow-up system that specifies who will follow up and when.
- Offer extra value with customized content, free services, or special gifts.
- Send relevant and targeted emails (including a personalized video is a great way to go the extra mile).
- Engage with your customers in online forums.
- Highlight leads with high lead scores when it comes to engagement.
Utilize Automation Tools
Automation tools can save you time and effort in managing your sales process. Automating tasks such as scheduling meetings and calls, managing workflows, maintaining email lists, assigning and scoring leads, and entering information into your CRM can streamline the process and make it easier to manage. Additionally, automating reporting can provide more accurate and quicker evaluations of lead situations and more opportunities to collaborate with clients and analyze the competition.
Wrap Up
A lead velocity rate is a tool that sales teams can use to increase their productivity and, as a result, their sales. By understanding what lead velocity rate is and how it works, you can take steps to improve your own team’s performance. If you’re looking for help increasing your sales, contact us today. The experts can assist you in developing a plan that takes into account all of the factors that affect sales success. In the meantime, try implementing some of the tips we’ve outlined above and see how they impact your team’s lead velocity rate.