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Three Tips for Navigating the New 'Demand Waterfall'

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Recently, SiriusDecisions released a new version of its popular "demand waterfall" marketing effectiveness framework. Since 2002, many marketers have used the Sirius-defined processes, and the terminology "Marketing Qualified Lead" (MQL) and "Sales Qualified Lead" (SQL), to align sales and marketing activity and to track results.

By all accounts, the new demand waterfall graphic and report were very well received, particularly among those who have adopted Sirius's terminology.

So, what was once defined as a tidy "funnel" or a simple "waterfall" is no longer as relevant as it once was. Think, instead, a river fed by many brooks and streams that gracefully come together, only to rush over the edge of the waterfall into the (sometimes) beautiful and tranquil pond below at the last minute.

Although this is no "A River Runs Through It" family drama starring Brad Pitt, the turbulent relationship between the Paul and Norman characters in the movie is not far off from the relationship between Sales and Marketing . The changes from Sirius explicitly address that relationship.

The following are the four key changes that stood out for me.

  1. Adding inbound vs. outbound marketing channels. Although both techniques create Marketing leads to be scored, qualified, nurtured, and closed, the close rates from each activity should be measured independently to ensure investments are made appropriately.
  2. Adding teleprospecting teams. The original waterfall focused solely on Marketing leads to close business. Because Marketing sometimes has a teleprospecting team that qualifies leads before handing them to Sales, the waterfall needed to be updated. The new waterfall creates a unique process called "Teleprospecting Accepted Leads" and "Teleprospecting Qualified Leads."
  3. Adding teleprospecting as a source. Teleprospecting teams often generate their own opportunities from cold-calling or database-mining techniques. A new step called "Teleprospecting Generated Leads" was therefore added to the waterfall.
  4. Formally adding sales activity. Although sales-generated opportunities were assumed to be part of the overall funnel, they were previously not formally included in the demand waterfall. In many organizations, Sales is assigned goals based on how much business it can develop, and the marketing activity is almost an afterthought. Including sales efforts in the funnel explicitly shows a more complete picture.

Demand Waterfall SiriusDecisions
2012

So, what do these changes mean to you? Use the following three key actions to put the changes into practice in your organization.

1. Take a holistic approach to your funnel management

Looking at your lead sources in silos is no longer good enough. You need to think about deals, cost of deals, and relative efficiencies. If you aren't working with a complete picture, you may make the wrong decisions.

For example, at one company I worked for, Marketing had contributed nearly 80% of the closable pipeline. Good, right? Hardly. Marketing opportunities were taking longer to close, they were smaller deals, and they were less qualified overall, so close rates were lower and distracting.

In a vacuum, you would see the 80% number and double down on marketing activity. Instead, when that activity is measured together with Sales goals and activity, you realize that you would need to restructure the program and reprioritize how Marketing was driving demand in partnership with Sales.

2. Use consistent language

The Sirius framework sets up a process and a language that most everyone can agree on. But even in the gap from MQL to "Sales Accepted Lead" to SQL, we have a great deal of room for interpretation. In my experience, that gray area can be contentious. I recommend that Marketing adopt the language of Sales in those areas to ensure consistency.

Sales likely already has language in place around what counts as a qualified lead or opportunity. Simply adopt that definition and work backward, or negotiate a joint meaning.

If Marketing's definition of SQL (and therefore the mechanism for generating it) is different from that of Sales, you will be doomed. Everyone must be comfortable with the numbers and with what they report.

3. Measure everything—but be clear which metrics matter

To know where to make adjustments, you must look for signals at every level of the funnel and you must have baseline and target goals for each area,. At the same time, you need to avoid analysis paralysis. Select two to three key metrics that matter most for your business and track the heck out of them, while using the rest of the metrics to inform plans and gauge internal effectiveness. Assess which metrics are key to your organization, publish both baseline and target goals, and then track them rigorously.

* * *

As with all frameworks, of course, the SiriusDecisions framework is only as good as how you use it.

(Image courtesy of Bigstock: Iguassu Falls)


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Aaron Dun is vice-president of marketing and strategy at Percussion, a provider of Web content, experience, and engagement software products. Reach him via aaron_dun@percussion.com.

Twitter: @ajdun

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Comments

  • by Rishi Tue Aug 21, 2012 via web

    Interesting analysis on leads. I agree that Marketing (MQL) and Sales (SQL) need to merge and have the same definition. I would also like to emphasize the importance of putting lead management tools in place - since they are speak the same language of marketing and sales departments. A marketer can see how a lead is acquired, its sources, etc. while a sales person can see the lead transition into Salesforce and manage the lead accordingly. For more tips and tricks including "How to Measure your Results using Analytics", check out our marketing cheat sheets at http://mdv.to/NmISj3

  • by Keith Tue Aug 21, 2012 via web

    As the article says, Marketing needs to track not just the number of leads by tactic, but also revenue by tactic.

  • by Prugh Roeser, The Devereux Group Tue Aug 21, 2012 via web

    While I'm glad to see the updates to the Sirius Decisions waterfall model and the impact they can have on day-to-day marketing activity, I continue to be frustrated by the transactional perspective that the concepts of waterfall and funnel embed.

    I keep having difficulty finding out how any of these metaphors accommodate multi-touch marketing whether in one channel or across many channels. It's not so much a matter of accounting for multiple responses since lead scoring can be used to factor those in.

    It's a matter of handling suspects who don't respond to earlier touches in a campaign or program, but kick in midway (or later). Since they missed the beginning, they're not part of the initial waterfall universe rushing over the edge. They're not a water input coming together in the river; they join the fall midair as it's dropping into the pool at the bottom. Where do these get accounted for in the funnel or the waterfall?

  • by Aaron Tue Aug 21, 2012 via web

    Thanks for the comments Prugh, I agree, its not about the metaphor (but as a writer, I enjoyed the turn of phrase!) The reality is that people jump into your funnel at all parts of their buying cycle, and while we design wonderfully structured ways to move people from Stage A to B to C and to purchase, that is just how we structure the process. If someone jumps into the funnel mid-air, they still came in prior to purchase, and they came in from *somewhere.* Credit that "somewhere" appropriately and appreciate the fact that they are helping lower your average deal cycle!

    @ajdun

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