Maximizing cash flow by managing sales velocity

maximize cash flowEntrepreneurs and business owners and managers can maximize cash flow by optimizing sales using a powerful benchmark and management tool called sales velocity.

The tool helps drive cash flow by assuring that sales is contributing maximum output.

The sales velocity calculator’s value is really in its benchmark-ability, and its ability to incite 4 big-picture questions around sales growth strategy, namely:

  1. ‘How can we reduce our sales cycle time?’
    • can we attract more clients when they are ready to buy, rather than always going out and building leads?
  2. ‘How can we increase our close rates?’
    • is this a training issue, or are there other forces affecting our close rate?
  3. ‘How can we increase the number of qualified leads that we’re managing?’
    • can we identify alternate, cost-efficient forms of marketing or sales that will bring leads to our team?
  4. ‘How can we increase our average sale?’

Tracked over time, relative to the same business unit, performance improvements in each dimension will track against improvements in cash flow.

The number itself is usually not able to be compared to other units, unless the units are virtually exact (as in franchise operations).

It serves as a useful leading-indicator of business health by providing a bellwether of sales health – and can focus both Sales and Marketing on short term key performance measures such as:
  • increasing the number of qualified leads
  • closing the leads currently in the pipeline
  • adding more staff, increasing the average sale value
  • or influencing the length of the sales cycle