What is Lead Velocity Rate?
The Lead Velocity Rate (LVR) measures real-time growth in the number of qualified leads that a company generates per month.
Frequently tracked by high-growth SaaS companies, LVR is a useful indicator of a company’s efficiency at managing its pipeline of incoming leads and serves as a gauge of its near-term (and long-term) growth potential.
How to Calculate Lead Velocity Rate (Step-by-Step)
The lead velocity rate (LVR) captures the growth of qualified leads generated each month in real time.
Tracking LVR enables management to determine if its pool of qualified leads is expanding, making it a reliable indicator of future growth.
The LVR metric is often considered to be one of the most accurate predictors of future revenue growth.
Specifically, LVR measures a company’s pipeline development in real-time, i.e. the number of qualified leads that a company is currently working on converting to actual paying customers.
Since LVR is measured on a month-to-month basis, the metric can be informative in terms of the company’s current revenue growth trajectory.
Unlike other revenue metrics, LVR is not a lagging indicator, i.e. it can be indicative of future performance rather than just serving as a reflection of the past.
Lead Velocity Rate Formula (LVR)
The lead velocity rate (LVR) is a KPI that compares the number of qualified leads in the prior month to that of the current month to determine the pace at which new leads are being added to the company’s pipeline.
If a company’s sales team is capable of consistently meeting its LVR goals each month, that would be an indication of strong sales efficiency (and optimistic growth prospects).
By isolating a company’s lead generation on a month-to-month basis, the number of qualified leads in the prior month acts as a point of reference for the current month.
LVR is calculated by subtracting the number of qualified leads from the prior month from the number of qualified leads in the current month, which is then divided by the number of qualified leads from the prior month.