When I think of metrics that every company should be tracking to understand how they are performing one of the first metrics that comes to mind is Lead Velocity. While there are a few different interpretations of what Lead Velocity means and how it informs your businesses performance, in this post I will be talking through these different interpretations and what I believe to be the best method of tracking Lead Velocity for HubSpot users.
What is Lead Velocity?
HubSpot defines Lead Velocity Rate as “the real-time growth of qualified leads month over month.” This is important to call out as they view Lead Velocity as different from Sales Velocity which they define as “measuring how quickly deals move through your pipeline and generate revenue”. While both metrics are important to track, this post will be focused on Lead Velocity.
To redefine Lead Velocity in my own words, Lead Velocity is the process of tracking your qualified leads created each month and comparing that to the number of qualified leads you created last month to determine the percentage change of qualified leads. HubSpot uses the formula shown below to calculate the Lead Velocity rate of a given month:
Source: HubSpot Blog – Lead Velocity
While this formula is helpful, it also leaves a lot of room for interpretation by using the word “Qualified” when referring to the monthly volumes. Does this mean any new lead I bring in? Should this number include records sourced by sales? All ambiguous questions aside, I truly believe most businesses will align on the idea that a “qualified lead” is a record that has taken an agreed level of action or has met the company’s ideal customer profile and warrants contact by sales. So while HubSpot doesn’t explicitly call these records “Marketing Qualified Leads” I feel confident in my assumption that MQLs are what HubSpot is referring to in their formula. To show an example of how this number would be calculated for a company, let’s use the numbers below to calculate Lead Velocity for Company A.
January MQLs: 75
February MQLs: 100
March MQLs: 90
To calculate the Lead Velocity for February (as we cannot calculate the Lead Velocity for January without data for December), we will plug the January and February numbers into the formula as shown below.
|February Lead Velocity =||100 (Feb MQLs) – 75 (Jan MQLs)||x 100|
|75 (Jan MQLs)|
|February Lead Velocity =||25||x 100|
|February Lead Velocity =||.33||x 100|
|February Lead Velocity =||33%|
Now that we have calculated the Lead Velocity for February, let’s calculate the Lead Velocity for March.
|March Lead Velocity =||90 (March MQLs) – 100 (Feb MQLs)||x 100|
|100 Feb (Jan MQLs)|
|March Lead Velocity =||-10||x 100|
|March Lead Velocity =||-.10||x 100|
|March Lead Velocity =||-10%|
So we’ve completed these calculations but how do we use them to inform our business?
At the end of the day, every business has a sales team that it is feeding qualified leads to. Understanding the Lead Velocity Rate helps us understand how we are impacting the workload of our Sales team, as well as how we are pacing as a business to meet or exceed our pipeline goals. Using the Company A example above, I would assume that Sales was really busy working inbound leads in February as the volume increased by 30%, where March was a little more reasonable as we decreased the number of leads by 10%.
Why should companies seek to improve Lead Velocity?
While improvement may seem like an “up and to then right” term, improvement related to Lead Velocity may not always mean a higher percentage. What I mean is, an increase in your Lead Velocity Rate from one month to the next may not actually mean you are driving more quality business, but may indicate that you are generating more leads that are less qualified. On the other end of the spectrum, maintaining a Lead Velocity of 0% may mean you’re pacing perfectly with your target goal as you have not decreased the number of qualified leads you are passing to sales and may be perfectly on track to hit your MQL volume target for the time period. Even further, a negative Lead Velocity Rate for a month may feel like your marketing team is under performing, but if the month prior had an unusually high number of qualified lead, this may not indicate you are underperforming as you may still be meeting your volume target in the month your Lead Velocity Rate was negative.
All in all, improvement related to Lead Velocity may look different for every company based on where they’re at and their goals. Personally, I would view a Lead Velocity Rate of 0% as the target to reach. Primarily due to the fact that this metric would indicate that we are delivering a consistent number of qualified leads to the sales team month over month. To reiterate, having a positive Lead Velocity should rarely be a goal for your company as that requires growth month over month indefinitely which for many organizations (and budgets) simply isn’t possible.
When should companies focus on improving Lead Velocity?
As mentioned above, improvement may not always mean an increase in the Lead Velocity Rate but companies should report on this metric and use it as a guide to measure needed sales team growth or reduction month over month. If the Lead Velocity Rate increases and not all MQLs created in the month were messaged by sales, this indicates the need for additional sales team members as we have increased the volume of records but the sales team’s capacity has reached its limit. A company’s Lead Velocity Rate increases month over month but their conversion rate from MQL to SAL or SAL to SQL decreasing is also a way to identify a change in MQL rules that are creating more MQLs that really aren’t qualified.
How can a company improve Lead Velocity with HubSpot Marketing Hub?
Companies can improve Lead Velocity tracking with HubSpot by taking advantage of some out of box features listed below:
Original Source Tracking
While Source tracking may not seem relevant to Lead Velocity, it very much is. As marketers take actions to generate records, ultimately records will be created from those efforts. HubSpot’s automatic Original Source tracking allows marketers to easily identify the number of records they are generating from various channels without needing to do anything other than follow HubSpot’s prescribed UTM structure. Where other tools require you to build a process to manage this, HubSpot enables this out of the box which allows Marketers to see their records generated by channel and the MQLs created from these channels to help them decide where to continue investing their money. These sources should also be used when reporting on Marketing Sourced Qualified Lead as this field allows you to exclude records sourced by the sales team that may have contributed to our pipeline number, but should be excluded from your team’s qualified lead number.
HubSpot enables dynamic scoring fields that help marketers compare records to determine which records should be sent to sales. Whether these scoring fields are configured for firmographic scoring (based on the company’s ideal customer profile) or behavior scoring, using this out of box feature will give your team better control over who you consider to be qualified which ultimately impacts your monthly qualified lead volume. It also enables you to restrict passing records to sales who may not be ready or a conversation which reduces your qualified lead volume but may help with your conversion rates through the rest of your sales processes.
HubSpots out of box Lifecycle Stage field and date time stamps provide a structure to track who is actively being engaged with by sales as well as those who you have not sent to sales yet. While you do need to build automations to manage the Lifecycle Stage for records, the system will automatically capture date time values as records enter a stage as well as restrict a record from moving backwards if they have already progressed further down the funnel. While this may not seem relevant, having a “Became a Marketing Qualified Lead” datetime field enables you to very easily report on the number of Qualified Leads you have generated month over month and is critical for enabling your ability to track Lead Velocity.
While there are many KPIs that are relevant to Marketing Operations and tracking your company’s success, the Lead Velocity Rate is unique in its ability to help you understand your marketing team’s contribution to the pipeline relative to the previous month. Tracking this metric will allow you to dive deeper into why the number has increased or decreased and force you to do additional research to explain why the number has shifted and whether that is good or bad based on your goals. It will help you determine if you are overwhelming your sales team with inbound work or if they have more capacity for outbound work during a given month. Hopefully this article has armed you with the tools you need to track and calculate your Lead Velocity as well as debunking the misconception that this number should always be growing for your business to be successful.