Sales Velocity

Live from Schenectady, New York, it's SaaS Talk with the Metrics Brothers, Growth and CAC.

And I'm Growth, better known as Ray Reich, founder and CEO of Benchmarkit.

And I'm CAC, better known as Dave Kellogg, EIR at Balderson Capital, independent consultant, and the author of Kellogg.

And together, we are the Metrics Brothers.

And we go together like sales and performance. Ray, I don't know if I need to help you with the analogies here. Keep going.

Well, that is very positive subliminal messaging for any sales professional in our audience, Dave.

Ah, we're into subliminal messaging now, Ray. I didn't know that. But look, far too often sales performance is in the eye of the beholder, Ray. So let's add the CFO and CEO perspective to that of the CRO.

Now that sounds like a job purpose-built for the Metrics Brothers, adding data and math behind this definition of sales performance.

Okay, so let's use one definition of sales performance. There's a lot of them out there. My favorite might actually just be bookings per seller or bookings per ramp seller, right, to make it simple. But there is a popular metric out there called sales velocity. We hit on it in the last episode, um, where we talked about the state of revenue growth report from Gong.

Okay, I love it, Dave, but before we hit maximum sales velocity, let's hear a word from our sponsor. The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Growth Wright have put the Metrics Brothers podcast on on hiatus for the remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave at Kellogg and Ray on LinkedIn at Ray Reich. Thank you so much for listening to the Metrics Brothers podcast. Okay, Dave, so I thought initially let's just talk about the definition of sales velocity. And we did talk about it last episode, but let's start with the formula. It's taking the number of opportunities that you have multiplied by the average contract value times the win rate, and then you divide that by the average sales cycle. So the result really shows the amount of new bookings per day that you can generate based upon those 4 input variables. Now, one of the things when I first heard of sales velocity, I'm like, okay, well, so something comes out and we're gonna talk about some numbers in a minute. Let's say it's $2,500 a day that you can generate based upon that equation. But is it business days or is it based upon calendar days? And the answer is, if your sales cycle is in calendar days, that's gonna be the amount of bookings that you can generate based upon each calendar day. So that's one small little kind of minuscule detail I wanted to share, Dave.

Yeah, and Ray, you keep saying kind of the word can generate here, which I just want to quibble with that, which is to me, this, especially if this is being looked at as a trailing metric, you know, like, hey, what was our sales velocity last quarter? That it's really, it's not necessarily can, it's did. But I hear you because the formula, I mean, first you did this already, but the formula is optis times ACV, which is average contract value. I call that ASP, which they got confused, but sales price. Optis times sales price times win rate divided by sales cycle length. And you made 2 points. One, the units of that equation are effectively dollars per day. You know, in first-year physics, you always calculate the speed of light in furlongs per fortnight, right? So I always go first to units. And the units here are sales per day or dollars per day. And your second point is, well, what's a day mean? And the answer is, well, the day is going to be a function of what you— if you count business days only in your average sales cycle, then this is going to be sales per business day. Otherwise, it's going to be sales per calendar day. So, I'm with you.

Yeah. Now, you made a really good point. I think it's really important. I'm talking about sales velocity as a head of sales. So, I'm looking at it from my aggregate sales resources. But you can look at this on a per-rep basis because each rep's going to have a different win rate, a different ACV typically. So it's also a way to look at each rep's historic performance on— for measure by sales velocity. But also it's a great metric for planning and forecasting. If I know what my sales velocity has been for the trailing 3 months or the trailing 12 months, Especially if I have seasonality or my Q4, I always have different sales velocity than I have in Q3 or Q1, then it's really going to help me plan for what's the potential for next quarter, Dave.

Yeah, I understand. A couple comments on that, Ray. One, you talked about being able to do it at different levels of the hierarchy, right? You can do it for the rep, you could do it for the district, you could do it for the region, you could do it for the country, you could do it for the whole company, which is correct. The other thing you talked about, which is to me even more important, is you can do it by business segment. For example, enterprise, just say you have both enterprise and corporate sales, they're going to look very different on this metric, right? The sales cycle in corporate is going to be shorter, the ACV is going to be lower, the win rate may or may not vary depending on if you have the same competition set in enterprise versus corporate, number of opportunities should be a lot higher. So, in fact, it would be kind of interesting to see how they compared across, you know, from corporate sales to enterprise sales. But even more interestingly is just to watch, hey, in corporate sales, given these parameters, our velocity is X, and in enterprise sales, it's Y. Yeah.

Now, the other thing I would say to that is this is, to me, this is my own definitions, Dave. I'd love to get your feedback. This is an effectiveness metric. It's how much bookings can I generate based upon historic performance. But with number of opportunities being in there, if I assume I can increase the number of opportunities by investing some more money, etc., it could impact some of my efficiency metrics like my CAC ratio or my CAC payback period. So all I'm going to say here is I do not believe sales velocity in and of itself should ever be used in isolation of a CAC Efficiency metric.

Got it. So it reminds me, Ray, of this school of— I'm just going to be tongue-in-cheek here— but the school of rhyming oratory. There are certain politicians who like to have this very dramatic kind of couplets and rhyming couplets in their speeches. And I, just to be somewhat jaded, I always feel like when somebody goes, this is not an efficiency metric but an effectiveness metric, my kind of bullshit detector goes off, frankly. I know we see this one differently, but, but I don't know. I mean, I know you did some work on ChatGPT, and, you know, which, you know, that plus $4 will get you a latte. Only slightly joking there. But, um, efficiency versus effectiveness, like, I guess they're different concepts, but I don't know. But if it's a metric, I don't know. Can you give me just 2 examples one more time, Ray? Give me an example of an effectiveness metric in go-to-market, and then give me an example of an efficiency metric. Let's see if I can get the difference.

Okay. Well, quota productivity. For every rep I have handed out quota, what percentage of those reps hit quota? Or if I measure it in dollars, for every dollar quota that I put out there, what percentage of that quota is going to be delivered with a new bookings number? That's how effective I am, right?

So, Dave K parlance, just to, to be difficult, I would call that attainment and realization. I always think we should look at realization the way PS people do. So, you're saying attainment, i.e., percent of reps on quota, is an effectiveness metric. You're saying realization, the percent of quota assigned that we realize, is effectiveness.

Yep.

I guess so.

And then, efficiency is I have $1 million of compensation that I'm paying to sales reps. $500,000 base salary, $500,000 to Commissions, and that generated $3 million of new bookings. Right now, I know that the 3-to-1 ratio of, you know, bookings to compensation, and to me, that's how efficient I am with my dollar spent.

Okay, we'll get back to velocity now. Like, I'm, uh, we maybe we should do an episode on effectiveness versus efficiency because, because based on our examples, I feel like it's always more efficient to be more effective. Right? Because if we have more reps on quota, I guess we're more effective, but we're also more efficient. Efficiency metrics are easy to agree on. Pipe to spend is an efficiency metric. CAC ratio is an efficiency metric, in my opinion. So I think we'd have to come back to this another day. So I'm not sure what kind of metric— you're arguing this is an effectiveness or efficiency?

Effectiveness. It has nothing to do with cost.

Oh, okay. That's an easy way to define it. Yeah. Oh, that's interesting. Oh, okay. There you go. Okay. So, so, so efficiency metrics are kind of per unit input, some output. Effectiveness.

Okay.

I'll buy that.

That's exactly what it is. But hey, you did a nice kind of model of sales velocity that we talked about last episode, but why don't you go ahead and go through that real quick, just so people can see when you change one of the input variables, how it impacts sales velocity.

Sure. Let's do that. So we're going to take the same example we did last time, which is just to say, hey, we've got 100 opties, opportunities. I want to say opties. We've got an ASP. Ray calls it ACV. I call it ASP. Sorry, we don't agree on everything. Of $50K, a win rate of 20%, and an average sales cycle, which I call ASC, of 100 days. And if you take those numbers and just multiply them, you end up with a velocity of $10,000 per day in sales. And if you look at this metric, it's kind of A times B times C in the numerator, meaning if you boost any one of A, B, and C by 20%, you're going to boost the result by 20%. So, for example, So, for example, if you take the optis up from 100 to 120, hold the ASP constant at 50, hold the win rate constant at 20%, hold the sales cycle constant at 100, then you will find a velocity of 12K sales per day. Conversely, if you boost 2 of them by 20%, you'll get a 44, like 1.2 squared, you'll get a 44% increase in productivity. So, for example, if we took optis from 100 to 120, and if we took sales cycle from 50 to 60, but held win rate and sales cycle constant, You'll get 14.4K sales per day. There's a little subtlety with the division part of it, which is if we reduce the denominator by 20%, it actually will increase it by 25, right? Because 1 divided by 0.8 is 12.5 or 1.25. So you actually have to drop it by slightly less. So if you drop the sales cycle to 83 days, so after uplift it's 100, then you would get a 20% boost if you held the other 3 variables constant. And I think, you know, the thing that gets people excited here and the seductive part of this, as we talked about last time, is, ooh, ooh, what if I could increase each by 20%? So I could get 120 opties instead of 100. I could have an ASP of $60K instead of $50K. If I could win 24% instead of 20%, and if I could cut my sales cycle from 183 days, what would my velocity be? Answer, 20.8. sales per day, i.e., 108% improvement. So you've more than doubled sales per day. And that's where this stuff gets both seductive and dangerous. Back to you, Ray.

Exactly, because that's where the FP&A, you know, analyst came to me and said, hey, Ray, I modeled this out. All you need to do is increase your win rate by 20% and increase your ASP, and we're going to double our capacity. But that's what I really want to talk about, because as a former Leader of sales, I really like to not focus on the compound metrics in my day-to-day operating decisions. I present those to the board, but I want to focus on those input variables. And for this one, it's really which variable do I think I can impact the quickest and what's at what level. And I choose win rate as the first sales velocity input metric. I'm going to work on. Number one, I can just make sure I have a more well-structured and followed stage-by-stage sales process. So, I'm spending more time on those opportunities that are truly qualified. So, I can do that pretty quickly. I then, by having those gates of going from stage to stage, every company I ever walked into, Dave, I could increase win rate. by anywhere from 4 to 6 points within 90 to 180 days. So, I say take win rate and have a goal to increase that by at least 10 to 20% in 1 to 2 quarters. What say you?

Yeah. So, just be careful with it, Ray, because if you use the hack approach to increasing win rate, like excluding more of the deals we lost, win rate went up, right? So, instead of saying we had 100 opties, but 10 were really junk and didn't belong in there, so we only had 90. Right, I kind of redefine opti. Maybe I'm enforcing our existing stage 2 definition, but, but just be careful there because you can't increase win rate by cutting optis. I mean, look, you may need to if you've got opportunities that are not demonstrably compliant with your stage 2 definition, you need to cut them, and hopefully your win rate will go up, right? Just mathematically, like excluding the 10 that weren't actually optis, we closed n% of the remaining 90. The n The end percent will change, but the number of deals you close will not, right? But to me, it's important that when you improve one of these metrics that you're holding the other ones constant. And if the way you improve win rate is not by winning more, but just by cutting more opties and saying, nah, those 30 weren't opties in the first place, you may have a better sales velocity, but you're not going to have more sales. Yeah, actually, that is— Yeah, you won't have a better sales velocity because you're cutting the number of opties. You're going to have the same sales velocity and less sales. No, and the same sales. Go ahead.

Yeah, my number one caution is if you're looking at qualified opportunities for the win rate at stage 2, if you maturely reduce the number— maturely— if you reduce the number of stage 2 opportunities at all, then you've defeated the purpose here. So, I totally agree.

Yeah, just to be clear because it's a little confusing, Ray. Because look, you need to do that. But you're doing that because it's the right thing to do, right? Like if half of your stage 2 opties don't meet your criteria, for stage 2, then you have to cut them. But I wouldn't go celebrate a big increase in win rate, right? That's all, right? But, but so I don't want to prevent people from doing the right thing. But when you say increase win rate, you mean kind of ceteris paribus, all other variables equal, being equal, being the same, we win more of those deals. That's the way to increase win rate. And you typically do it through training, competitive analysis, sales process, sales playbooks, yada yada.

Yeah.

Yeah.

And then the second thing that I do, and I sometimes would have done this simultaneously, I'm like, I think we can increase your average contract value or in your parlance, ASP, right? Because the way to do that is number one, just have really strict discount guidelines. And if you're in a larger enterprise company, you can have a deal desk, right? That they review any discounts over a certain amount. I also have always done this, and I would look at our pricing, I would do the competitive analysis, and I would increase the MSRP on our pricing for new customers because it allowed me to still give the customer the feel of the— I got my X percent discount, but I still increased the actual realized price for us. And I'd usually combine that with some Enhanced value-based selling techniques. And I actually found, once again, in 2 quarters, I could increase the average contract value by anywhere from 10% to 20%. And that dramatically increases sales velocity. What do you think of that one?

Well, uh, look, look, it's back to another opportunity to shoot your foot off, which is if you, you know, reduce discounts to zero, you can feel great about having lower discount volumes. You can think feel great about having higher deals. You just might not have as many of them, right? So you're going to lose a ton of deals because they said, Ray, I can only buy it at 80, not at 100. You say, nope, I'm trying to increase my ASP. We're holding at 100. So you lose the deal, right? So, so this playing with this formula is a little dangerous, right? If you increase win rate by dequalifying opportunities, then you need to build backfill those missing opportunities with real opties so you can get more sales. If you're going to increase ASV, You better do it without losing deals, right? Without driving the win rate down, because then again, you're shooting yourself in the foot. Personally, and this may surprise you, Ray, for somebody who's pretty quantitative, I have always hated discounting and discount analysis because I just want to win the deal and I'm paying a salesperson to figure out at what price we can do that. So, unless I have reason to believe that seller is extremely sloppy, I tend to believe them. If the customer says they can only do it at 80, I'm not going to win any negotiation prizes here, but I hate losing on price. Right. So, so I don't know how you react to that. When you've tried to put in strict discounting, do you find yourself losing more, Ray?

The answer is no, because I typically did it along with a higher price. So the price point remained the same. And to be fair, I guess I got my regional managers or frontline sales managers to be incented with maintaining certain discount rates. And they got pretty good at getting involved in the deals and maintaining the win rate.

By the way, Ray made a super important point there, which is as you sell to bigger and bigger companies, there are people in procurement whose job it is to get a 20% discount. So you are far, far better off just charging 20% more and giving it back to the purchasing agent so they can declare victory than you are trying to charge 100 and not do discounts. And that's something you learn as you come up from SMB into mid-market and enterprise.

And now, important point, you gotta of course continuously monitor your sales velocity and your other performance metrics. So if you do these things, right, if you are having decreased sales velocity, it's not working. But I picked those 2 based upon experience, and my own personal experience was trying to compress cycle time, especially with large buying committees. And in today's environment, in 2025, It's much harder for the sales organization to really say they have a whole lot of control on sales cycle time. You can have all those i's dotted and t's crossed on the sales process, but you're still not always going to change buyer committee velocity.

Yeah, I agree, Ray. It's, it's, I think it's the hardest of the 4 to change. You know, there are some things you can do to change it. To me, it usually involves compressing the proof of concept phase. So say your company started as a startup and you got in the habit of doing custom POCs for people. Over time, you might be able to replace that with a demo. And it will seem like heresy to the people who've been there because like, no, we always had to sell it doing this deep POC. Yeah, it's because you were a 20-person startup and people were terrified of buying from you. But by the time you're a $100 million company, you know, you could just say, hey, we've got 15 other references in your industry solving this problem. I'm not going to go prove it to you. Right. And that's a maturity thing that is very hard for some people at startups to realize.

Yeah.

'Cause they get caught in the habit of doing things. Like back when I started Ray, it was benchmarks. If you wanted to sell a relational database, you had to go run a benchmark. And benchmarks are big, hard, and expensive. And over time, I remember a VP came into the company one day and said, this is stupid. Why are we doing benchmarks? And I'm like, what? 'Cause we always do benchmarks. And his answer was, but what is the customer trying to figure out? If we're fast enough? Well, we've got 15 other customers with a higher volume than they do. Like, why are we doing a benchmark? So, so sometimes that, those are where you get the big wins in my mind. If you could take some big rock out of your sales cycle, then you could do it. Otherwise, hard.

I agree. And I always like to take the big rock that I call procurement out, but that's hard to do.

Okay. They like to be in, right?

The last one that, as you know, taking the head of sales approach, and I didn't say you should do this immediately, and that's increasing the number of opportunities because I equate increasing number of opportunities with increasing pipeline. Which means either I'm pushing harder on marketing or the SDR team, and I'm typically asking for a little bit more money. Hey, we need 20% more oppies, opties. And if it's costing $1,000 per, I need to spend $20,000 more. So that's why I don't use that as my first approach. As a former head of marketing, what do you think of that?

Well, it all depends, Ray. To me, it depends on your win rate. I've recently worked with a customer that had like a 30 to 40% win rate. And they were having trouble hitting plan. And in that case, it's like, guys, you're not gonna be able to improve your win rate that much. You know, you, you got a pretty high one. Your problem is you don't have enough opties. So as sellers like to say, we don't have enough at-bats. I can get on base, just give me more at-bats. So, so if that's true objectively, then I'm all in favor of it. And as you know, Ray, there's more than one way to generate an optie. You could bang on the AEs to spend more time prospecting. You could push the Help out SDRs to sell more. Alliances is the most underused way of getting more opties. You can start a partners program, typically co-sell with RSIs. Or of course, you can rely on our friends in marketing, who— marketing is beautiful because they tend to be able to tell you what an optie costs. So, you say, if they cost me $4K each, Ray, how many do you want? Yeah, okay, you want 50? Great, give me $200K and I'll get you 50 more.

Agreed. But then, that's where kind of when I think about my efficiency metrics, right? I could be impacting my CAC ratio, etc., if we spend another $40,000 or $400,000.

So please God, tell me you're not the kind of VP of Sales, Ray, who'd rather miss his number and have a good CAC.

Um, that would be— that would be called your former VP.

Yeah, yeah, you don't want to be that. Go ask for the money, right? Far better to make the number and get beat up on efficiency. And by the way, at least you can sell the future then, because those— that $50K is going to be for next quarter opties. All right. So, hey, I'm saving next quarter. This quarter we were great.

I like that you called me on that. So, hey, I think we should kind of wrap up here and do a summary on sales velocity. So first of all, you know, sales velocity is really a good metric to see how historically you've been performing, to see if you're on track to making next quarter's number. Right. So that's one good way of using it. And it's also a pretty good way. If I look at my sales velocity for the trailing 3 and 12 months, It helps me kind of do my 20— the next year fiscal plan. Hey, with this many reps, I can get this much. I'm being asked to do 80% more. So how many more reps do I need to hire? So I think it's really good for capacity planning, Dave.

Okay. I mean, I prefer just building a bookings capacity model, but, but, but look, I don't love sales velocity. I don't think you do either. I think you're being nice and giving it your best shot. I think it's a metric we needed to cover here because you will hear about it. If you're a professional sales and marketer and go-to-market in SaaS, every once in a while you're going to hear about sales velocity. The most often I ever heard about it was in sales training where they'd start the course, be going, these are the 4 ingredients to hitting your number. And we're going to talk about how you as a seller can get more opt-ins, how you can improve your win rate. I like it for sales training. I don't really use it as an operational metric, but, but I think it was worth the episode.

Yeah. I've never used it as an operational metric either. So I had to do a lot of research. I had to do a lot of kind of new thinking, but I would— the thing I did come out with was even if I was being forced to use it, I would partner it with my favorite efficiency metric called CAC ratio.

Okay, well, we'll see you next time, Ray. Thanks.

Okay, thanks, Dave.

The Metrics Brothers AI, SaaS, and More is a production of The Metrics Brothers Growth and CAC and a member of the Benchmarkit Podcast Network. By accessing this podcast, you acknowledge that The Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray, information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional, or for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising out of any use of, or God help you, relies upon the information presented here. Ray Grothreich is based in New York City and available on X @rayreich. Dave Kellogg is based in Silicon Valley and available on X @kelblog. Schedectady, which is French for unspellable, is not our actual production location. Thanks for listening.