Lead Velocity Rate

Lead Velocity Rate (LVR) is a critical metric that estimates the real-time growth of qualified leads that your business gets month over month. It essentially shows a 1,000 foot view of the company’s pipeline growth and is often considered the best predictor of future revenue.

Why is Lead Velocity Rate Important Today? 

In today's competitive business world, it's old-fashioned to wait for monthly or yearly revenue to determine your company's wellbeing. That's where the lead velocity rate comes in. It’s a real-time tool that helps you understand how quickly your business is growing, acting like a friend who always keeps you in the loop.

Especially for SaaS and subscription-based businesses, LVR is the guiding star. It doesn’t just tell you about the money you’ve already made, but also predicts the earnings still to come. Every new qualified lead, or potential customer, is an opportunity to grow.

The business world is competitive. Companies are doing everything they can to attract new customers, and they’re using every tool and technology available to do it faster and smarter. That’s why keeping an eye on your LVR isn’t just nice—it’s essential. It’s like your early alert system. If your LVR is decreasing, your business might be in trouble.

History of Lead Velocity Rate 

In the past, sales teams solely focused on the money coming in. It was all about revenue. However, with the evolution of the business world, especially in the early 2010s when SaaS companies were emerging rapidly, a new important metric came into play: the Lead Velocity Rate.

Entrepreneurs realized that relying only on revenue to assess business growth was outdated. They needed a real-time indicator to understand their business's growth prospects before the financial reports came in. LVR provided instant insights into the growth of qualified leads, offering a predictive view of future revenue.

How to Implement Lead Velocity Rate in Sales

Implementing the LVR is like setting up a sophisticated alarm system for your business's future. It's about weaving a safety net, so opportunities don’t slip through the cracks. But where do you start?

Step 1: Identify Qualified Leads 

Begin by defining what a “qualified lead” means to your business. It’s not a one-size-fits-all deal. Your buddy's SaaS startup might have a different definition than your e-commerce hustle. Nail down the criteria. Make it as clear as the blue sky on a sunny Cali morning.

Step 2: Measure Monthly Growth 

Every month, it’s go-time. Tally up the number of new qualified leads and compare it to the previous month. It's not rocket science, but consistency is key. Make it a ritual, like your morning espresso.

Step 3: Analyze and Optimize

This is the critical moment. If your LVR is soaring, it's time to celebrate. But if it isn’t, there’s no need for immediate alarm. It's an opportunity to dig deep, analyze, and make improvements. Perhaps your strategies for attracting leads need enhancement, or your landing pages need to be more effective.

Step 4: Feedback Loop

Make LVR a team sport. Share the insights, the highs, and the lows, with your crew. Turn feedback into fuel and iterate. Every insight is a golden nugget to boost that LVR.

Step 5: Tech Stack

In the digital age, tools aren’t just handy—they’re essential. CRM systems, analytics tools, AI – these aren’t buzzwords, they’re your allies in the quest to boost LVR. Equip yourself. Get the tech that talks, listens, and learns.

And remember, the LVR isn't just a number—it’s a narrative. It tells the tale of opportunities knocking at your door, of the future unfolding. Keep your eyes on it, and you won’t just be in the game; you’ll be ahead of it.

Frequently Asked Questions About Lead Velocity Rate (FAQs)

What is the Lead Velocity Rate?

The Lead Velocity Rate (LVR) is a metric that quantifies the monthly growth percentage of qualified leads a business attains. It is used to gauge a company's potential for future growth and revenue, offering insights into the effectiveness of its lead generation strategies in real-time.

How Do You Calculate Lead Velocity Rate?

The Lead Velocity Rate is calculated using the formula:

Lead Velocity Rate = (Current Month’s Qualified Leads - Last Month’s Qualified Leads)/Last Month’s Qualified Leads

For example, if a company had 100 qualified leads last month and has 150 this month, the LVR would be 50 percent. This indicates a positive growth in the number of potential customers interested in the business.

What is Lead Velocity Rate in SaaS?

In the SaaS (Software as a Service) industry, the Lead Velocity Rate (LVR) serves as a crucial metric for measuring the monthly increase in qualified leads. It acts as a predictor for future revenue and growth, offering insights into the effectiveness of lead generation and marketing efforts. A positive LVR indicates an expanding customer base and potential increases in recurring revenue.