Why Should Financial Services Firms Care About Pipeline Velocity?

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When it comes to financial services, nailing your sales process—especially your forecasting—might feel challenging. Financial Services is a field that is constantly changing, and figuring out what data actually gives you insight into your sales team's performance (as well as how to best shape a sales strategy) might feel difficult to grasp. If there's one metric you should be paying attention to, however, that's your pipeline velocity. This key metric can help you understand how your sales team is doing, and how you can boost data-driven sales.

What is pipeline velocity?

Just like regular velocity, pipeline velocity measures the rate at which your leads move through the sales pipeline. Pipeline velocity gives you insight into how much revenue you bring through the sales pipeline over a certain period of time (i.e. a day, a month, etc.) You can optimize your pipeline velocity by increasing your close rates for new clients, or by increasing wallet share from existing clients.

To calculate pipeline velocity, you use an equation. Simply multiply the number of qualified leads in your pipeline, the average amount of dollars each lead brings in, and the overall win rate percentage of your sales team. Then, divide this number by the length of your typical sales cycle, either in days or months (or whatever time period is most applicable to your business). For example, let's say you have 50 qualified leads in your pipeline, each lead brings in $1,000 (on average), your sales team has an overall 20% win rate, and it usually takes 28 days for your team to close a deal. You'd multiply 50x1000x.2, which gives you 10,000, then divide that all by 28- which gives you 357.14. This means your pipeline velocity is $347.14 per day.

One great thing about pipeline velocity is, that if you're using a good CRM (you should be!), you should already have access to these numbers, and you should be able to monitor your pipeline velocity easily. 

Pipeline velocity is such an important metric for sales enablement because it gives an accurate measure of how well your sales team is doing now, and whether their efforts are paying off—or whether they're costing the company.

How you can increase sales pipeline velocity for financial services?

Pipeline velocity gives you a tangible, measurable number that your sales team can work to improve. Improvement in your pipeline velocity means that you're experiencing revenue growth! Any business should want to increase its pipeline velocity, so they can ensure they're generating the highest return from their sales efforts and able to finance other areas of their business, such as marketing and customer service, to fuel more growth. 

Improve your marketing

One way to improve pipeline velocity is to increase the quality of leads you bring in. If you want to increase the number of good leads you have in your pipeline, you'll most likely have to improve your inbound marketing efforts. To better target the RIGHT clients, ensure you're using personalized marketing approaches and content targeted at your specific buyer personas, rather than taking a "spray and pray approach." Optimize marketing via your website, social media platforms, email newsletters, and more. Sometimes, it takes investing more money into marketing to see marketing efforts bring in more money.

Increase your close rates

You can also try to increase your close rates. This means getting more people all the way from the start of the pipeline to the finish. To increase your close rates, take a close look at your sales processes to see where they are not working. Throughout your sales process, you should be convincing your customer that it's easier and better to spend money working with you—and not with a competitor. Your lead has shown interest, now show them why you're the best choice.

Make sure you get the right clients with the right products and services

Try to get more money out of each paying customer. Rather than trying to upsell or cross-sell once you've already brought in a client, a good way to get customers to spend more money is to ensure that you've matched them with the right products and services from the get-go. If your services directly meet their needs, they'll be more willing to be returning, loyal customers, and willing to buy the offering that's just right for them.

Shorten the sales cycle

Can you speed up the time it takes to move someone from lead to customer? Shortening your sales cycle will increase your pipeline velocity. To shorten the cycle, make sure you are informative, clear, impressive, and educational at every step in the process. This can eliminate excess, unnecessary steps that lengthen the process, like gratuitous meetings, redundant communication, and the sharing of resources that don't actually include as much helpful information as they could.

More info on pipeline velocity for financial services

To learn more about pipeline velocity for financial services businesses, check out the following helpful resources:

Alternatively, if you want more customized help building a sales pipeline, reach out to Learners.ai today. We can help you with your sales process—and then align marketing, sales, and customer service so that your business can be streamlined in a way that makes customers come back for more—and enables you to grow. Contact us to book a consultation today.