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Funnel velocity is the speed at which leads and marketing opportunities move down and out of your funnel. Measuring the speed at which leads pass through a funnel is a fundamental aspect of business planning.
Funnel velocity can be measured using:
- Age in a stage before moving to the next stage
- Total age in all stages leading to an exit
- Time that passes from an action (i.e. Call to Action) to a reaction (i.e. sales inquiry) or a sequence of events (i.e. signup, purchase, etc.)
Determining velocity can be used as a benchmark to track which stages in a sales funnel and marketing process accelerates a sale or slows it down.
Why is Funnel Velocity Important?
Learning how to calculate and analyze your sales velocity allows you to identify critical areas in your marketing and messaging to improve revenue.
Some questions to ask yourself when determining your velocity are:
- Have you ever closed a sale with a lead staying in a stage for a long duration?
- Do you always lose sales after a certain age in stage?
- How far over the average can opportunities be before leads lose interest?
Here’s an example of funnel velocity: You have 27 sales accepted leads. Let’s say the “win” rate on qualified leads is 20%. The average sale is $25,000 and the current sales cycle is 35 days. This makes the current pipeline velocity $3857 for the month. Which means, that every day around $3850 is flowing through your pipeline.
Calculating the points where sales accelerate or slow down throughout your funnel is also a critical metric when analyzing your sales forecast.