SiriusDecisions Advanced Waterfall Use Cases - Circulate 2016

Circulate 2016
April 11, 2016
Demand Waterfall Use
Cases
John Donlon
Research Director
@SiriusJD

Introduction to the Demand Waterfall

© 2015 SiriusDecisions. All Rights Reserved 3
Lead Management
Process
The Lead Management Process
Inquiry Closed/Won

SiriusPerspective:
The SiriusDecisions Demand Waterfall®
This is the b-to-b standard for defining, measuring, modeling and
diagnosing demand creation performance across the lead management process.
Inquiry
Inbound Outbound

SiriusPerspective:
Marketing Qualification
Inquiry
Inbound
Tele Qualified Lead (TQL)
Tele Accepted Leads (TALs)
Automated Qualified Lead (AQL)
Tele Generated Lead (TGL)
Outbound

SiriusPerspective:
Inquiry
Sales Qualification
Inbound
Sales Accepted Leads
(SALs)
Sales Generated
Leads (SGLs)
Outbound
Sales Qualified Lead (SQL)

SiriusPerspective:
Close
Inquiry
Sales Qualification
Inbound
Sales Accepted Leads
(SALs)
Sales Generated
Leads (SGLs)
Outbound
Closed Won
Sales Qualified Lead (SQL)

SiriusPerspective:
Close
Task Families Surrounding the Demand Waterfall
: To drive best-in-class performance, sales and marketing must align
roles and responsibilities around five waterfall-based jobs.
Inquiry
Sales Qualification
Inbound
Tele Qualified Leads (TQLs)
Sales Accepted
Leads (SALs)
Teleprospecting Accepted Leads (TALs)
Automated Qualified Leads (AQLs)
Tele Generated Leads (TGLs)
Sales Generated
Leads (SGLs)
Outbound
The use of traditional
and social media to
set the stage for
demand creation
Seed
The creation of
“original” demand,
with a focus on
quality vs. quantity
Create
Efforts geared to help
sales move deals
more quickly through
the pipeline
Accelerate
Helping reps increase
their productivity,
for both sales- and
marketing-sourced
demand
Care and feeding of
prospects that aren’t
ready for sales, or
that have fallen out
of the waterfall
Nurture
Enable
Won Business
Sales Qualified Leads (SQLs)

SiriusPerspective:
Aligning Waterfall Analysis With Insights and Actions
With the right data and process foundation, the Waterfall can be
used to analyze historical performance, diagnose issues and predict future success.
Performance Measurement
Process Diagnostics
Demand Planning
Revenue Forecasting

SiriusPerspective:
Demand Waterfall Analysis Metrics: Required for Actionable Insight
Demand Waterfall-specific data fields – combined with analysis views
– enable the creation of key metrics required for advanced Demand Waterfall use cases.
How efficiently are leads
converting through
Demand Waterfall
stages?
What do I currently have
in each stage of the
Demand Waterfall?
How fast are leads
moving through the
Demand Waterfall?
Volume Conversion Rate Velocity

SiriusPerspective:
Performance Measurement: Three Key Questions
Focus on operational alignment and business context to utilize the
Demand Waterfall as a performance management tool.
How can the Waterfall be leveraged to analyze
demand program and tactic performance?
How do I leverage the same Waterfall constructs to
measure significantly different sales and marketing
situations?
How do I isolate lead handoff process issues from
design and execution issues?

SiriusPerspective:
Advanced Performance Measurement Examples
Waterfall measurements must be disaggregated to conduct
meaningful analysis of the programs and processes contributing to current performance.
Revenue
Requirement
Step 2
Step 3
Step 4
Step 5
Define
Waterfalls
US and CAN Nordics China
Waterfall
measurement starts
with defining the right
context for analysis;
multiple Waterfall
views may be
necessary

SiriusPerspective:
• TBD
Revenue
Requirement
Isolate
Cohorts
Step 3
Step 4
Step 5
Define
Waterfalls
Campaign
#1
Campaign
#2
Out of
Campaign
Volume
(1000s)
24.9 19.1 8.8
Throughput
(INQ – C/W)
1.1% 3.7% 1.9%
Velocity
(# Days)
64 61 69
CPL
(USD)
$880 $914 $715
Campaign
#1
Campaign
#2
Out of
Campaign
1.4 1.1 0.7
3.6% 3.1% 2.6%
76 79 84
$1,080 $990 $685
With Waterfalls
defined, isolate
cohorts by lead
origination filters and
analyze for volume,
conversion and
velocity

SiriusPerspective:
SLAs and the SiriusDecisions Demand Waterfall
SLAs feature a bidirectional flow to accommodate a more complex
lead management process.
SLA Types
Tele to Sales3
Tele to Marketing4
Marketing to Sales2
Marketing to Tele1
Sales to Tele or
Marketing5
Inquiry
OutboundInbound
Close
Won Business
Sales Qualification
Sales Generated
Leads (SGLs)
Sales Accepted
Leads (SALs)
Sales Qualified Leads (SQLs)
Automation Qualified Leads (AQLs)
Teleprospecting
Generated Leads (TGLs)
Teleprospecting
Qualified Leads (TQLs)
Teleprospecting Accepted Leads (TALs)

SiriusPerspective:
Revenue
Requirement
Isolate
Cohorts
Build
Dashboards
Step 4
Step 5
Define
Waterfalls
|------------SLAs OUT OF COMPLIANCE-----------|
Engaged in
48-72 hrs.
Engaged in
72-96 hrs.
Engaged in
96+ hrs.
SLA not
adhered to
2,424
[6%]
2,020
[5%]
3,231
[8%]
7,674
[19%]
|-----------------SLAs IN COMPLIANCE---------------|
AQLs
Sent
TALs
Accepted
Engaged in
8 hrs.
Engaged in
8-24 hrs.
Engaged in
24-48 hrs.
SLA
adherence
40,392 40,392
[85%]
3,231
[8%]
19,792
[49%]
9,694
[24%]
32,718
[81%]
Operationalize
measurements into
management
dashboards, giving
visibility into both
program performance
and effectiveness of
lead management
processes
Convene
Council
Diagnose
Problems

SiriusPerspective:
Revenue Forecasting: Three Key Questions
Understanding the expected future revenue value of your current
Demand Waterfall provides opportunities to prevent revenue shortfalls.
What is the expected value of my current
Demand Waterfall volume over time?
Does this expected value support our revenue
goals?
If there is a projected gap, what can be done
to recover and close the revenue gap?
Revenue Forecasting

SiriusPerspective:
Advanced Revenue Forecast Example
Demand Waterfall revenue forecasting leverages conversion,
velocity and current volume metrics to identify and prevent future revenue shortfalls.
Current Waterfall Stage Volume
Current
Volume
INQ 6,215
AQL 171
TAL 569
TQL 34
SAL 54
SQL 68
Revenue
Requirement
Step 2
Step 3
Step 4
Step 5
Analyze
Volume
Validate that current
stage volume reflects
active engagement
and buying cycles
Revenue Forecasting

SiriusPerspective:
Demand Waterfall revenue forecasting leverages conversion,
velocity and current volume metrics to identify and prevent future revenue shortfalls.
Current Waterfall Stage Volume
Current
Volume
Current
Conversion
Net
Conversion
to C/W
Estimated
Close/Won
Estimated
Revenue
INQ 6,215 54% 0.30% 19 $2,595,293
AQL 171 83% 0.55% 1 $132,508
TAL 569 12% 0.67% 4 $530,012
TQL 34 79% 5.55% 2 $26,5006
SAL 54 39% 7.02% 4 $530,012
SQL 68 18% 18% 12 $1,722,540
ASP $140,000
Expected
Revenue
$5,775,367
Revenue
Requirement
Forecast
Value
Step 3
Step 4
Step 5
Analyze
Volume
Net conversion rates
applied to active
current volume
predicts the expected
value from each stage
Revenue Forecasting

SiriusPerspective:
Demand Waterfall revenue forecasting leverages conversion, velocity
and current volume metrics to identify and prevent future revenue shortfalls.
Revenue
Requirement
Forecast
Value
Forecast
Timing
Identify
Gaps
Step 5
Analyze
Volume
Q1 Q2 Q3
Expected Revenue $1,722,540 $1,325,031 $2,727,797
Revenue Goal $1,500,000 $2,000,000 $2,500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000Revenue
Quarterly Expected Revenue Against Goals
In this scenario, we
face an expected
shortfall in Q2, a
potential surplus in
Q3 and a total future
value coverage of
96% ($5.78M on $6M
goal)
Revenue Forecasting

SiriusPerspective:
Demand Waterfall revenue forecasting leverages conversion, velocity
and current volume metrics to identify and prevent future revenue shortfalls.
Revenue
Requirement
Forecast
Value
Forecast
Timing
Identify
Gaps
Adjust
Plan
Analyse
Volume Acceleration
• Passive Recycle
Nurtures
• Pipeline
Acceleration
• Economic Value
Tools
Service-Level
Management
• Sales Handoff
• Compliance
• Culture
Revenue Forecasting

SiriusPerspective:
Demand Planning: Three Key Questions
Demand planning provides critical insight into both the Waterfall
efficiency and volumes required to meet future revenue goals.
What does the future Waterfall need to look
like to meet our long-term revenue goals?
Will our planned programs and budget drive
the required Waterfall volume, velocity and
efficiency?
What changes to plan and budget should we
make to meet our goals?
Demand Planning

SiriusPerspective:
Demand Planning Example
Demand planning should include investments in more than
acquisition programs to optimize revenue performance.
Revenue
Requirement
Step 2
Step 3
Step 4
Step 5
Set
Goal
Demand Planning for FY2016
Revenue
Total Revenue $28,000,000
Marketing Sourced % 25%
Marketing Sourced Revenue $7,000,000
Budget
Acquisition Programs $840,000
Marketing’s target
represents 25% of
total revenue with an
$840K budget
Demand Planning

SiriusPerspective:
Revenue
Requirement
Reverse
Waterfall
Step 3
Step 4
Step 5
Plan
Set
Goal
Waterfall Analysis
Revenue Goal $7,000,000 Deal Size $140,000
Conversion Point
Conversion
Rate
Stage
Required
Waterfall
INQ to AQL 54% INQ 16,763
AQL to TAL 83% AQL 9,052
TAL to TQL 12% TAL 7,513
TQL to SAL 79% TQL 902
SAL to SQL 39% SAL 712
SQL to C/W 18% SQL 278
C/W 50
Leveraging
current Waterfall
conversions, 16,763
inquiries are required
to reach the revenue
goal
Demand Planning

SiriusPerspective:
Revenue
Requirement
Reverse
Waterfall
Align
Campaigns
Step 4
Step 5
Set
Goal
Budget Analysis
Current Plan
Blended Cost per Inquiry $60
Inquiries Required 16,763
Budget Allocation
Acquisition $1,005,782
Nurture
Enablement
Total Budget $1,005,782
Available Total Budget $840,000
Budget Gap ($165,782)
The available budget
will not fund the
inquiry volume
required at current
conversion rates and
execution plan
Demand Planning

SiriusPerspective:
Revenue
Requirement
Reverse
Waterfall
Align
Campaigns
Evaluate
Scenarios
Step 5
Set
Goal
Waterfall Scenario Analysis
Revenue Goal $7,000,000 Deal Size $40,000
Current
Conversion
Improved
Conversion
Stage Required
Waterfall
Improved
Waterfall
INQ to AQL 54% 54% INQ 16,763 10,934
AQL to TAL 83% 83% AQL 9,052 5,905
TAL to TQL 12% 15% TAL 7,513 4,901
TQL to SAL 79% 79% TQL 902 735
SAL to SQL 39% 41% SAL 712 581
SQL to C/W 18% 21% SQL 278 238
C/W 50 50
Implementing nurture
programs,
enablement and SLA
governance improves
conversion
Demand Planning

SiriusPerspective:
Revenue
Requirement
Reverse
Waterfall
Align
Campaigns
Evaluate
Scenarios
Finalise
Plan
Set
Goal
Budget Analysis
Current Plan Improved Plan
Blended Cost per Inquiry $60 $60
Inquiries Required 16,763 10,934
Budget Allocation
Acquisition $1,005,782 $656,036
Nurture $100,000
Enablement $75,000
Total Budget $1,005,782 $831,036
Available Total Budget $840,000 $840,000
Budget Gap ($165,782) $8,964
Changing
investments to
mid-stage and
late Waterfall
programs enables us
to meet revenue
goals with existing
budgets
Demand Planning

SiriusPerspective:
Waterfall Diagnostics: Three Key Questions
Waterfall diagnostics leveraging performance patterns can identify
critical breaking points in the lead management process that impact demand creation.
Which lead management subprocess(es) are
restricting revenue growth?
What are the likely factors contributing to this
underperformance?
What are the appropriate best practices to
resolve this issue?
Waterfall Diagnostics

SiriusPerspective:
Diagnosing Demand Waterfall Performance
Demand Waterfall diagnostics compare current processes and data
with best practice process frameworks and benchmarks to identify performance issues.
Benchmarks Best Practices
Dashboards Assessments
Waterfall
Diagnostics
Data Process
Current
StateGoal
Hypothesis
Patterns

SiriusPerspective:
Factors Impacting Benchmarks
Factors such as customer type, go-to-market strategy, deal size
and peer performance all influence the optimal benchmark for waterfall diagnostics.

Demand Waterfall Performance Patterns
Identifies where the process is underperforming

SiriusPerspective:
The Demand Waterfall Through a Process Lens
The Demand Waterfall viewed through a process lens contains four
highly integrated sub-processes.

In tolerance
range
(+-10%)
Comparing Performance Against Benchmark
INQ to AQL
Benchmark
41%
Conversion rate (%)
45.19%
36.9%
50.1% A
42.9% a
39.9% b
33.1% B

SiriusPerspective:
The Story in the Pattern
The lack of agreement between sales and marketing on lead
definition and service-levels results in an AABB pattern.
A A B B
• Marketing functions above
benchmark
• Sales function below benchmark
Scenario
• Lead Definition/Targeting
• Scoring/Nurturing
• Service Levels
Best
Practices
Classic Sales and
Marketing Misalignment

Demand Waterfall Diagnostics via Process Decomposition
Total Demand
Waterfall Throughput
Macro-Function
Level
Primary
Diagnostic
Level

SiriusPerspective:
Identifying the Break Point In the Pattern
Break points in the Demand Waterfall pattern identify focal points for
additional diagnostics.
B always provides
opportunities for improvement
A can be considered either
bad or good, depending on
impacts on downstream
Demand Waterfall stages
A B a a

SiriusPerspective:
Key to Demand Waterfall Pattern Diagnostics
Break points in the Demand Waterfall can be caused by a variety of
contributing factors, which can be used to form a hypothesis.
What’s causing variation
from benchmark? Hypothesis!

SiriusPerspective:
Framing the Hypothesis
The diagnosis of Demand Waterfall processes requires analysis of the
input, output and in-process issues restricting performance.
AQL TQL
Quality and
Consistency of
Input
Quality and
Consistency of
Output
Internal
Process
Performance

Overview of Demand Waterfall Diagnostics
Methodology and Tools

SiriusPerspective:
Advanced Demand Waterfall Diagnostics: Example
Demand Waterfall diagnostics methodology uses performance
patterns, hypothesis maps and data to identify and improve lead management issues.
Revenue
Requirement
Step 2
Step 3
Step 4
Step 5
Identify
Patterns PeersAcme
Total Waterfall Efficiency
(INQ – Won)
B0.38% 0.65%
Marketing Function
(INQ – TQL)
B5.7% 10.7%
Sales Function
(TQL – Won)
a 6.1%6.8%
Automation Qualification
(INQ – AQL)
A61.0% 54.0%
Tele Qualification
(AQL – TQL)
B9.4% 19.8%
Sales Qualification
(TQL – SQL)
a31.0% 29.1%
Sales Close
(SQL – Won)
a22.0% 21.0%
The ABaa pattern
identifies a likely
break point in the
AQL-to-TQL
conversion process

SiriusPerspective:
Advanced Demand Waterfall Diagnostics: Example
Revenue
Requirement
Evaluate
Hypotheses
Step 3
Step 4
Step 5
Identify
Patterns
The hypothesis map
for the ABaa pattern
identifies possible
reasons for
underperformance

SiriusPerspective:
Advanced Demand Waterfall Diagnostics
Revenue
Requirement
Evaluate
Hypotheses
Assess
Processes
Step 4
Step 5
Identify
Patterns Define
No consensus on lead
definition
Documented and adopted lead
definitions by segments
Engage
No rules for number of
followup attempts
Clear rules for followup types
and volume optimized by yield
curve analysis
Timing
No timeframe for acceptance,
engagement or lead timeouts
Clear rules for acceptance,
engagement or lead timeouts
Enforce
No enforcement of SLA rules SLA compliance key part of
management culture
No
5
Are broken service-level agreements with teleservices an issue for
our organization?
Definitely
1
Probably
2
Possibly
3
Not Likely
4
Assessments
compare current
process performance
to
best practices

SiriusPerspective:
Revenue
Requirement
Evaluate
Hypotheses
Assess
Processes
Prove
Hypotheses
Step 5
Identify
Patterns
Teleprospecting Key Metrics
Activity
Unworked Lead % 27%
Initial-Touch Timing Compliance 57%
Average Touch Attempts (SLA=8) 1.4
Average Outbound Calls/Day 38
Quality
% Calls With Live Interaction 8%
% Calls That Make Progress 5%
Average Call Quality Score 3.2
Hypothesis proof may
require additional
data collection. In this
case, both service-
level and call quality
issues are impacting
conversion efficiency.

SiriusPerspective:
Revenue
Requirement
Form
Hypotheses
Assess
Processes
Prove
Hypotheses
Take
Action
Identify
Patterns
SLA Governance
• Notifications
• Escalation
• Yield Analysis
Teleservices
• Call Scoring
• Sales Alignment
• Culture

Action
Items
• Marketing
• Ensure that the necessary data elements, views metrics and
filters are in place to support advanced use cases
• Leverage the Demand Waterfall as a strategic platform to
drive change in operations and planning
• Sales
• Champion governance of standardisation in the lead
management process to support Waterfall data collection
• Incorporate recurring Waterfall review meetings to increase
attention on early-stage opportunities
• Product
• Determine how the Demand Waterfall can be used to model
demand creation objectives by offering
• Consider Waterfall use cases that yield important insights
into product demand and sales effectiveness

SiriusDecisions Advanced Waterfall Use Cases - Circulate 2016

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