Probably the most significant new thinking to come out of the Sirius conference was an update to their Demand Waterfall. The Demand Waterfall was first introduced in 2006 and was updated in 2012. The new version reflects the new realities of the self-driven buyer, sales and marketing automation, and the high prevalence of groups (as opposed to individuals) involved in the buying decisions.
Below is a summary of some of the most significant changes, along with my thoughts on what I like and donâ€™t like about the updates.
Demand Units vs. Leads and Opportunities
Sirius is moving away from the notion of â€œleads and opportunitiesâ€ in favor of â€œDemand Unitsâ€. DUs are needs that you can fulfill within autonomous buying centers (typically BUâ€™s, functions or geos) of an account. DUs can be generated by Marketing, Sales or Tele-prospecting, and typically result from multiple touchpoints with your company over time.
Definition of â€œBuyersâ€
The â€œbuyerâ€ is a group of individuals who come together to solve a problem and are empowered to make a decision. The buying group is made up of individuals (personas) with organizational, functional and individual needs. Each brings their own perspectives, biases and information requirements.
As a seller, it is critical to know how these people relate to one another, and to build relationships with these people. It is also critical to know how well your solution â€œfitsâ€ their needs, and their sense of urgency to solve the problem.
Accounts can have multiple demand units if you have offerings that meet multiple needs. A Demand Map is used to describe the potential of an account in the context of the demand unit. For example, if there may be different buying groups with the same need in an organization, which is known as a Horizontal Demand Map. If there is a single buying group with the need for multiple solutions you offer, then you have a Vertical Demand Map. Most often, you will have a Matrixed Demand Map.
Demand Maps can help guide your cross-selling and upselling activity in existing accounts, and align marketing, sales and product groups on go-to-market strategy.
Stages of the Demand Unit Waterfall
- Target Demand
- Active Demand
- Engaged Demand
- Prioritized Demand
- Qualified Demand
- Pipeline Stage
- Closed / Won Stage
Target Market is actually above the Demand Unit Waterfall. It represents your Total Addressable Market (TAM) â€“ or the number of demand units that exist for your solution in the defined market. This gives you visibility into which organizations are likely to have a need and be a good fit for your solution. This stage helps to align your Marketing, Sales and Product functions behind a common target definition.
Not all of your TAM has a current need for what you sell. Active Market represents the number of demand units showing evidence of acute need or buying intention. The magic is in identifying these signals as soon as possible but with a reasonable degree of certainty.
For example, there could be trigger events that signal a need for what you sell. It could be downloading buyer-focused content from your site driven from digital ads. Perhaps you have the ability to notice an abnormally high level of traffic on your website from a company through reverse IP address look-ups. There are also emerging technologies that provide intent-based buyer intelligence by purchasing and enhancing lead and traffic data from popular web sites.
Identifying your Active Market narrows your focus on outbound tactics to prospects thought to be in-market.
Engaged Demand occurs when one or more members of a Demand Unit self-identifies to the seller. The stimulus can come from a variety of sources such as web traffic, form completions in response to content offers, or sales outreach.
There will always be information junkies who download content or register for events who canâ€™t or wonâ€™t ever buy from you. The key is to identify over time patterns that are leading indicators of qualified need. This will influence your lead scoring criteria, especially if you can map engagement from multiple individuals in a demand unit.
Prioritized Demand is Engaged Demand that is ready for a live conversation. Maybe they respond to a request from a lead development or business development rep, complete a contact form, engage in chat on your website, or call you for a conversation about a need they are trying to fulfill.
In this stage, your sales or tele-sales reps are now engaged in a live conversation with an individual in a buying group, and the Demand Unit has satisfied your qualification criteria. At this point, you should start to touch other people in the buying group in the demand unit decision.
You are now in an active pursuit to win business with a qualified opportunity DU. You should have additional stages of your sales process with activities and exit criteria based on best practices to guide your sellers to a successful outcome.
Winning a DU is the start of a business relationship that can and should grow as you help your customer succeed.
What I Like About the New Waterfall
Overall, I really like new waterfall model. It is not only simpler, but also a better representation of how I see business buyers buy in the real world.
I like that the new waterfall starts with Target Demand. I believe that will drive some very productive strategic TAM discussions among business leadership that will help focus and align organizations.
I like losing the focus on leads and the progression of leads to opportunities. I strongly believe that B2B marketers need to move beyond â€œleadsâ€ as a measure of impact and focus more on pipeline generation. If what youâ€™re doing isnâ€™t driving sales, then you need to think harder about what youâ€™re doing and why.
As a CMO for the past 12 years, I rarely saw (and still donâ€™t see) MQLs converting to SALs. If you create good content that people want to read and will fill out a form to get it (i.e., become an MQL), its great brand building. There may even be times when your thoughts are so profound that you trigger an opportunity. However, most often people just want to read the content and donâ€™t want to be accosted by a sales person. Iâ€™m no different myself. Having a LDR blow-up my inbox because I downloaded a whitepaper is a real annoyance. I think the new waterfall will result in less of that behavior.
Iâ€™m also a big believer in more precise targeting through research, trigger events and account-based marketing. The new waterfall accounts for these changes and many others that reflect the reality of how buyers buy.
I also like the focus on the Demand Unit and the need to expand within accounts once you land. I felt that the previous versions of the waterfall were overly focused net-new logo acquisition. I realize that they werenâ€™t, but getting an organization into a â€œDemand Unitâ€ mindset really helps focus proper time and attention on growth through cross-sell and upsell.
What I Donâ€™t Liked About the New Waterfall
Unless Iâ€™m misunderstanding something, I think requiring â€œevidence of need or buying intentionâ€ to move a BU from Target to Active Demand is too aggressive too soon, and overly dependent on highly imperfect information. Iâ€™m comfortable with using triggers to focus effort, because triggers are usually based on factual information. However, buyer-intent technology is very early stage and unproven. Unless you have countless research resources, you simply would never have enough water in your waterfall. Alternatively, that water in your waterfall might actually be vapor created from vaporware.
It seems that a stage is missing between Target and Active Demand. This stage would reflect your Target Demand that is engaged with your brand â€“ maybe consuming content or attending events â€“ but doesnâ€™t have an active need or buying intention. As a marketer and a business leader, I want my Target Market engaged with my brand, and I want evidence this is happening. Itâ€™s a good first step that could lead to future consideration when there is a need, or when we can loosen the status quo to create a need through our content marketing efforts.
Iâ€™m also unsure about the impact of the Engaged Demand stage. By definition, a member of the Demand Unit must self-identify. Iâ€™m assuming this means they fill out a form and download something from our web site, or take a call from a BDR or LDR. If we know they have an active need and are downloading our content then great â€“ weâ€™ll deploy resources to follow-up. However, weâ€™re not certain if the need is real, then what are we supposed to do? Have our LDRs blow-up their phones and inboxes? It could be a wasteful use of your resources and a bad brand experience calling Targets with no intent of buying.
Finally, Iâ€™m not sure if Sirius Decisions has mapped the buyerâ€™s journey to their new waterfall, but it would be useful to better define what the buyer is doing at each stage to ensure that the sales and marketing activities are properly aligned. I think thatâ€™s an overall general criticism of the Waterfall. It is really â€œSeller Focusedâ€ when we live in a world where the buyer holds tremendous power.
In closing, I commend Sirius Decisions for updating and simplifying their Waterfall model. Many of the changes are very good and moving in the right direction. Like all things new, there are a lot of questions and plenty of opportunities for clarifications and corrections.