Lead Velocity Rate (LVR) measures the growth rate of qualified leads over a specific timeframe, typically from one month to the next. Expressed as a percentage, it can be a valuable indicator of a business's upwards (or downwards) trajectory. As a metric, it's particularly prominent in the SaaS space, though there's also value in measuring it as an eCommerce company.
Most revenue-focused metrics tend to be lagging indicators of growth. Let's say, for instance, that a business's revenue topped $30,000 in March 2023, then $45,000 in April.
That $15,000 in growth may have come about from sales efforts as far back as 2022. This means that while it may look like the business is experiencing positive growth on paper, there could be myriad problems below the surface, such as a broken sales pipeline or a sharp increase in customer churn.
LVR, on the other hand, provides a more current, reliable growth indicator, the benefits of which include:
Note that if your business lacks a sales team or has a relatively short conversion cycle, LVR isn't quite as valuable or accurate.
To calculate lead velocity rate, use the following formula:
[(Current Month's Qualified Leads - Previous Month's Qualified Leads)/Previous Month's Qualified Leads] * 100.
This calculation will provide you with a value which you can then use to determine whether your business's growth has recently trended upwards or downwards. For example, if you attracted five qualified leads this month and last month you only brought in a single qualified lead, your velocity rate formula would look like this:
[(5-1)/1] * 100 = 400 percent.
LVR is a strong indicator of performance, but like any metric, it should not be measured in a vacuum. For instance, say one month you attract twenty new leads versus five the previous month. On paper, it looks like your business is performing well, right?
When you dig a little deeper, however, the data tells a different story — each of those five leads from the previous month brought in an average of $1000 in revenue, while your twenty new leads only brought in $100 each.
Because LVR can be so misleading when measured on its own, you need to contextualize it with other revenue-focused metrics such as: