Earlier this week at another fantastic SiriusDecisions Summit, analysts unveiled a new version of their demand waterfall.  The first version was created more than 12 years ago and introduced us all to the MQL and SQL stages that have become common language in B2B marketing.  Four years ago SiriusDecisions unveiled a new version with more stages, more acronyms, and a better rationalization of the role sales plays in creating demand as well.

The new waterfall (redefined as the Demand Unit Waterfall) is pictured here.  DemandGen Report posted a nice overview from the unveiling to give you the gist of each stage.

In general, it’s simpler and a vast improvement, but with one important caveat.

What I Like:

1. It Starts with Addressable Markets
Too often we build demand models in Excel without understanding how big our addressable market is in the first place.  Just because you can make Excel say anything doesn’t mean you’ll actually be able to generate leads from 90 percent of your entire market!  So basing the entire model on what can actually be engaged seems fundamental but is surprisingly missing from many marketing organizations.

This is also an effective way to add precision to how broadly you choose to market.  Let’s say you want to focus on a vertical market-oriented approach.  How many markets do you go after?  This decision historically has been made fairly arbitrarily.  But now, you can choose market volume based on how much addressable market you need to start with in order to end up with enough sales and growth at the bottom of the waterfall.

2. It’s Simpler and Easier to Understand
I was fearful that the new waterfall would have more steps, more acronyms, more complexity.  Thankfully SiriusDecisions went the other direction. The simplicity of this year’s version makes it far easier to understand.

3. No Sales, No Marketing, Just Pipeline
I LOVE that the current nomenclature specifically and intentionally does not call out where sales is involved vs marketing involved.  For best-in-class organizations, those groups work in a seamless, cohesive way to drive and convert demand.  Easier said than done sometimes of course, but it’s an important cultural and operational shift that is driving vast improvements in efficiency and results for B2B companies worldwide.

4. Demand Units
It’s a wonky title, but for me it works.  Focusing on leads is an outdated construct pushing marketers to generate “more” often only for the sake of more.  Focusing on logos doesn’t account for the fact that some companies might represent multiple opportunities across business units and time.  But demand units represents specific, defined needs within an organization.  No matter how many members of the buying committee, no matter how many individual touchpoints, there’s still a single defined demand unit.  This again focuses sales & marketing professionals on the opportunity for further, valuable alignment.

But Here’s The Caveat:

The Simplicity Masks Enormous Complexity & Diversity
I give SiriusDecisions credit for making the new model easier to understand.  But that comes at a time when buying environments are more complex than ever before.  And as Carlos Hidalgo smartly pointed out yesterday, buying committees and individual “demand units” often operate in vastly different ways.  So the elegant simplicity of the new Demand Unit Waterfall masks a ton of operational complexity and diversity that organizations still need to address to make it all work.

So, as usual, every answer begets a few more questions.  Then again, nobody said this was gonna be easy…

 

 

  • Kerry_Cunningham

    As usual, you are spot on, Matt. As co-author of the Demand Unit Waterfall, I agree with everything you’ve said, including the caveat that there’s a lot of complexity under the hood. Unfortunately, that complexity is the reality. We do think that the complexity obeys some common patterns, though (pivoting on go-to-market strategies and market maturity), and that will make it easier for technology vendors to step into the breach. In fact, some are already there. Meanwhile, we strongly encourage everyone who is in the process of implementing or tightening up service-level agreements to keep pushing forward. What you do today to tighten up demand management processes will pay dividends down the road.

    • Thanks Kerry and I completely agree. Not easy stuff and not something that can be done overnight. I also think the cultural shifts required as marketing further embraces revenue responsibility need to be considered and managed carefully. Marketers who have been traditionally focused on the “more” may be fearful of what the new alignment means.

      I’m a big fan of quickly setting new targets (revenue-centric vs marketing-centric objectives) but then allowing the organization (sales, marketing, customer success) some time to figure out what that means and how to fully operationalize it.

      Thanks again for another great event!