Metric of the week #1: Lead Velocity Rate

Based on our experience working with tech executives and investors to create budgets, financial projections and conduct financial due diligence, many startup executives and business angel investors find it difficult to predict future revenues. Since future revenues make up the largest part of adding value to a startup, this is an undesirable circumstance for all parties involved.

So how can you predict a start-up's future revenues at least more or less reliably?

A useful KPI here is the lead velocity rate. This KPI predicts the growth in the number of leads from month to month. Since existing and new leads are the potential source of future revenue, it gives the management as well as the marketing and sales team a clear path to achieve future revenue targets. Combined with the metrics of past and actual conversions of marketing-qualified leads (MQL), sales-qualified leads (SQL) and SQL-to-win ratio, both the startup executive and the investor can predict the future revenue of a startup with a satisfactory reliability as long as the attractiveness of the pursued business strategy in the market as well as quality of leads remains the same.

If you want to learn more about the predictability of revenues, or question our statements, feel free to leave us a comment or message.