The RevOps Playbook Series: Part 2 Defining & Operationalizing Deal Velocity

Introduction

In the competitive landscape of B2B SaaS, understanding and optimizing key performance indicators (KPIs) is essential for sustained growth. Deal Velocity stands out as a pivotal metric that directly reflects the efficiency of your sales processes at the granular deal level. By focusing on Deal Velocity, RevOps teams can uncover actionable insights to streamline operations, enhance team performance, and drive revenue faster.

Understanding the Key Metrics: Sales Cycle Velocity, Deal Velocity, and Sales Velocity

Before we dive into Deal Velocity, it's important to distinguish it from related metrics to provide clarity and context within our series:

• Sales Cycle Velocity measures the speed at which prospects move through your entire sales process, emphasizing overall cycle efficiency.

• Sales Velocity assesses how quickly you're generating revenue by combining factors like the number of opportunities, average deal value, win rate, and sales cycle length:

• Deal Velocity, our focus in this article, zeroes in on the speed and progression of individual deals through your sales pipeline, highlighting the impact of internal processes on each deal's journey.

Understanding these distinctions is crucial for accurately measuring performance and implementing targeted improvements—a central theme of our series.

Defining Deal Velocity

Deal Velocity measures how quickly an individual deal moves from initiation to closure within your sales pipeline. It reflects the effectiveness of your internal processes and the agility of your sales team in advancing deals. By operationalizing Deal Velocity, you can:

• Identify Bottlenecks: Pinpoint stages where deals commonly stall.
• Improve Forecasting: Enhance the accuracy of revenue projections.
• Increase Efficiency: Optimize resources by closing deals faster.

Calculating Deal Velocity

Calculating Deal Velocity involves two key components: the Deal Value and the Time to Close, which is determined by the Close Date and Created Date of the deal.

Calculating Time to Close

Time to Close is the total duration a deal spends in your sales pipeline from the moment it's created to when it's closed (won or lost).

• Created Date: The date when the deal (or opportunity) was initiated in your CRM system.
• Close Date: The date when the deal was won or lost.

Importance of Defining When a Deal Should Be Created

A crucial aspect of accurately calculating Deal Velocity is clearly defining when a deal should be created in your CRM system. This definition affects the Created Date, which is fundamental for determining the Time to Close.

Key Considerations:

• Consistency: Establish a uniform criterion for deal creation to ensure that all deals have comparable Created Dates.
• Alignment with the Buyer's Journey: Ideally, a deal should be created when a prospect demonstrates a significant level of engagement or intent, such as agreeing to a meeting or demo.
• Avoiding Premature Deal Creation: Creating deals too early (e.g., at the initial inquiry stage) can inflate the Time to Close and distort Deal Velocity metrics.
• Data Integrity: Clear definitions help maintain data accuracy, making your Deal Velocity calculations reliable and actionable.

Best Practice:

• Define Deal Creation Point: Set a specific milestone, such as after lead qualification or upon acceptance of a meeting request, to trigger deal creation.
• Document the Criteria: Clearly outline the criteria for deal creation in your sales process documentation.
• Train Your Team: Ensure all sales reps understand and adhere to the defined criteria.

Internal Processes and Considerations Behind Deal Velocity

Operationalizing Deal Velocity involves a deep dive into your internal processes. Here are key considerations:

1. Defining When to Create a Deal

Clear Criteria for Deal Creation:

• Establish Specific Triggers: Define the exact point in the customer interaction when a deal should be created in the CRM.
  • Examples: After a discovery call, when a proposal is requested, or upon meeting a lead qualification threshold.
• Consistency Across the Team: Ensure all sales reps follow the same criteria to maintain uniformity in data.
• Documentation and Training: Provide guidelines and training materials outlining the deal creation process.

Impact on Deal Velocity:

• Accurate Time to Close: Properly defining the Created Date ensures that Time to Close reflects actual sales efforts.
• Reliable Metrics: Consistency in deal creation timing leads to more accurate Deal Velocity calculations, enabling better decision-making.

2. Standardizing Sales Stages

• Clear Definitions: Establish specific entry and exit criteria for each pipeline stage to ensure consistency.
• Alignment Across Teams: Ensure marketing, sales, and customer success teams have a unified understanding of each stage.
• Documentation: Maintain up-to-date documentation of processes and stage definitions for reference and training.

3. Process Alignment with the Buyer's Journey

• Customer-Centric Mapping: Align your sales stages with the customer's decision-making process to create a smoother experience.
• Adaptability: Be prepared to adjust stages based on customer feedback and market trends.
• Personalization: Tailor interactions at each stage to meet the specific needs and concerns of the prospect.

Strategies for Optimizing Deal Velocity

Building on the internal considerations, here are actionable strategies:

1. Streamline Internal Processes

• Automate Repetitive Tasks: Use automation for follow-ups, meeting scheduling, and data entry to reduce manual workload.
• Simplify Workflows: Eliminate unnecessary steps in the sales process that do not add value.
• Expedited Approvals: Implement faster approval processes for pricing, discounts, and contract terms.

2. Enhance Lead Qualification

• Implement Rigorous Criteria: Use firmographic, technographic, and behavioral data to qualify leads more effectively.
• Prioritize High-Velocity Deals: Focus on deals that are likely to close quickly.
• Lead Scoring Models: Develop models to score and prioritize leads based on predefined criteria.

3. Improve Communication Channels

• Internal Collaboration Tools: Utilize platforms like Slack or Microsoft Teams for quick internal communication.
• Customer Communication Cadence: Establish a communication schedule to keep prospects engaged without overwhelming them.
• Multi-Channel Outreach: Use a combination of email, phone calls, and social media to reach prospects effectively.

4. Leverage Technology and Analytics

• CRM Utilization: Make full use of your CRM's capabilities for tracking and analytics, ensuring data like Created Date and Close Date are accurately recorded.
• AI and Predictive Analytics: Consider advanced tools that can predict deal outcomes and suggest next best actions.
• Pipeline Visualization: Use tools that provide visual representations of deal stages and velocities.

5. Continuous Feedback and Improvement

• Regular Debriefs: After closing a deal, conduct a debrief to discuss what worked and what didn't.
• Iterative Process Refinement: Use insights gained to refine sales processes continually.
• Benchmarking: Compare your Deal Velocity against industry standards to gauge performance.

The Impact of Deal Velocity on Other B2B SaaS KPIs

Optimizing Deal Velocity influences other critical KPIs we've discussed or will cover in this series:

• Customer Acquisition Cost (CAC): Faster deal closures reduce sales costs, lowering CAC.
• Lifetime Value (LTV): Efficient processes can lead to higher customer satisfaction and retention, increasing LTV.
• Churn Rate: A smoother sales process can set a positive tone for the customer relationship, potentially reducing churn.
• Sales Forecast Accuracy: Improved Deal Velocity allows for more precise sales forecasts and better resource planning.

By connecting Deal Velocity to these broader KPIs, you can see the compounded benefits of operational efficiency.