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Demand for the Demand Waterfall: Your Colleagues’ New Sophistication

Something exciting is happening in demand planning. It’s subtle, and quiet, more of a “slow burn” than a wildfire.Our new B2B call center partners are showing a remarkable sophistication. Fewer are asking me, “Can you be our plug-and-play call center partner?”

Instead they are asking, “Can you help us re-architect our sales funnel?”

They want to know, for example:

  • If I have a revenue target of $2.5 million for Q1, how many sales-accepted leads do I need to achieve it?
  • How many marketing-qualified leads do I need to achieve that number of SALs?
  • How many full-time employees do I need on the phone and on live chat to generate those MQLs?
  • Is this reproducible—can I depend upon those MQLs month-to-month, and that same rate of conversion to SQLs?

The list goes on.

Demand for the demand waterfall

You probably recognize those terms (MQL, SAL and so forth) from the SiriusDecisions Demand Waterfall framework. SiriusDecisions introduced the demand waterfall in 2005, and marketers have used it ever since to analyze their lead qualification processes from the inquiry stages through closed business.

We buy into the framework, and increasingly our partners do as well, which is good news. It acknowledges that generating demand is more complex than simply picking up the phone. The phone is a tool in the middle of the Demand Waterfall—and actually a small part of it. You need an idea of what you’re trying to achieve—like a revenue target—and what resources you need both up and down the sales funnel to achieve it. It’s pointless to generate 50 MQLs without a sales infrastructure to handle them.

Under pressure for predictability

Our new partners are asking us for more details because their bosses are challenging them for better performance, reporting and predictability. Those bosses are tired of up quarters and down, feast-and-famine; they’re demanding dependable pipelines and accurate forecasts. They also want to know “what if?” What if we had two FTEs on the phones versus three? What is the difference in cost, and what is the boost in revenue?

But that’s not new!

You’re right in saying “that’s not new!” Sort of.

What is new is the level of sophistication among our new partners. They’re thinking like HP and other sales-savvy Fortune 500s, who recognize that MQLs are just part of the equation.

I believe this new level of thinking was sparked by SiriusDecisions revamping its Demand Waterfall in 2012 to better reflect modern practices (for example, to include leads qualified by marketing automation and leads qualified or generated through teleprospecting). SiriusDecisions acknowledged in a 2013 AdAge article that a year after introducing the new model, adoption was slow. But by its 2014 summit, companies like Cisco claimed they used it to forecast revenues based on the current month’s MQLs—and they could achieve a predictable stream of MQLs. So, that predictability that marketing chiefs demanded is possible.

We know the model is ringing true because our new partners are asking “Tell us about the Demand Waterfall—how does your demand gen solution make it work for me?”

It has been a slow burn—complex, sophisticated ideas often are.

But in time they catch fire.

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