Why Track Sales Pipeline Velocity? Who Cares? Isn't Pipeline Just a Vanity Metric?

Pipeline velocity is the speed which highly qualified prospects and opportunities move from one end of the funnel

Actively tracking pipeline velocity provides valuable insights on the overall health of a company's sales engine. Pipe
Pipeline Velocity is different because it uses 4 critical attributes that each have a significant impact on monthly and
with historical data. Even more importantly, Pipeline Velocity calculations also help model future sales performanc
are critical for B2B marketers and Pipeline Velocity is a powerful tool that helps with both.

How is Pipeline Velocity Calculated?

Pipeline velocity is calcaluated with four critical attributes that are

1. The number of active sales opportunities with at least a 50% chance of closing
2. The monthly average closed deal value
3. The monthly deal win rate percentage
4. The average length of a sales cycle as a percentage of a 12 month period

Each of the four attributes has a significant impact on increasing or decreasing velocity each month. It is entirely p
can reveal weaknesses in the pipeline which can be diagnosed and optimized. For example, sales may be on target
closed deal value is declining. Sales win rates can also decrease while overall sales are steady. Each one of these a
examples point to why pipeline velocity is so valuable to measure and manage.

The PipelineVelocity formula is illustrated below. Heinz Marketing has developed this calculator to help B2B sales a
 a Vanity Metric?
ve from one end of the funnel to the other.

a company's sales engine. Pipeline by itself may be a vantiy metric to some simply because any lead can have a potential sales number.
ificant impact on monthly and quarterly sales. Pipeline Velocity serves as a diagnostic tool that identifies potential issues in a number of ar
model future sales performance based on positive or negative changes to any one of the 4 data attributes. Historical analysis and future m
both.

ty each month. It is entirely possible to have strong sales month to month, or quarter to quarter. However, the overall pipeline velocity
xample, sales may be on target hitting their numbers. But the number of active opportunities is declining each month. Or, the monthly ave
re steady. Each one of these areas can signal future problems which helps managers diagnose and fix issues before sales begin to decline.

s calculator to help B2B sales and marketing professionals like you easily track pipeline velocity.
e a potential sales number.
ential issues in a number of areas
istorical analysis and future modeling

he overall pipeline velocity

h month. Or, the monthly average
before sales begin to decline. These
 HEINZ MARKETING SALES PIPELINE VELOCITY CALCULATOR
January February March April May June July August September October November December
1. Number of Active Monthly
Oppportunities (50% chance to close) 40 42 40 45 47 48 49 55 57 62 65 70
2. Average Monthly Deal Value $12,500 $12,000 $13,000 $13,250 $13,250 $13,250 $14,000 $14,250 $14,250 $14,250 $14,250 $15,700
3. Monthly Win Rate % 40% 38% 43% 44% 43% 45% 47% 48% 48% 45% 45% 47%
4. Average Sales Cycle (months as % of
year) 30% 28% 29% 25% 25% 27% 27% 27% 30% 30% 29% 28%
5. PIPELINE VELOCITY $666,667 $684,000 $762,069 $1,049,400 $1,071,130 $1,060,000 $1,194,148 $1,393,333 $1,299,600 $1,325,250 $1,437,284 $1,844,750
6. Monthly Sales $200,000 $191,520 $221,000 $262,350 $267,783 $286,200 $322,420 $376,200 $389,880 $397,575 $416,813 $516,530
7. Sales % of Velocity 30% 28% 29% 25% 25% 27% 27% 27% 30% 30% 29% 28%

HOW TO USE THE HEINZ MARKETING SALES PIPELINE VELOCITY CALCULATOR

Monthly Sales and Pipeline Velocity Use this calculator to identify how fast qualified opportunities are moving through the sales funnel. There isn't any standard
velocity target. The key is identifying areas that can improve velocity and address and fix issues if velocity decreases.
$2,000,000
Velocity is calculated with 4 data points. This spreadsheet will calculate the pipeline velocity for you using the data points you
$1,800,000 provide. Each data point is described below.
$1,600,000
Each one of the data points represents big performance areas which significantly sales and pipeline velocity. That means any
$1,400,000
increase or decrease in a single data point, or all data points, can have a significant impact on velocity, and ultimately overall sales.
$1,200,000 This makes pipeline velocity valuable because of the diagnostic information that shows revenue impact from any single issue such
$1,000,000 as increased sales cycle length, decreasing average deal size, and decreasing win rate percentages.
$800,000 Each of the numbered data point in the calculator is explained below:
$600,000
1. Enter the number of active monthly opportunities. Organizations should have standard 'high-bar' definition for 'active
$400,000
opportunities'. We classify active opportunities as having a specific potential dollar amount, a projected close date and at least
$200,000 a 50% chance of closing. Avoid low-bar pipeline clutter when calculating velocity.
$0 2. Enter the average monthly deal value. Use the average value of monthly sales (deals) that are won.
1 2 3 4 5 6 7 8 9 10 11 12 3. Enter the monthly sales win rate percentage. What is the average number of sales won each month.
4. Enter the average length of sales cycle. Calculate the number of months to win deals. Use months as a percentage of a 12
Pipeline Velocity Monthly Sales
month year. For example, 3 months is 25% of a 12 month calendar year.
5. Sales Pipeline Velocity Calculation - The 4 data points you have entered will be calculated into sales pipeline velocity
compared to actual monthly sales.

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