What is it? Sales velocity is an indicator that shows how long it takes to sell a product or service. It is closely related to unit turnover and warehouse stock.
Why count? Calculating the indicator allows you to analyze the popularity of a particular product position, correctly form a purchase for subsequent periods, and adjust the assortment. The data obtained will tell you how to increase sales.
The article explains:
How Important is Sales Velocity?
The relationship between marketing, sales velocity and cash flow
Sales velocity hong kong email list variables
Example of calculating sales speed
Turnover rates and factors affecting sales speed
Possible reasons for the decline in sales speed and solutions
Increasing Sales Speed with Business Process Automation
Selecting and implementing CRM to automate and increase sales speed
Working time map as a way to speed up sales
Frequently asked questions about sales speed
5 Scenarios for Using Neural Networks to Increase Website Profits by 40%
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How Important is Sales Velocity?
There are many examples of entrepreneurs who made a sharp rise at the beginning of their activity, so to speak, "skimmed the cream", and then, after a certain flat period, gradually burned out, without any outstanding success. You can develop a great service or product, but if sales are several times slower than production, then the business cannot be called profitable.
Sometimes it happens that huge sums are spent on opening new stores, their design, building an office, developing a website, but at the same time a large number of applications simply do not have time to be processed, as a result of which the entrepreneur loses potential profit.
As one well-known pizza chain advertises, "If we don't deliver in 40 minutes, the order will be at our expense." Is sales speed really that important in business? If so, at what stages should you pay close attention to it?
For any project at the launch stage, sales figures are very important. So, if you have an idea, it should be developed into a functioning prototype, which is then visualized, an offer is prepared for the target audience (TA) and the implementation process begins. At the same time, you cannot forget about feedback from the consumer, thanks to which it becomes possible to refine your product to perfection. Improved products will reach a new level of sales.
How Important is Sales Velocity?
Successful business operation is possible only if the speed of receipt of funds from consumers is higher than the speed of their expenditure. This parameter is monitored using a weekly or daily cash flow report.
Currently, most companies are working to improve this indicator. Example: the payment period for giants (Rosneft, AvtoVAZ, etc.) is 90 days from the moment the payment obligations arise. That is, the organization can use the finances of suppliers/partners for 3 months.
It is believed that such management of financial flows is ideal. Most startups work on the same principle, especially those that use crowdfunding platforms to promote and receive investments, providing funds for the implementation of the idea. Users will vote for the proposal they like with dollars or rubles, financing your project with a pre-order.
It is almost impossible to find a field for which the average sales speed would not be important. For certain types of business, too fast inflow of finance may not be so useful and may even be harmful. Most often – when a newly created company or startup receives quick money in the form of loans, various grants, etc. What harm can this cause? A large amount of money at the beginning of a company’s work can lead to its excessive scaling, bloating of infrastructure and staffing. Later, when all processes are normalized and the size of cash flows is reduced to the norm, the business faces difficult to solve problems, as a result of which some organizations simply close.
The speed of cash flow is not only a necessary but also a dangerous tool. Therefore, professional skills and experience are required to manage it. After all, a newbie at the wheel of a Formula 1 car is unlikely to go beyond the first turn. The same applies to cash flow management.
Business should develop organically, that is, subsidizing projects should be done independently, the manufactured product will generate profit, thanks to which the size of the working capital will grow. And only when the business starts working stably, the indicators of cash flow and profit will begin to record a constant positive trend, you can start looking for new sources of increasing the speed of financial flow.
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