Lead Velocity: Why It Matters, What to Measure & How to Boost

DES-556-Blog-Post-graphic_lead-velocity_v0.2Lead (or data) velocity is a marketing metric that’s quickly gaining popularity among Marketing Ops and Demand Gen practitioners. And it’s understandable why. Lead velocity is a gauge of several fundamental marketing objectives: sales-marketing alignment, customer experience and marketing-attributed revenue.

We’ll get into much more specific definitions and how to measure velocity later in this post.  At a high level, lead velocity is about speed (e.g., the time it takes for a generated contact to become sales-qualified lead) and conversions rates (the percentage of leads that convert through various points in the customer acquisition funnel).

Why Velocity Matters

Poor customer experience

Velocity can be both a symptom and a cause of bad customer experience. If the speed with which your contacts are making their way through the customer acquisition funnel is slowing or the number of those contacts in various stages is decreasing, it likely signifies a customer experience failure of some sort.Your content, engagement strategies, workflows – or any number of things – may be off. Velocity helps to uncover failing efforts and where added focus may improve prospect experience and customer acquisition.

On the other hand, velocity may be strained due to operational issues, such as unstandardized data formats or taking too long to upload contacts into nurture tracks. This in effect deprives prospects of getting the info they want when they want it, and decreases the likelihood of conversion.

Marketing-sales misalignment

Slow velocity hurts marketing’s credibility and relationship with sales. And since one of Marketing Ops’ key focuses is to align marketing efforts with sales’ goals, this relationship shouldn’t be taken lightly by Ops practitioners. Sales reps want good, interested leads. And they want them at volume.

A high velocity ensures that sales gets what they want from marketing, and this is typically reciprocated through actionable feedback that marketing can use to adjust initiatives and improve results.

Impact on revenue

The above two points mean fewer new customers, less marketing-attributed revenue and quite possibly a diminished role for both Marketing Ops and Demand Gen teams.

New Call-to-action

Defining “Lead Velocity”

In recent years numerous articles have proposed various ways to calculate velocity. None of them are right or wrong, but after reviewing many and testing additional methods, I’ve found common “schools of thought” and where they prove most helpful.

The “School of Speed”

This is the easiest, most literal definition of velocity: the time it takes for a lead/contact to get through the various stages of the buying cycle. For example, the time that elapses between when a media partner’s generation of a lead and when it’s imported into the marketer’s automation system. Or, the time it takes a marketing-qualified lead (MQL) to become a sales-accepted lead (SAL).

You can calculate in sections or the entire buying cycle; but the metric is “elapsed time” and the lower the figure, the better. This definition tends to be more important for B2B orgs, which have much longer sales cycles and decreasing these cycles is a key objective of both marketing and sales efforts.

The “School of Conversions”

In this calculation it’s all about the volume of leads that convert compared to a previous month or quarter. The percentage increase in conversions is the velocity rate. So, the higher the percentage, the better.

For example, if you have 200 contacts convert to MQLs this month and you only had 150 convert last month, your velocity rate would be 33%, because your number of conversion increased by 50, which is 33% of last month’s 150 total.

B2C orgs are typically more concerned with conversion rates than speed, so this definition is usually more relevant to their needs. But that’s not to say that B2B orgs don’t care about conversion rates, which is why the next calculation is likely the most important…

The “The Hybrid School”

The final definition of velocity mixes the previous two outlined above, combining both speed and conversion rates. As such, it’s likely the most helpful calculation for most B2B organizations. Moreover, it’s easily broken down in sub-metrics to pinpoint the extent of various areas of failure.

This is one way to calculate a hybrid velocity:

[(# of qualified leads in current month) minus (# of qualified leads in previous month)] divided by (# of qualified leads in previous month) x 100. 

This figure is then divided by the average time elapsed during that conversion processes. For example, we’ll use the time elapsed between contact capture and conversion to sales accepted lead (SAL).

LeadVelocityequation

Using this equation, your velocity calculations might look something like this:
  • (200 SALs in current month – 150 SALs previous month) ÷ 150 x 100 = 33%

   33% ÷20 days = 1.65 would be your velocity figure here.

  • If you cut elapsed time in half but remained at 33% conversion the following month, your velocity would still double to 3.3.  
  33% ÷ 10 days = 3.3
  • Or you may have generated 300 SALs the following month, doubling conversions (100%). And let’s say the average time elapsed also doubled to 40 days.

  100% ÷40 = 2.5

(Note – if your conversion rate actually decreases from the previous month, it’ll throw off the calculation. This is one reason to always keep track of the conversion rates and speed separately in addition to the hybrid calculation. It’s also just good to know the individual factors that contribute to your monthly or quarterly calculation.)

Think of the hybrid formula like baseball’s “OPS” stat (On-Base Percentage Plus Slugging Average) – you always want to know conversion rates and speed between conversions as individual statistics, but having them in a singular figure makes for quicker, more well-rounded comparisons between campaigns, leads sources, quarterly programs, and even stages of the buy cycle.

Common Causes of Slow Velocity

1. Undefined objectives – Customer acquisition is a relay race with many legs spanning numerous teams and departments. If these teams don’t agree on when or how a lead should be handed off, velocity slows dramatically.

Solution – Focus on frequent communication. In my experience, two tactics do a remarkable job in achieving this: (1) Weekly sales-marketing calls to review pipeline and program data and (2) Regularly being involved on sales calls with prospects.

2. Numerous, disjointed lead sources and unstandardized data – Third-party data sources, media partners, trade shows, webinars, etc. are all used by demand marketers to acquire data on prospective customers. This diversification is great except for when the time comes to consolidate and import data into customer engagement systems (marketing automation or CRM).

Left decentralized, it’s not uncommon for time between initial data capture and MA/CRM importation to extend longer than ten days – that’s long enough for prospects to lose interest in products/services or engage with a competitor.

SolutionThe key to solving this issue is consolidating diverse sources into a single location and insist on standard data formats. This first requires an understanding of where and how prospect data sources converge. With this understanding, you’ll then be able to focus on creating data formatting standards and streamlined workflows to get data into nurture tracks in a timely manner, which then leads to higher, faster conversion rates.

3. Unstandardized processes – This often goes hand in hand with data, but it’s important to highlight in its own right. Processes left unstandardized result in many redundant, manual efforts, such as multiple handoffs between your staff and data providers or normalizing lead files for importation into marketing automation systems. Most Demand Gen marketers still have unique processes for each media provider they work with, which backs up how quickly leads can be re-engaged to convert.

Solution – Connect your systems. Integrating systems that capture, refine, leverage and analyze customer data eliminates a ton of manual processes that waste resources, hurt customer experience and prevent growth. Most marketers have integrations between their marketing automation and CRM systems, but these technologies are often still disconnected from third-party prospect data sources, which allows them to remain disjointed and procedurally dissimilar. Ensuring a smooth, automated flow of data all the way up the funnel to prospect data capture eliminates bottlenecks that slow velocity and allow prospect interest to wane (i.e., bad customer experience).

Lead velocity is critical metric for all demand-focused marketers. By understanding its impact, how to measure it, and most importantly, how to improve it, you can make a material difference on marketing’s contribution to customer growth.  And, your customers will thank you for an improved customer experience.

subscribe-to-integrate-blog

 

Comments

Tips & Insights To Help You Overcome Demand Marketing Challenges

Subscribe to get insights delivered directly to your inbox.