What is Lead Velocity Rate (LVR)?
Lead Velocity Rate (LVR) measures the month-over-month percentage growth in qualified leads. Unlike total lead count, which can be misleading, LVR focuses exclusively on leads that meet your qualification criteria making it a predictive indicator of future revenue.
The formula is straightforward: [(This Month's Qualified Leads - Last Month's Qualified Leads) / Last Month's Qualified Leads] x 100. A positive LVR indicates pipeline health; negative LVR signals future revenue problems before they hit the bottom line.
Why It Matters
Most sales metrics are lagging indicators revenue, closed deals, bookings tell you what already happened. LVR is a leading indicator, providing early warning of pipeline health issues and confirmation that growth strategies are working.
For SaaS and subscription businesses, LVR is particularly powerful. Because current qualified leads predict future revenue, tracking LVR enables accurate forecasting and resource planning. Rising LVR suggests you should scale sales capacity; falling LVR indicates problems before they impact revenue.
Benchmarks
- Healthy LVR: 10-20% month-over-month growth indicates strong pipeline
- Flat LVR (0-5%): Pipeline stagnation, signals plateau risk
- Negative LVR: Shrinking pipeline, revenue decline likely within 2-3 quarters
- Correlation with revenue: Companies with 15%+ LVR typically see 30-40% year-over-year revenue growth
Best Practices
1. Focus on qualified leads only - LVR measures growth in qualified leads (MQLs, SQLs, or opportunities), not total leads. Including unqualified leads masks the true picture of pipeline health.
2. Track consistently month-over-month - LVR requires consistent measurement intervals. Month-over-month is standard; ensure you're comparing apples to apples with consistent qualification criteria.
3. Segment by lead source - Track LVR by channel to identify what's driving growth. Organic LVR might be rising while paid LVR falls, revealing where to focus investment.
4. Correlate with downstream metrics - LVR should predict bookings and revenue. If LVR rises but revenue doesn't, qualification criteria may be too loose or conversion is broken.
5. Use LVR for capacity planning - Rising LVR signals need for more sales capacity. Use LVR trends to hire ahead of revenue curves, ensuring reps can handle incoming pipeline.
Common Mistakes
- Including unqualified leads in calculations, inflating LVR misleadingly
- Comparing inconsistent time periods (e.g., seasonal spikes)
- Changing qualification criteria without adjusting baseline
- Treating LVR as vanity metric without correlation to revenue
- Ignoring negative LVR trends until revenue impact is unavoidable
Key Takeaways
- LVR is a leading indicator of future revenue and pipeline health
- Focus on qualified leads, not total lead volume
- Consistent measurement enables reliable trend analysis
- Rising LVR should correlate with future revenue growth
- Use LVR proactively for capacity planning and investment timing
