Sales Velocity and the Funnel

Posted on February 2, 2011. Filed under: Funnel Audits, Lead Generation, Pipeline Measurement, Sales, Sales forecasting, Sales Funnel, Sales Goals, Sales Management, Sales Metrics, Sales pipeline, Sales Quota, sales training, Sales Velocity | Tags: , , , , , , , , , , , , , , |

One of my clients, a director of sales, gave me solicited input in a meeting I was preparing to facilitate for him and his colleagues and the VP of Sales last year.  This was an existing Funnel Principle client looking for ways to leverage the system they installed a few years earlier.  “Let’s make sure we talk about sales velocity”, he said.

“Absolutely”, I replied.  Then I asked, “If you had better or more information about sales velocity for your region funnel how would you use that information to manage better?”

He replied almost before I finished the question.  “I don’t know.  But it seems like I should know more about it.”

Metrics like sales velocity are valuable for many reasons.  Whether your company has a sophisticated system of metrics, or keeps metrics to a bare minimum, or has no metrics at all you all share a common need to make the information you gather meaningful to your troops.   Ultimately, their greatest value is the role they play in changing or reinforcing selling behavior.

Funnel value (we call it TVR, Total Viable Revenue) is probably the most common metric that I hear VPs of Sales say they want to have and provide for their salesforce.  I agree it’s a valuable metric but only if it’s acted upon.  I continue to see a gap in having that information and in driving change.  I see two reasons for this.  One is because the users don’t trust the data on their funnels.  Therefore, the funnel value has little credibility.  Two, there’s a lack of connection between funnel value and actions to run a territory.

TVR is a key leading indicator to the true health of a funnel.  It’s all the sales on the funnel that have reached a critical stage of the customer’s buying process called Commit Funding.  At this stage the customer has committed funding and possibly significant resources to making a change one way or another.

The best way to connect TVR to actions is to inspect the funnel regularly and use the information to plan, organize and execute.  Think ‘lean’ for a second.  If a rep’s TVR is in the red, the action plan has to include ways to get it to green.  These ways are tied to working specific accounts and opportunities at specific sections of the funnel, namely the non TVR sections.  These are the early stage opportunities.  You go there first to find more TVR.

An action plan to find more TVR if that’s what the diagnosis suggests is not a loose, airy, feel-good next step kind of thing.  It’s specific and therefore accountable.

It’s the sales manager’s job to help the seller define this plan and keep her accountable to it.

Ain’t rocket science.  But man it is powerful.

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