Lead Velocity Rate (LVR) is a crucial metric for startups, especially when seeking investment, for several reasons:
- 𝐏𝐫𝐞𝐝𝐢𝐜𝐭𝐬 𝐅𝐮𝐭𝐮𝐫𝐞 𝐑𝐞𝐯𝐞𝐧𝐮𝐞: LVR calculates the real-time growth of qualified leads month over month. It’s often considered the best predictor of future revenue and can be unaffected by seasonality or team quality.
- 𝐀𝐬𝐬𝐞𝐬𝐬𝐞𝐬 𝐋𝐨𝐧𝐠-𝐓𝐞𝐫𝐦 𝐆𝐫𝐨𝐰𝐭𝐡 𝐏𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥: LVR assesses a startup’s potential for long-term growth by measuring the month-to-month percentage change in the number of qualified leads. This allows startups to forecast sales from one month to the next.
- 𝐑𝐞𝐚𝐥-𝐓𝐢𝐦𝐞, 𝐍𝐨𝐭 𝐋𝐚𝐠𝐠𝐢𝐧𝐠: Unlike sales numbers, which are lagging indicators defining what happened in the past, LVR is real-time and clearly predicts future revenues and growth. This makes it a more strategically important metric than revenue growth.
- 𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐢𝐞𝐬 𝐈𝐬𝐬𝐮𝐞𝐬 𝐄𝐚𝐫𝐥𝐲: If sales rates are out of sync with your LVR, it indicates a problem with either the sales team or the product that is preventing sales from being as robust as expected.
Investors are interested in these aspects as they provide insights into the startup’s future performance and growth potential. Therefore, maintaining a healthy LVR can be a strong indicator for investors that the startup has a promising future.
