Lead Velocity

Introduction

The Lead Velocity Metric (LVM) is a vital key performance indicator for businesses, especially in the realms of sales and marketing. It measures the growth in qualified leads over time, providing insights into the future revenue potential of a company.

What is Lead Velocity Metric?

LVM quantitatively assesses the increase or decrease in the number of qualified leads month over month. Qualified leads refer to potential customers who have shown a significant interest in a company’s product or service and fit the target customer profile.

Formula for LVM

To calculate the Lead Velocity Metric, use the following formula:

LVM = (Number of Qualified Leads in Current Month – Number of Qualified Leads in Previous Month) / Number of Qualified Leads in Previous Month * 100

This formula gives the percentage growth rate of qualified leads from one month to the next, helping businesses predict future sales performance.

Importance of LVM

LVM is crucial because it:

• Provides a forward-looking indicator of revenue growth.
• Helps in assessing the effectiveness of marketing campaigns.
• Supports sales team planning by indicating the pipeline health.
• Enables better allocation of resources to areas with higher growth potential.

Examples for Better Understanding

Example 1: Positive Growth

Imagine Company A had 200 qualified leads in March and 250 in April. Using the LVM formula:

LVM = (250 – 200) / 200 * 100 = 25%

This indicates a 25% growth in qualified leads from March to April, suggesting an upward trend in potential future sales.

Example 2: Negative Growth

Conversely, if Company B had 300 qualified leads in January and 270 in February:

LVM = (270 – 300) / 300 * 100 = -10%

This shows a 10% decrease in qualified leads from January to February, signaling a potential dip in future sales and the need for strategic adjustments.

Example 3: Steady Growth

Suppose Company C had 150 qualified leads in June and 150 in July:

LVM = (150 – 150) / 150 * 100 = 0%

This indicates no growth or decline in qualified leads, suggesting a steady but stagnant pipeline.

Conclusion

Lead Velocity Metric is an indispensable tool for businesses aiming to gauge their lead generation efforts’ effectiveness and predict future revenue trends. Regularly tracking LVM helps in making informed decisions, optimizing marketing strategies, and ensuring the health of the sales pipeline. By understanding and applying LVM, companies can navigate their growth trajectory more effectively.