When you’re using a bow to fire an arrow, the velocity is bound to influence whether or not it hits the target. The same is true when it comes to B2B sales and marketing. Let’s take a look at why LVR is just as important as other popular metrics like LTV, CAC, and churn rates!
What is Lead Velocity Rate (LVR)?
Put simply, the lead velocity rate measures the growth of qualified leads from one month to the next. This makes it a very reliable metric for predicting the future revenue of a company since it’s often unaffected by external factors like seasonality or team quality.
How to Calculate Lead Velocity Rates
To calculate your lead velocity rate, you need to take the current number of qualified leads and deduct the total number of qualified leads from the previous month. You’ll then divide that figure by the number of qualified leads from last month and multiply by 100.
If $1 million worth of qualified leads enters your pipeline this month and $1.1 million the next month then your LVR is 10% MoM. You can use HubSpot’s graphic calculator to get your lead velocity rate.
Lead Velocity vs Sales Velocity
The key difference between lead velocity and sales velocity is one focuses on growth while the other focuses on speed. Lead velocity measures the growth of how many leads come through your pipeline while sales velocity focuses on how fast they move through the process and convert.
Why Tracking Your Lead Velocity Rate is Important
In an ideal world, your sales will always grow at a pace consistent with your lead velocity rate. If sales are growing slower than your LVR indicates it should then that means there’s a problem with either your team or the product itself.
In this way, the lead velocity rate serves as an early warning indicator that something is off so you can find the solution before you lose more leads. There are other red flags like high churn rates or a drop in customer lifetime value (LTV) but they usually come too late when the damage has already been done.
It’s important to realize that there is some pipeline lag in play so your monthly recurring revenue (MRR) growth might not reflect the current lead velocity rate immediately. Just keep optimizing your funnel strategy and you’ll get there in no time.
If your leads haven’t been converting then it’s probably time to rethink your sales process. Book a live demo or free trial today to see how webinars drive leads through the funnel at a faster rate and get you more conversions in no time!