What is Lead Velocity and How Can It Help My Business?

August 19, 2022

I once worked a job where my sole responsibility was to make 100 calls per day.

That's right, one hundred calls per day, five days weekly. I stuck it out for about ten months before I couldn't take it anymore! The goal for every call that I made was to determine if the person I was calling was suitable as a lead for the rest of the sales team. I was essentially "cleaning" the leads to ensure they were qualified.

The life of a Sales Development Rep (SDR) can feel genuinely miserable.

If there were a better format for measuring the quality of leads generated by the business, it would've saved me hours on the phone. It could've created more revenue, been more precise, and helped the company grow!

That's why your Lead Velocity Rate is so essential for growing businesses.

What is Lead Velocity Rate?

Lead Velocity Rate (LVR for short) is a measurement of the number of qualified leads generated by your business over a certain period. It best boils down to measuring the effectiveness of your marketing efforts in developing qualified inquiries in your business.

LVR is typically measured in a percentage because it's viewed as a growth or shrinkage measurement. To calculate your business's Lead Velocity Rate, you can follow a straightforward formula:

(Number of Leads Generated This Month - Number of Leads Generated Last Month) / Number of Leads Generated Last Month

So, if my business generated 15 qualified leads this month and ten qualified leads last month, my lead velocity would be .5, or 50%. I've grown the number of leads my business is creating month over month by 50%! If this kind of growth continues over several months, it shows that my marketing efforts are performing exceedingly well.

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How Can Lead Velocity Rate Help My Business?

Follow-up question: why would an accounting firm like ours write or make videos about Lead Velocity Rate in the first place?

One of the most challenging factors for any business to predict is revenue, the amount of income you create during any given period. Revenue is complicated to predict in service businesses because most services are one-offs unless you bill monthly.

By analyzing our Lead Velocity Rate and the rate at which the company turns leads into new customers, we can more accurately predict and make revenue assumptions.

For example, let's assume that your business generates 100 leads per month. You close an average of 20% of the leads that come into your business with a contract size of about $5,000 per customer. That means that, on average, your business is creating $100,000 per month (20 new customers x $5,000 per contract). If your LVR is growing at a steady rate of 10% each month, you can also make assumptions about your revenue growth. During one month, you'll sign new customers worth $110,000 (22 new customers x $5,000 per contract). The following month, you'll hit $121,00 and so on.

LVR can be a handy tool in measuring the effectiveness of your marketing and can help to transform your business profoundly!

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Jeremy Millar
Written by:
Jeremy Millar

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