When B2B organizations think about velocity, it is typically thought of as the time from the opportunity creation to opportunity closed (won or lost). It only includes the sales cycle. The idea is that a faster velocity (shorter sales cycle) means there is more momentum, which should translate to a higher win rate.
Sales velocity is important, but it’s not the only velocity metric that marketers should be tracking. In addition to helping marketers understand their impact on momentum, a more comprehensive measurement -- total velocity -- enables better forecasting and marketing optimization.
This post will explain the importance of considering the marketing cycle when analyzing velocity and discuss the impact it can have on the marketing team.
Three Measures of Velocity
We regularly monitor our velocity. Last month, when we took a look at our sales velocity for opportunities that closed during the month, we had a velocity just over 95 days. When filtering for just our closed-won opportunities, it was about 60 days.
But that’s just looking at opportunity creation to opportunity close. While we do some marketing post-opportunity creation, the large majority of our marketing takes place before the opportunity creation touch.
Sales Velocity + Lead Creation
So if you want to think about how marketing impacts velocity -- and revenue-driven marketers should want to do that -- you need to look into the marketing cycle. One way to do this is to track velocity from lead creation to opportunity close.
Why would you want to track how marketing impacts velocity? For one, if a faster velocity means higher win rates, you would want to see how your marketing is positively impacting win rates. And second, if you know how long it takes for an opportunity to close, it can help with forecasting. If you spend $X on marketing that engages prospects in January, how long will it take to start seeing returns? Assuming you have a somewhat consistent buyer journey, knowing this would be helpful.
So, we took a look at our velocity from lead creation to opportunity close. We found that we had a velocity of 245 days. Closed-won opportunities had a velocity of 331 days, a good amount longer. We’ll get to the implications of this later.
But even if you’re calculating velocity starting at LC, that’s still missing a significant portion of marketing: all the pre-lead stage marketing.
When you spend $X in January to engage a new audience, you’re actually starting at the top-of-the-funnel. In other words, the $X you spent in January will influence the first touch (FT), not the lead creation touch (LC). Maybe the FT is in January, the LC is in February, the OC is in March, and the Opp Close is in April. That’s a four month marketing and sales cycle, not three months like if you had started counting at LC.
So we went back into the data and calculated our total velocity, from first touch to opportunity close and found that our total velocity was 311 days. Our total velocity (marketing and sales) is actually about two months longer than we had previously thought. When we only look at closed-won opportunities, our total velocity is 349 days, which is still over two weeks longer than LC-to-Close velocity.
Our traditional sales velocity (OC to Close) demonstrates the classic reason why organizations care about velocity: when opportunities became customers (closed-won), they closed about 35% faster compared to when they were lost.
However, now that we can see velocity that takes into account the marketing path, we see the opposite effect. Successful buyer journeys tend to have longer total marketing and sales cycles by about 12%.
While we would prefer to see that our closed-won opportunities had faster total velocity, there is still plenty of insight to be gleaned.
So what does this mean?
The slower total velocity is likely impacted by two factors:
Our product is powerful and nuanced, which requires a lot of education and often involves many stakeholders
We have calibrated our marketing and sales alignment to most effectively use our sales team’s resources
Our Product Requires A Lot Of Education
As for the first factor, our data shows that successful customer journeys involve a lot of marketing interaction -- often several months from first touch to opportunity creation. Prospects are doing more research, reading more content, and interacting with us more ahead of the demo.
The result is that when they are ready to demo, they are well informed and well equipped to have positive interactions with our sales team, which results in a shorter sales cycle.
In 2014, Forrester famously claimed that buyers now complete about 90% of the customer journey on their own before ever reaching out to a salesperson. Our data reflects this concept. Seeing the data, our challenge now is to figure out ways to deliver the same amount of education, but ideally in less time. This will hopefully increase total velocity, while still ensuring that our sales team has good conversations and is able to close deals at the same fast rate.
Prioritize Sales Team Resources With Predictive Account Engagement Scoring
On a related note, the second factor that is likely influencing our total velocity is the use of predictive account engagement scores. These scores use an algorithm to take into account historical data in order to predict the likelihood of an account closing. This allows our sales team to focus on and prioritize accounts that are most engaged and most likely to close.
For accounts that have high engagement scores, this means faster closing rates, as reflected in the sales velocity data. But for accounts that may not be as likely to become customers, it means a longer sales cycle. This, too, is reflected in the data.
As for marketing, the predictive account engagement scores give us insight into what marketing interactions are adding value. If we launch campaigns targeted at accounts with low scores and the campaign is effective at increasing their scores, we’ll be able to increase total velocity. In order to make that judgment, we need to be measuring total velocity, not just sales velocity.
Now that we have addressed the likely explanations for our total velocity data, what are the implications moving forward? Most practically, it helps with forecasting. As we touched on earlier, if you know how long it takes for an account to go from first touch to close, you can forecast and budget accordingly. How long until you see returns on a marketing campaign that you launched this month? Total velocity tells you the answer.
Measuring total velocity also allows you to optimize for it. Are there certain channels that increase velocity faster than others? Do accounts that have engagements with Paid Social or Events close faster than accounts from Paid Search or Email? Again, a total velocity analysis will tell you this answer.
First touch to close velocity -- total velocity -- gives marketers the insight they need to impact and optimize customer momentum. As marketing strategies, like ABM, become increasingly focused on impacting and capitalizing on accounts with momentum, the ability to measure, analyze, and optimize for total velocity will continue to increase in value.