Don’t throw people at your sales problems

Have you ever found yourself in the position where you think to yourself “If only I had an extra pair of hands”?

Many of us find ourselves in that situation as business leaders, sales leaders and salespeople, all of the time! An extra pair of hands is actually very appealing when you find yourself at maximum capacity, unable to handle any more new sales opportunities.

What I am about to share with you, is one of the most powerful growth metrics that is used internationally in scaling technology companies.

If you’re not in a tech company, don’t worry, the same logic applies.

We are going to discuss Sales Velocity.

This is a story about mathematics and logic, not one of technique and skill.

If you have access to your sales data, then this is a great topic to be exploring.

In this article, you will learn what to look for in your sales data in order to potentially double, triple and sometimes even quadruple your sales, without the need to hire more people to achieve these lofty goals.

Understanding the levers that we can pull to influence the outcomes of sales revenue is fundamental for a few reasons.  First of all, we can establish whether the time and effort spent are in the appropriate place, and secondly, we can also recognise that we don’t always need to ‘throw’ more people at a problem in order to get the desired outcomes.

Let’s explore this situation in a bit more detail:

• You sell contracts for a product or service that costs on average, £1,000.

• You can manage 10 new prospective customers per month.

• For every qualified lead that you are working with, you convert 20% to customers.

• On average it takes you three months to close a new deal.

£1,000 contract value x 10 prospects x 0.2 (20% success rate)) = £2,000

Divide the £2,000 by three-month sales cycle, and you get a Sales Velocity of  £666.67

Sales Velocity = (Contract Value x Prospects x Success Rate)/Sales Cycle Legth

In any normal situation, some seasoned sales leaders would see their team reaching capacity under the workload. Also noticing that (depending on the data for your own business) each salesperson is paying for themselves through the new business revenue that they are securing.

A business case gets made to hire more salespeople, and then scale the sales team, which in turn will grow revenue – and the cycle continues.

Well, what if there was another way?

If I was looking at your sales data, before making any recommendation to hire a new team member (which may also be a viable solution by the way), I would explore all of the components of the Sales Velocity calculation…

Ask yourself the following…

“Can I reduce the length of the sales cycle?”

If you can reduce it to just 2 months, your Sales Velocity will increase by 50% to £1,000.

The practical outcome of having a shorter sales cycle means that your sales team can handle more prospective opportunities.

“Can I increase my success rates to 30%?”

If you can do this through upskilling and coaching, as well as shorten your sales cycle, your Sales Velocity increases by a further 50% to £1,500.

The practical outcome is less time spent nurturing more prospects through to a higher rate of conversion. Which sales leader wouldn’t want that?

“Can I increase my contract value?”

Pricing is a whole other topic that we can spend time on, but for the purpose of this illustration, let’s just increase prices by 10% and our Sales Velocity is now £1,650. That is a 147% total increase on your original Sales Velocity figure.

To put that in context, doubling your sales team and taking no action on improving the other variables would have netted you a theoretical 100% uplift in revenue, plus all of the other overheads that come with that increase.

“Can I get more qualified prospects?”

This one is slightly more subjective, but by ensuring your sales and marketing efforts are aligned with each other, and that anyone working on lead generation is delivering quality, then this can be factored in.

I’ll let you do the calculations on this one.

There is so much money being ploughed into tech companies that their sales reporting and forecasting need to be bulletproof, and we can all learn from some of the best analysis out there. This is just one way to take more control of your own revenue generation.

Ben Bennett is Managing Partner of Second Voice (secondvoice.co.uk) a Brighton-based consultancy focused on enabling B2B companies to accelerate growth through sales and operations. Ben is also a business growth mentor for the NatWest Entrepreneur Accelerator and Partner at Plus X.

If you’re looking to grow your own company and want impartial advice or support, please reach out to Ben at sbt@secondvoice.co.uk