There are many different ways to measure the success of an ad agency. You might use sales revenue, customer engagement, or even customer satisfaction to determine whether your agency is succeeding. There are pros and cons to using each of these metrics. But they all have a place in the calculation process. However, sales velocity is one measurement that your agency may currently be overlooking. It’s a great way to keep track of how quickly you’re making money. You can use sales velocity to figure out which of your sales sources work best and chart a clearer path toward your long-term revenue growth goals. If you’re interested in learning more about sales velocity as a measurement of business success, keep reading. We’ve put together all of the information that you need to know about the metric in the following sections.

What Is Sales Velocity?

In the purest terms, sales velocity is a measurement of how quickly your company makes money. It looks at how quickly you’re able to move leads through your sales pipeline and how much value you’re getting from each new customer you add.

Why it matters

Your agency’s sales velocity matters for a few key reasons: First, the higher your sales velocity, the faster you’re closing deals, and the more your revenue grows. So tracking this ratio will give you great insight into how your business is doing as a whole. 

You can also track the sales velocity of specific departments within your agency. This is a great way to compare the performance of various groups over time. It can clue you into which sales practices are working for your company and which aren’t.

Sales velocity can also serve as a useful point of comparison for the metrics you’re currently using to track your agency’s progress. For example, your agency might see a lot of revenue growth in a particular quarter and assume that its sales team is doing fantastic. 

But you might find that after calculating your sales velocity for that quarter, your team is actually spending more time and resources on each deal than it was in the past. Therefore, the return you’re getting for each resource you invest in may not be as high as you expected. This provides useful context that you can use to verify whether your agency is actually on track to reach its targets.

What Variables Impact Sales Velocity?

There are four key variables that will play a role in determining your agency’s sales velocity. Here’s a quick look at each one.

Number of opportunities

This is a measurement of how many leads your team can work through in a given time period. It usually includes data from all sales sources. But you might exclude some sources if you’re trying to calculate the velocity of a particular department within your agency instead of the velocity for the agency as a whole.

Average deal size

The number you use for this will vary based on your agency’s business model. If you use a subscription-based model, then you will want to use the average customer lifetime value. If you don’t, then you’ll just use the total dollar amount of an average sale.

Conversion rate

This is the percentage of opportunities within a given time period that your team converts into paying customers. For example, if you had 100 total opportunities and converted 40 of them into clients, your conversion rate would be 40%.

Sales cycle length

Sales cycle length is the amount of time that passes between when you first contact a prospect and the moment you turn them into a paying client. To calculate this, gather the individual cycle lengths for each client that you converted and use that data to create an overall average cycle length for your agency.

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How Do You Calculate Sales Velocity For Revenue Growth?

You’ll use the four variables described above to calculate your agency’s sales velocity. You can choose any time period that you find relevant. It could be helpful to look at your velocity at a yearly, quarterly, and monthly rate.

The formula for this is pretty straightforward. Start by multiplying the total number of opportunities you have by your average deal size. Then multiply that number by your conversion rate percentage. 

Next, take the number that you’re left with and divide it by the number of days in your average sales cycle. The resulting number will be your ad agency’s sales velocity for the time period that you’re tracking.

How Ad Agencies Can Boost Sales Velocity

If you want to get more out of each of your sales sources, then you may want to focus on boosting your sales velocity. When you do this, your agency will essentially begin squeezing more value out of each opportunity it has to work with. This is a great way to increase your company’s revenue growth and to keep it on track for its long-term goals.

That raises the question of what steps you can take now to start increasing your sales velocity. There are a few different ways to go about achieving this.

Improve your conversion rate

Improving your conversion rate is a great way to boost your sales velocity. To do this, you’ll need to optimize your sales process. That can be a multi-faceted process, which could take some work.

It might include optimizing the way you interact with prospects through your website, social media posts, and other marketing strategies. You may also want to try analyzing your sales process to find its weakest points. There could be a specific stage or two where the majority of your prospects tend to drop off.

Increase your average deal size

If your conversion rate is already high, then you might also look into increasing your average deal size. You could do that by expanding the services you offer or by pushing your clients toward long-term deals with special offers or improved sales tactics.

However, it’s important to note that you wouldn’t want to increase your sales cycle significantly to make this happen. If your sales cycle gets too much longer, your sales velocity rate won’t actually go up even if you increase your agency’s average deal size. It’s all about finding a balance that enables your sales staff to make the best use of their time possible.

Shorten your sales cycle

Maybe you already have a great conversion rate and a strong average deal size. In that situation, it may be best to focus on shortening your sales cycle. Think about where you might be able to eliminate certain steps of the process altogether. 

There could be actions you take to make your existing stages more efficient. For example, investing in a powerful sales tool could help you process the prospects you identify in a shorter amount of time.

Use Sales Velocity To Accelerate Your Agency’s Growth

Revenue growth is a goal for virtually every company. But it’s difficult to achieve. If your agency’s existing methodologies aren’t allowing it to reach its goals, then focusing on sales velocity could be your solution.

Sales velocity gives you actionable insight into the parts of your sales process that aren’t working optimally. You can use this information to make changes to your operations so that they become more effective at propelling your agency toward its goals.

The best way for your agency to use sales velocity for revenue growth will depend on where you’re strongest and weakest at the moment. Regardless, this measurement will give you the perspective you’ll need to make changes where they’re most needed. Ultimately, that’s going to be the key to accelerating your agency’s revenue growth.

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LeadLander Can Help Your Agency Reach Its Revenue Goals

Even if your agency is using the best sales practices already, it won’t be able to achieve its revenue goals without a steady stream of prospects to use those practices on. That’s why maximizing your number of opportunities is a key component of increasing your agency’s sales velocity.

There are several different ways to achieve this. But one of the easiest is to start getting more out of the prospects that are already interacting with your website. You can do that by investing in a tool that will track your leads and provide you with valuable insights into how they’re engaging with your agency.

LeadLander makes all of this possible. Our platform goes beyond traditional web analytics systems to offer you specific details about both known and unknown prospects. You can use LeadLander to find new leads, improve your pipeline accuracy, and receive real-time alerts showing how leads are interacting with your website.

We know that LeadLander can help your agency reach its revenue goals. But you don’t have to take our word for it. You can try LeadLander for free by signing up for our 14-day trial.

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