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SiriusDecisions Advanced Waterfall Use Cases - Circulate 2016

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www.fullcircleinsights.com

Jon Donlon discusses the Demand Waterfall and explores the best practices to unlocking sales and marketing performance in world class organizations.

April 11, 2016 @ the Circulate 2016 conference hosted by Full Circle Insights, a B2B marketing analytics and funnel metrics solution provider.

Published in: Marketing

SiriusDecisions Advanced Waterfall Use Cases - Circulate 2016

  1. 1. Circulate 2016 April 11, 2016 Demand Waterfall Use Cases John Donlon Research Director @SiriusJD
  2. 2. Introduction to the Demand Waterfall
  3. 3. © 2015 SiriusDecisions. All Rights Reserved 3 Lead Management Process The Lead Management Process Inquiry Closed/Won
  4. 4. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 4 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
  5. 5. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 5 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. Marketing Qualification Inquiry Inbound Tele Qualified Lead (TQL) Tele Accepted Leads (TALs) Automated Qualified Lead (AQL) Tele Generated Lead (TGL) Outbound
  6. 6. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 6 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. Marketing Qualification Inquiry Sales Qualification Inbound Tele Qualified Lead (TQL) Sales Accepted Leads (SALs) Tele Accepted Leads (TALs) Automated Qualified Lead (AQL) Tele Generated Lead (TGL) Sales Generated Leads (SGLs) Outbound Sales Qualified Lead (SQL)
  7. 7. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 7 Close 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. Marketing Qualification Inquiry Sales Qualification Inbound Tele Qualified Lead (TQL) Sales Accepted Leads (SALs) Tele Accepted Leads (TALs) Automated Qualified Lead (AQL) Tele Generated Lead (TGL) Sales Generated Leads (SGLs) Outbound Closed Won Sales Qualified Lead (SQL)
  8. 8. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 8 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. Marketing Qualification 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)
  9. 9. Demand Waterfall Use Cases
  10. 10. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 10 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
  11. 11. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 11 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
  12. 12. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 12 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? Performance Measurement
  13. 13. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 13 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 Performance Measurement
  14. 14. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 14 • TBD Advanced Performance Measurement Examples Waterfall measurements must be disaggregated to conduct meaningful analysis of the programs and processes contributing to current performance. 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 Performance Measurement
  15. 15. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 15 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 Marketing Qualification 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)
  16. 16. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 16 Advanced Performance Measurement Examples Waterfall measurements must be disaggregated to conduct meaningful analysis of the programs and processes contributing to current performance. 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 Performance Measurement Convene Council Diagnose Problems
  17. 17. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 17 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
  18. 18. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 18 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
  19. 19. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 19 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 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
  20. 20. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 20 Advanced Revenue Forecast Example 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
  21. 21. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 21 Advanced Revenue Forecast Example 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
  22. 22. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 22 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
  23. 23. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 23 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
  24. 24. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 24 Demand Planning Example Demand planning should include investments in more than acquisition programs to optimize revenue performance. 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
  25. 25. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 25 Demand Planning Example Demand planning should include investments in more than acquisition programs to optimize revenue performance. 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
  26. 26. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 26 Demand Planning Example Demand planning should include investments in more than acquisition programs to optimize revenue performance. 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
  27. 27. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 27 Demand Planning Example Demand planning should include investments in more than acquisition programs to optimize revenue performance. 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
  28. 28. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 28 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
  29. 29. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 29 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 Waterfall Diagnostics
  30. 30. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 30 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.
  31. 31. Demand Waterfall Performance Patterns Identifies where the process is underperforming
  32. 32. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 32 The Demand Waterfall Through a Process Lens The Demand Waterfall viewed through a process lens contains four highly integrated sub-processes. Waterfall Diagnostics
  33. 33. © 2015 SiriusDecisions. All Rights Reserved 33 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 Waterfall Diagnostics
  34. 34. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 34 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
  35. 35. © 2015 SiriusDecisions. All Rights Reserved 35 Demand Waterfall Diagnostics via Process Decomposition Total Demand Waterfall Throughput Macro-Function Level Primary Diagnostic Level Waterfall Diagnostics
  36. 36. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 36 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
  37. 37. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 37 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! Waterfall Diagnostics
  38. 38. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 38 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 Waterfall Diagnostics
  39. 39. Overview of Demand Waterfall Diagnostics Methodology and Tools
  40. 40. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 40 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 Waterfall Diagnostics
  41. 41. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 41 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 Evaluate Hypotheses Step 3 Step 4 Step 5 Identify Patterns The hypothesis map for the ABaa pattern identifies possible reasons for underperformance Waterfall Diagnostics
  42. 42. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 42 Advanced Demand Waterfall Diagnostics Demand Waterfall diagnostics methodology uses performance patterns, hypothesis maps and data to identify and improve lead management issues. 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 Waterfall Diagnostics
  43. 43. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 43 Advanced Demand Waterfall Diagnostics Demand Waterfall diagnostics methodology uses performance patterns, hypothesis maps and data to identify and improve lead management issues. 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. Waterfall Diagnostics
  44. 44. SiriusPerspective: © 2015 SiriusDecisions. All Rights Reserved 44 Advanced Demand Waterfall Diagnostics Demand Waterfall diagnostics methodology uses performance patterns, hypothesis maps and data to identify and improve lead management issues. Revenue Requirement Form Hypotheses Assess Processes Prove Hypotheses Take Action Identify Patterns SLA Governance • Notifications • Escalation • Yield Analysis Teleservices • Call Scoring • Sales Alignment • Culture Waterfall Diagnostics
  45. 45. © 2015 SiriusDecisions. All Rights Reserved 45 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
  46. 46. Q&A

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