Channel Velocity Rate

What is Channel Velocity Rate?

Channel Velocity Rate (CVR) has its roots in the familiar sales concepts of Lead Velocity Rate and Sales Velocity Rate. CVR shows you not just if your channel sales are growing but how quickly that growth is happening. Calculating Channel Velocity Rate gives you a single, consistent formula for setting growth targets and measuring lead generation and sales effectiveness; this formula can be applied to the entire channel program or to a channel manager, partner, or partner sales rep. 

How do you calculate Channel Velocity Rate?

In short, channel velocity rate is equal to your active partners rate (total number of active partners divided by the total number of partners), multiplied by the number of registered deals and referrals, multiple by the average deal size, and then multiplied by your close rate. All of that gets divided by the length of your sales cycle, or days in pipeline. Here’s what the equation looks likechannel-velocity-rate-1.png

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Active Partners Rate:

Conventionally, you might hear “partner engagement” defined as the number of partners in your program. When thinking about CVR, however, it’s not just how many there are, but what percentage are engaged. Quality is more important than quantity, and growing your base of engaged and active partners is key.


Registered Deals and Referrals:

This is the total number of sales-accepted, qualified deals and referrals that have been registered in your system. To effectively measure channel velocity rate, we recommend that you do not including any deals, referrals, or other opportunities that have not been registered, as they do not appropriately reflect the type of engagement you’re looking for from your partners and should be discounted from the overall totals.


Average Deal Size:

This is another easy and straightforward number you should be able to pull from your channel sales software to determine the average dollars that have been attached to each deal. For companies with larger deal sizes (5–9 figures), we recommend denoting numbers in thousands, hundreds of thousands, or millions. For example, $155,250 should be denoted as $1.55.


Close Rate:

How many of deals in your channel pipeline that have been marked as “Closed-Won” or “Won”? Over time, as the number of deals in your pipeline increases, you may see your close rate decrease. However, if you’re able to increase the volume of deals while also maintaining or increasing the close rate, that shows that the training, enablement, and additional resources you're providing to your partners are having a positive impact


Days in Pipeline (Sales Cycle):

One of the most critical data points for measuring channel velocity rate and the controlling denominator of the entire formula is the length of your sales cycle—or days in pipeline. Keeping a close eye on how long a deal has been in your channel pipeline helps avoid those registered deals that are left for dead, and gives you a stronger foothold on the performance of your entire channel and continuously optimize to improve your CVR.

Why is Channel Velocity Rate Important?

Your CVR, when tracked over time, provides you with a proven, effective, and consistent metric by which to monitor and report the overall health of your channel program – as long as you have the data. Ideally, this data is housed in a system that automatically crunches the numbers and creates a report card, like this one from Allbound (we’re a bit biased):

 

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