Contract Velocity Benchmarks

A Key Metric for B2B SaaS Startups

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Optimizing sales processes is crucial for sustained growth and profitability. One of the most critical metrics that revenue operations (RevOps), sales, deal desk, and finance teams need to monitor closely is contract velocity. Simply put, contract velocity measures how quickly contracts move through the sales pipeline, from proposal to signature. It’s a vital indicator of the efficiency and effectiveness of your sales process.

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Understanding and improving your contract velocity can lead to shorter sales cycles, higher win rates, and increased revenue. But what exactly should you be aiming for? What benchmarks should you be aware of? In this blog post, we’ll explore contract velocity in depth, discuss the factors that influence it, and provide actionable benchmarks that B2B SaaS startups can use to assess and improve their performance.

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Why Contract Velocity Matters

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Contract velocity isn’t just a metric—it’s a reflection of how well your sales process aligns with your prospects' needs and your organization’s operational efficiency. For B2B SaaS companies, the ability to close deals quickly can be the difference between scaling successfully and stagnating in a competitive market.

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Here’s why contract velocity matters:

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• Revenue Predictability: Faster contract velocity means you can predict revenue more accurately. This is especially important for SaaS companies that rely on subscription models and need to forecast recurring revenue.
• Customer Satisfaction: A speedy contract process often reflects a well-structured and transparent sales process, leading to higher customer satisfaction and trust.
• Operational Efficiency: By reducing bottlenecks in the contracting process, your teams can focus on high-value activities, such as nurturing customer relationships or strategizing future growth.

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Given the importance of contract velocity, it’s essential to track and optimize this metric. Let’s dive into the key factors that affect contract velocity and the benchmarks that you should aim for.

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Factors Influencing Contract Velocity

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Several factors can impact contract velocity, and understanding these can help you identify areas for improvement within your sales process.

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1. Sales Cycle Length: The overall length of your sales cycle has a direct impact on contract velocity. Longer cycles often result from complex products, multiple decision-makers, or extended negotiations. Reducing the sales cycle length can significantly boost contract velocity.
2. Contract Complexity: Complex contracts with many clauses, terms, and conditions can slow down the approval process. Simplifying your contracts or using standardized templates can help speed things up.
3. Approval Workflows: The more layers of approval required (both internally and on the customer side), the slower the contract velocity. Streamlining approval workflows and leveraging automated tools can make a big difference.
4. Customer Engagement: How engaged and responsive your customers are during the sales process will also influence contract velocity. The more responsive they are, the faster the deal will progress.

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By focusing on these factors, you can make strategic adjustments to improve your contract velocity and keep your sales process running smoothly.

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Contract Velocity Benchmarks for B2B SaaS Startups

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Setting realistic contract velocity benchmarks is crucial for assessing your performance and setting goals for improvement. While benchmarks can vary based on company size, industry, and product complexity, here are some general guidelines that B2B SaaS startups can use:

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1. Average Contract Velocity: For most B2B SaaS companies, an ideal contract velocity is around 30-45 days. This means that from the moment a proposal is sent, the contract should be signed within this timeframe. If your contract velocity is consistently longer than this, it’s time to analyze where the bottlenecks are occurring.
2. Top Performers: Top-performing SaaS companies often achieve contract velocities of 15-30 days. This is usually the result of streamlined sales processes, strong customer relationships, and efficient internal workflows.
3. Early-Stage Startups: For early-stage startups that are still refining their processes, a contract velocity of 45-60 days may be more realistic. As your team gains experience and optimizes workflows, this number should decrease over time.

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These benchmarks can serve as a starting point for evaluating your own performance. Remember, the goal is to continuously improve your contract velocity by addressing the factors that slow down your sales process.

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Tips for Improving Contract Velocity

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Now that you understand the importance of contract velocity and have benchmarks to aim for, let’s explore some practical strategies to help you improve this metric:

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1. Implement E-Signature Solutions: One of the simplest ways to speed up contract execution is by using e-signature tools. These platforms enable quick, secure, and legally binding signatures, eliminating the delays associated with traditional paper-based contracts.
2. Automate Approval Workflows: Automation can significantly reduce the time it takes to get internal approvals. Tools like CRM-integrated workflow automation can route contracts to the right stakeholders at the right time, ensuring that nothing falls through the cracks.
3. Standardize Contracts: Using standardized contract templates can reduce the time spent drafting and reviewing each deal. Ensure that your legal team has pre-approved terms that your sales team can use to avoid back-and-forth delays.
4. Improve Customer Communication: Keeping the lines of communication open with your customers throughout the sales process is key to maintaining momentum. Regular follow-ups, clear next steps, and setting expectations can help prevent the process from stalling.
5. Align Sales and Legal Teams: Often, delays in contract velocity stem from misalignment between sales and legal teams. Ensure that both teams are working together to prioritize contracts and address any potential roadblocks early in the process.

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By implementing these strategies, you can create a more efficient sales process that enhances contract velocity, ultimately driving faster revenue recognition and improved customer satisfaction.

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Conclusion

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Contract velocity is a critical metric for B2B SaaS startups, serving as a key indicator of sales process efficiency and operational alignment. By understanding the factors that influence contract velocity, setting realistic benchmarks, and implementing targeted improvements, you can accelerate your sales cycles and boost your bottom line.

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What is your experience with contract velocity? Have you found certain strategies particularly effective in speeding up the contracting process? Share your thoughts in the comments below—we’d love to hear from you!