What Is Pipeline Velocity?
TL;DR
Pipeline velocity is a measure of how much revenue a pipeline produces per day. It is calculated by multiplying the number of qualified open deals by the average deal value and the win rate, then dividing by the average sales cycle length in days.
How is pipeline velocity calculated?
Multiply qualified open deals by average deal value and by win rate, then divide by average sales cycle length in days. The result is revenue per day, which is why it is a rate rather than a total and why it can be compared across periods of different lengths.
All four inputs have to come from the same period and the same definition of a qualified deal. A win rate carried over from last year combined with this month open count produces a figure that moves for reasons nobody can trace.
Which input is worth changing first?
Sales cycle length, because it is the only divisor. Cutting an average cycle from 60 days to 45 raises velocity by a third with no change at all to deal count, deal value or win rate.
Deal count is the input teams reach for first and the one that degrades the others: adding unqualified deals raises the count while lowering the win rate, and the product can come out flat. Velocity is useful precisely because it makes that trade visible in one number.
Frequently asked questions
Not when it was bought with discounting. Velocity rises on a falling deal value only if cycle length falls faster, so the figure is read next to average deal value rather than on its own.