Christi gave this presentation at SEC’s Sales Enablement Festival in May 2021.
Introduction
My name is Christi Loucks, I’m the Head of Revenue Enablement at SecZetta, where we ensure that organizations have the data they need to make well-informed, risk-based, access decisions.
I worked in sales enablement for six years and over those years, I've had a range of responsibilities. I’ve been involved in everything, from building programmes from scratch, to managing both technical and partner enablement, to creating external customer training and certification programmes.
On a personal note, I've lived in Denver, Colorado for 10 years, but I'm originally from St. Louis, Missouri (Go Cardinals!).
My favourite hobby is running, and I've completed over 25 half marathons and three full marathons. I'm not fast by any means, but I do very much enjoy it, because it allows me to have as many margaritas and tortilla chips as I want!
Sales Enablement Metrics
Today, however, I’m talking about sales enablement metrics, not running. To begin, I have a quick story.
When I first started out in sales enablement, the CEO of my company walked over to my desk, sat down on the corner and said to me: “So Christi, how are you going to measure this?”.
Of course I, brand new in sales enablement, meekly responded with: “Umm…quota attainment?”
I remember what happened next vividly. He took my mouse, grabbed my laptop, and started building a presentation on my computer on how I needed to be measuring enablement. It was kind of terrifying.
I don't remember exactly what he created on my laptop, but the point that stuck with me is this: metrics matter.
The C-Suite cares. Executives care. Leaders care. Investors care. As enablement practitioners, we've got to make that a priority as a result.
There are a lot of thoughts and opinions out there on how to measure sales enablement, and I'm going to throw out a potentially unpopular opinion and say that some of them are kind of BS.
We can measure sales enablement metrics like training sessions or courses completed, tool and system usage, maybe content that we create alongside marketing, but all that's doing is quantifying our activities, not necessarily the result.
The only result that matters is revenue. Did you hit your numbers?
So why would we claim success when we're actually just quantifying our enablement busyness?
We can also look at sales metrics, and I'm sure everyone reading is very familiar with the list above. You're probably measuring some or most of these items already.
But here's the underlying, BS problem with these numbers. There are so many factors that go into sales performance, and so many elements that impact a seller's success.
For example, what about a rep's territory? Has it already been built out? What about competitors in the space? Are they concentrated in a certain region? What about the lucky reps who walk into a new company and into opportunities that are just a few steps away from the finish line?
It's almost impossible to claim that ‘we have the most amazing sales enablement programme and that's why we're hitting our numbers’, I’d say.
So that begs the question: what are we to do? How do we know that our activities are actually truly impacting revenue?
The Sales Velocity Equation
This is where I get started to get excited, the sales velocity equation. Full disclosure, I can't take credit for this idea.
One, I didn't come up with the equation. And two, it was actually one of my former employees on my enablement team that had the idea to track our efforts this way. He even had to convince me up front.
Eventually, I came to find that the approach was brilliant, and I do think that all practitioners need to know about this approach.
So what is sales velocity?
It's a combination of four different factors:
- The number of opportunities
- The average deal size
- Your win rate
- Your average deal cycle
You multiply the first three together, and then divide by the fourth. This spits out a number which we call revenue pulled in over a period of time, whether that's months, weeks, days. Whatever you're using for that denominator for the deal cycle.
You can calculate this a couple of different ways. You can calculate sales velocity at the organisational level, using aggregate data from all of your sellers, or you can do it by individual seller, by territory, by region, however you want to slice and dice it.
It’s up to your business to use the equation in the right way to find the insights you're looking to get.
Why each sales velocity equation number matters
To explain this a little bit more, I want to look at the equation using elements other than sales numbers.
We are going to replace everything in the equation with the ingredients needed to make a margarita. You've got limes, Cointreau or Grand Marnier, or whatever core of your choosing, tequila, and sugar.
If you have a nice, well balanced equation, with appropriate levels of each ingredient, you get a delicious margarita. But we know life doesn't always work that way.
Let's say you're making a margarita. You're feeling good, because it's Cinco de Mayo, and you put in four shots of tequila.
You're ready to have a good time. You're going to have a giant margarita, it’ll be delicious, but it will knock you down in 10 minutes flat and leave your head dropping for two days.
Now let's say you go to make another margarita the next week, but you have some PTSD from the giant margarita that you made.
This time you go to make one and you only put in a little bit of tequila, and you add more sugar to cut through the alcohol because you're scared and you don't want to be hungover.
Now you have a teeny tiny margarita that will spike your insulin levels like crazy.
How does this relate to the various metrics that make up the sales velocity equation matter? Well, you can have a giant margarita, which is fantastic. But maybe one element is skewed.
A seller may have a high sales velocity score, but it might be due to one extreme metric. It's important to understand why their score is that high.
On the other hand, there may be some bottleneck at an organizational level that's blocking your kind of aggregate sales velocity from increasing and you need to understand what that is.
So why does this matter to sales enablement? The sales velocity equation gives us, as sales enablement practitioners, insight into where to focus our efforts to increase velocity and thus increase sales.
We have to look out for the patterns that emerge over time at both the organizational level and the individual level or team level, to really understand what we can do to increase the speed at which we bring in revenue.
So let’s dig into the equation. Let's say we see sales velocity declining quarter over quarter, and we need to dig into elements that have changed. What do we do?
Number of opportunities
So we first take a look at the number of opportunities. Did that figure decline? Do we need to work on tactics for prospecting and building pipeline?
What about our outbound messaging? What's going on in terms of getting more opportunities or not getting more opportunities? What can we do to mitigate that?
Average deal size
After examining the number of opportunities, we can take a look at the average deal size. Did that decline? And if it did, why did that decline?
Do we need to focus on pricing conversations? Do we need to talk more with our sellers about negotiating on value?
How are we handling upsell and cross-sell opportunities? What do we need to improve there?
Win rate
Regarding win rate; if that's declining perhaps we need a training effort centred on competitive positioning.
Maybe we need to look to see if we're talking to the right people and getting to the right buyers. Are we actually aligned to the right executive priorities within our customers and prospects?
Average deal cycle length
When it comes to deal cycles, are they increasing? This is a factor which would make the sales velocity go down.
Do we need to look into our sales processes? Are there bottlenecks that various tools or systems might be able to fix internally?
Do we need to better define go-forward action plans with our customers? What's causing our deal cycle to increase or to not decrease?
Sales Velocity example
You can see how analysing and defining these trends over time helps inform us of where we should hone our enablement activities, and that alignment is ultimately what informs us on whether or not we're making an impact.
So as much as I love margaritas and tequila, I do want to add in some numbers as an example. I think this will illustrate the power of sales velocity and the impact we really can make in enablement. Let's look at the scenario above and pretend that this is the current situation at our company.
Based on these very random arbitrary numbers, we have a sales velocity of 56, meaning we bring in revenue at a speed of $56 per day.
Imagine we really focus our enablement efforts over the course of the year with various programmes and tools, and we're able to increase each of the numerators by 10%. In a similar fashion, we’re able to decrease the denominator by 10%.
These aren't necessarily huge increases overall, but look at what it does to our sales velocity above. It increases it by 46%.
Now, we bring in revenue at a speed of $82 a day compared to $56 a day. By just slightly improving each element of this equation, we can make a huge impact on revenue.
Important notes on sales velocity
Hopefully now the concept of the sales velocity equation is clear, but before you go and create your own sales velocity report, there are a few important points that I want to make.
1) It’s only one data point, not the data point
Sales velocity is a data point. It is not the data point.
It's an indicator of health and your seller's behaviour, but ultimately success is hitting the number always, full stop.
Sales velocity can sit alongside revenue goals, quota attainment, customer acquisition cost, and so on. It's important to look at the entire picture as you're assessing the health and performance of your team.
Sometimes the sales velocity equation doesn't match up one-to-one with quota attainment. So your top performers on quota attainment, or total revenue brought in, may actually not match up with the top sales velocity scores, which is really interesting and something to pay attention to.
As an example of what I just experienced, one of the top sales velocity scores at my current company is a fairly young, but very solid account executive who does a tonne of small deals.
As a result, he doesn't bring in the most revenue but he's really, really good at closing smaller, frequent, maybe more transactional deals.
Now that I see that, I'm going to feature him on our internal enablement podcast, because I want him to give us all insights on how he effectively moves deals through the cycle and keeps such a low deal cycle time in the hopes that other sellers can take away some tips and tricks for their own opportunities.
So sales velocity gives enablement practitioners insights, so that we can coach and adjust our programmes and training accordingly. It shows us where we can make a difference, how we can influence the metrics that ultimately lead to success. But it's not meant to be the metric of success.
2) It’s only as good as your data
We all know the famous adage ‘garbage in, garbage out’.
If your CRM data isn't clean, your sales velocity score will not reflect an accurate picture.
CRM data hygiene is absolutely crucial to gaining the right insights from the sales velocity equation. So the moral of this story is, if you don't have clean data, clean it up as soon as possible.
3) It must be reviewed over time
The power behind sales velocity comes when it's reviewed over time. As a standalone metric, sales velocity actually doesn't tell us that much. It tells us how fast we are bringing in revenue.
That actually doesn't really matter until we see if we're improving in that area or not. So it's important to build cadences into your calendar for reviewing sales velocity, whether that's monthly, quarterly, or annually.
I'd recommend you do it more than annually, but just make sure that you have a picture over time.
4) It requires alignment with SalesOps
This whole process really requires close alignment with SalesOps or DevOps, whatever you call the operations team at your organization.
You've got to work closely with SalesOps to ensure that your data is accurate. I rely entirely on our Ops team to pull in the data into a report or dashboard for me, because they're the source of truth for the numbers, and I certainly don't want to mess anything up.
I would say this: don't try and do this on your own unless you're also Operations and Enablement. Definitely work really closely with Ops to make sure that you have the right numbers.
Hopefully that helps you measure your sales enablement impact a little bit more effectively. Thank you.
