Create a demand funnel
Create a demand funnel
1. Choose the demand generation funnel that best suits your current marketing and sales operations, age of company, and business goals.
For example, some models work better for young startups than enterprise businesses. Or, if you are SaaS, you need a model that considers both acquisition and customer expansion revenue. Each model has pros and cons. How complex is your marketing and sales operation? Do you have dedicated inbound and/or outbound efforts? Do you do account-based marketing? How long is your sales process? The SiriusDecisions Demand Waterfall (Funnel) aligns well with an inbound marketing model in which a marketing team sources inquiries from prospects, qualifies them, and passes them to sales to close or disqualify. This simple funnel works only if you have a lot of inbound interest – people coming to your business and asking to buy your product – and a sales team focused on fielding inquiries. SiriusDecisions Rearchitected Demand Waterfall (2012) may align well if you have both inbound and outbound efforts. It allows you to track the ROI of your lead sources between inbound and outbound campaigns, all the way through to revenue. This works well for more complex sales motions that require a three- to six-month sales cycle with more than one person to influence in the buying process. The DemandGen Framework considers customer expansion revenue in addition to the acquisition side which is covered by the SiriusDecisions models. If you’re in SaaS, expansion revenue is critical to success and, according to Profitwell, can separate you from your competition. If you are still a young startup with less than ten customers, you may want to put off customer expansion tracking for later on. SiriusDecisions Demand Unit Waterfall (2017) may benefit those with account-based marketing efforts that coordinate marketing and sales to identify and convert demand within large companies because it focuses the funnel tracking on buying units vs leads. A buying unit might be a line of business, a brand underneath a house of brands, or a team within an organization. If you spend a lot of time customizing your demand generation campaigns and sales approaches to individual accounts and individual teams within those accounts, this model is a great fit for you. Read DemandGen.com and blog posts on platforms like IntelligentDemand.com to understand the nuanced differences between each model.
2. Set demand funnel definitions and progression criteria before you set up marketing automation platforms to ensure that they will fit both the platform and sales processes.
Use metrics like Marketing Qualified Leads (MQLs), Sales Qualified Leads (SQLs), and deals or opportunities created from those to set specific criteria for passing from one stage of the funnel to the next. In a perfect world, a lead starts at the top (MQL) and works its way to the bottom (closed-won opportunity). Enroll the help of a marketing operations or sales ops person to figure the combination of the model you choose and the tool you use. Alternatively, get help from an agency that specializes in this work. Here are some examples of stage definitions: Lead. A new email is created in HubSpot. MQL. A lead performs enough activity to reach a lead score of at least 19 by downloading guides, using the open parts of our product, requesting a demo. SQL. An MQL is deemed worthy of a response from our sales team, and an SDR begins pursuing the SQL. Opportunity. An SDR books an initial meeting with the prospect and creates a new deal in HubSpot to begin tracking the sales process. Customer. The deal is handed off from the SDR to an account executive, who eventually closes the deal. Your stage definitions and hand-off criteria must reflect your actual sales process as it is today so you can measure conversion rates between the stages and know where to focus when your funnel, inevitably, springs a leak. Don’t just take definitions from the models or other companies and apply them to your company and funnel. For example, if you have a 50% conversion rate from MQL to SQL, that’s not bad (depending on your volume). But if you have only a 5% conversion rate from MQL to SQL, something might be wrong. The only way to know is if those definitions and hand-off criteria are airtight so that you can measure a baseline and begin optimizing it.
3. Once you have a firm grasp of your chosen demand funnel’s definitions for each stage and progression criteria, make sure those definitions align with your business’s view of how deals are created.
If the sales team already works with marketing leads, ask them which leads are better than others and when they consider a deal created. Then, use their feedback to finalize the criteria of a lead that becomes an MQL, an MQL that becomes an SQL, an SQL that becomes an Opportunity, and so on. Once you have alignment with your sales team, begin the implementation. If you don’t align your funnel’s definitions with those of your sales team, your work will be in vain.
4. Create a written document of your definitions and staging criteria and an agreement between marketing and sales teams on their responsibilities within the demand funnel.
Go into as much detail as possible when you document the stages of your funnel and the criteria leads must achieve to move to a new funnel stage. Some might call this a Service Level Agreement (SLA) between your teams. The most important thing is that your teams agree to what’s written down. That makes it real and transparent to you and the rest of the company. If you and your sales team can’t agree on a shared view of your demand funnel’s staging and progression criteria, you’re at an impasse. You must find a way around it and get their agreement on a shared definition of the demand funnel and how leads progress through it. Doing this pays off big time: 56% of aligned organizations met their revenue goals, and 19% beat their goals. Among misaligned organizations, by comparison, just 37% met their revenue goals, and just 7% beat them. Among survey respondents with a formally agreed-upon sales/marketing definition of what constitutes a qualified lead, 29.8% claim a lead conversion rate (to opportunities) of over 75%. Only 18.2% of firms lacking an agreed-upon definition boasted conversion rates at that level. Aligned organizations achieve up to 19% faster revenue growth and 15% higher profitability than other companies.
5. Get buy-in from your sales team by showing them how the demand funnel will help them to get more leads or help deals close faster, but also listen to their suggestions and think critically about how their input might improve or damage your funnel.
When making your case that the funnel should follow specific stages and lead should have specific criteria to achieve before moving from stage to stage (like from MQL to SQL), frame your arguments in ways that help your sales team minimize losses and maximize gains. This helps them understand that you’re trying to help them with this effort. For example, here’s some language you might be able to adapt to make your case: For heads of sales like VPs and Chief Revenue Officers: “Here’s how I think we can help your team spend more time on deals that are more likely to close and quickly disqualify ones that don’t. The SDR team wants to qualify deals and pass along ones that meet their qualification criteria. If we create deals only after SDRs have had a chance to qualify them, those deals will be more likely to close and a better use of your account executives’ time.” For salespeople or account executives: “Don’t waste your time on bad opportunities. If SDRs are sending over better-qualified deals and disqualifying weaker ones, you’ll spend more time on deals that are likely to close and waste less time with unqualified prospects.” For sales development like MDRs, SDRs, and ISRs: “Let’s work together to make sure the leads you work from marketing are likely to move forward to a discovery call and result in more deals.” Since your goal is to ensure that this demand funnel represents the reality of the sales team’s work of converting leads into deals, there should be some give and take between informed opinions from marketing and sales as well as data. Sales teams’ opinions carry weight because they’re the ones talking to customers and prospects all day and are responsible for the company’s future. So hear them out before you get your agreement down on paper. It may take up to six months to finalize your demand funnel. Work as best as you can, even without a funnel, until you finish this process.
6. Set up your marketing automation platform to track your leads within the funnel and launch your first campaigns.
Consult your vendor’s lifecycle stage fields and workflows to map and measure how your contacts and accounts move through your new demand funnel. Don’t be afraid to enlist the help of a marketing operations specialist or agency to get this done if you don’t have the skills to implement it yourself. Once you’ve implemented it, run campaigns to generate leads and see how they progress down the funnel. From there, make informed decisions on how to optimize stage progression at each level.