beyond measurement advanced demand waterfall use cases

Beyond Measurement: Advanced Demand Waterfall Use Cases

Jason Hekl Vice President 14 May 2015

Terry Flaherty Sr. Research Director

2015 SiriusDecisions. All Rights Reserved

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Todays Session: Flexing Your Waterfall Muscles


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Executive Summary

Key issues Too few organizations have utilized the Demand Waterfall beyond functional

alignment, process definition and basic measurement Advanced Demand Waterfall applications require the addition of new data

elements, collection strategies and analysis methodologies Aggregate Demand Waterfall reporting masks insights and diagnostics that can be

applied to optimize and improve marketing and sales programs

What you will walk away with An understanding of the value of advanced use cases for both marketing and sales Insight into data collection and analysis methodologies needed for these use cases Strategies to diagnose investments in marketing and sales programs

SiriusPerspective:


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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.

Marketing Qualification

Inquiry

Outbound Inbound

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)

Performance Measurement

Process Diagnostics

Demand Planning

Revenue Forecasting

SiriusPerspective:


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Inquiry

Outbound Inbound

Close

Won Business

Sales Qualification








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

Additional Data Elements

Demand Waterfall Views

Demand Waterfall Metrics

Context Filters

Foundational Building Blocks for Advanced Demand Waterfall Use Cases What your organization needs to get started

SiriusPerspective:


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Waterfall Analysis Data: Its All About the Arrival Understanding a leads current Waterfall stage and the path it took is

critical for measuring the efficiency and effectiveness of this process.

Stage Arrival Date

INQ 2/7/15

AQL 3/11/15

TAL 3/11/15

TQL 3/21/15

SAL 3/23/15

SQL 4/23/15

C/W

SiriusPerspective:


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Waterfall Analysis Views: Supporting Business Insight When analyzing Demand Waterfall performance, create and leverage

multiple views into the Waterfall data based on different business contexts.

Captures the Path Through the Demand

Waterfall

Identifies Current Stage in Waterfall

Current Stage Passport

SiriusPerspective:


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Waterfall Analysis Metrics: Required for Actionable Insight Waterfall-specific data fields combined with analysis views enable

the creation of key metrics required for advanced Waterfall use cases.

How efficiently are leads converting

through Waterfall stages?

What do I currently have in each stage of

the Waterfall?

How fast are leads moving through the

Waterfall?

Volume Conversion Rate Velocity

SiriusPerspective:


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Waterfall Context Filters: Telling the Right Story When measuring Waterfall performance, profile and origination

filters ensure that the Waterfall is measured in the correct context.

Aggregate

Data filters provide context

Business Units

Aud

ienc

e Pr

ofile

Fi

lter

s

Campaign Creation Date

Lead

Ori

gina

tion

Fi

lter

s

Geographies Customer Types


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Polling Question

How would you rate the maturity of your organizations current Waterfall data collection and analysis methodology? Beginner Intermediate Advanced Best practice

Advanced Waterfall Use Cases Key questions, implementation guidelines and example scenarios

SiriusPerspective:


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Advanced 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 issue?

SiriusPerspective:


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Advanced Performance Measurement: How Its Done Waterfall measurements must be disaggregated to conduct meaningful analysis of the programs and processes contributing to current performance.

Define Waterfalls

Isolate Cohorts

Build Dashboards

Convene Council

Diagnose Problems

Step 1

Step 2

Step 3

Step 4

Step 5

SiriusPerspective:


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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

SiriusPerspective:


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TBD



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

Campaign #1

Campaign #2

Out of Campaign

3.2 2.8 3.1

1.3% 1.4% 2.2%

88 85 90

$830 $745 $590

With Waterfalls defined, isolate cohorts by lead origination filters and analyze for volume, conversion and velocity

SiriusPerspective:


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Revenue Requirement

Isolate Cohorts

Build Dashboards

Step 4

Step 5

Define Waterfalls

Campaign #1

Campaign #2

Non-Campaign

INQ

M

QL

SQL

WO

N

24,900 19,100 8,800

1,494

979

274

2,617

2,355

707

660

594

166

6.0% 9

65.5% 15

28.0% 40

$30.1M 64

13.7% 5

90.0% 15

30.0% 41

$69.9M 61

7.5% 7

90.0% 20

28.0% 42

$14.1M 69

Volume Conv% Velocity

Deals Won Value Cycle

Operationalize measurements into management dashboards, giving visibility into both program performance and effectiveness of lead management processes

SiriusPerspective:


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Revenue Requirement

Isolate Cohorts

Build Dashboards

Step 4

Step 5

Define Waterfalls

|------------SLAs OUT OF COMPLIANCE-----------|

Engaged in 48-72 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.



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

SiriusPerspective:


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Inquiry

Outbound Inbound

Close

Won Business

Sales Qualification










Revenue Requirement

Isolate Cohorts

Build Dashboards

Convene Council

Step 5

Define Waterfalls

Reinforce functional daily management with a cross-functional lead management council that meets periodically to review and optimize programs and processes

SiriusPerspective:


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Revenue Requirement

Isolate Cohorts

Build Dashboards

Convene Council

Diagnose Problems

Define Waterfalls Make Observations (Pattern Analysis) 1

Ask Why 2

Form Hypotheses 3

Test Hypotheses 4

Analyze Findings and Act 5

Ongoing optimization requires a diagnostic approach to identifying and address underperforming programs and processes

SiriusPerspective:


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Advanced 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?

SiriusPerspective:


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Advanced Waterfall Diagnostics: How Its Done Waterfall diagnostics methodology leverages performance patterns, hypothesis maps and assessments to identify and resolve lead management issues.

Identify Patterns

Evaluate Hypotheses

Assess Processes

Prove Hypotheses

Take Action

Step 1

Step 2

Step 3

Step 4

Step 5

SiriusPerspective:


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Advanced Waterfall Diagnostics Example Waterfall diagnostics methodology leverages performance patterns,

hypothesis maps and supporting data to identify and improve lead management issues.

Revenue Requirement

Step 2

Step 3

Step 4

Step 5

Identify Patterns Peers Acme

Total Waterfall Efficiency (INQ Won)

B 0.38% 0.65%

Marketing Function (INQ TQL)

B 5.7% 10.7% Sales Function

(TQL Won)

A 6.1% 6.8%

Automation Qualification (INQ AQL)

A 57.0% 54.0%

Tele Qualification (AQL TQL)

B 9.9% 19.8%

Sales Qualification (TQL SQL)

A 31.0% 29.1%

Sales Close (SQL Won)

A 22.0% 21.0%

The ABAA pattern identifies a likely break point in the AQL-to-TQL conversion process

SiriusPerspective:


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Advanced Waterfall Diagnostics Example Waterfall diagnostics methodology leverages performance patterns,


Revenue Requirement

Evaluate Hypotheses

Step 3

Step 4

Step 5

Identify Patterns

xBxx

AQL TQL

Input (AQL)

In-Process

Output (TQL)

AQLs do not meet teles profile fit expectations

Over-qualification of TQL

Broken service-level agreements

Telequalification skills/enablement gaps

Messaging delivered by tele is not resonating

Solution not addressing market needs

AQLs sent to tele prematurely

The hypothesis map for the ABAA pattern identifies possible reasons for under-performance

SiriusPerspective:


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Advanced Waterfall Diagnostics Waterfall diagnostics methodology leverages performance patterns,


Revenue Requirement

Evaluate Hypotheses

Assess Processes

Step 4

Step 5

Identify Patterns

Defi

ne

No consensus on lead definition

Documented and adopted lead definitions by segments

Enga

ge

No rules for number of followup attempts

Clear rules for followup types and volume optimized by yield curve analysis

Tim

ing No timeframe for

acceptance, engagement or lead timeouts

Clear rules for acceptance, engagement or lead timeouts

Enfo

rce

No enforcement of SLA rules

SLA compliance key part of management culture

No

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Are broken service-level agreements with teleservices an issue for our organization?

Definitely

1 Probably

2 Possibly

3 Not Likely

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Assessments compare current process performance to best practices

SiriusPerspective:


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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

Both service-level and call quality issues are impacting conversion efficiency

SiriusPerspective:


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Revenue Requirement

Form Hypotheses

Assess Processes

Prove Hypotheses

Take Action

Identify Patterns

SLA Governance

Notifications Escalation Yield Analysis

Teleservices

Call Scoring Sales Alignment Culture

SiriusPerspective:


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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?

SiriusPerspective:


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Advanced Revenue Forecasting: How Its Done Demand Waterfall revenue forecasting leverages conversion, velocity and current volume metrics to identify and prevent future revenue shortfalls.

Analyze Volume

Forecast Value

Forecast Timing

Identify Gaps

Adjust Plan

Step 1

Step 2

Step 3

Step 4

Step 5

SiriusPerspective:


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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 3,568

Revenue Requirement

Step 2

Step 3

Step 4

Step 5

Analyze Volume

Validate that current stage volume reflects active engagement and buying cycles

SiriusPerspective:


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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

SiriusPerspective:


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Revenue Requirement

Forecast Value

Forecast Timing

Step 4

Step 5

Analyze Volume

Expected Timing of Waterfall Revenue

Avg. Days at Stage

Avg. Days to Close

Quarter Impact

Estimated Revenue

INQ 40 221 3 $2,595,293

AQL 14 181 3 $132,503

TAL 27 167 2 $530,012

TQL 12 140 2 $265,006

SAL 68 128 2 $530,012

SQL 60 60 1 $1,722,504

$5,775,367

Waterfall stage velocity metrics can be leveraged to forecast likely revenue impact by stage and quarter

SiriusPerspective:


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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

$3,000,000 Re

venu

e

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)

SiriusPerspective:


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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

Analyze Volume

Acceleration

Passive Recycle Nurtures

Pipeline Acceleration

Economic Value Tools

Service-Level Management

Sales Handoff Compliance Culture

SiriusPerspective:


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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?

SiriusPerspective:


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Demand Planning: How Its Done Effective demand planning is an iterative process used to optimize program types and budgets to reach future revenue goals.

Set Goal

Reverse Waterfall

Align Campaigns

Evaluate Scenarios

Finalize Plan

Step 1

Step 2

Step 3

Step 4

Step 5

SiriusPerspective:


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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

Marketings target represents 25% of total revenue with an $840K budget

SiriusPerspective:


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Revenue Requirement

Reverse Waterfall

Step 3

Step 4

Step 5 Plan

Set Goal

Waterfall Analysis

Revenue Goal $7,000,000 Deal Size $40,000

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 71,216

SQL to C/W 18% SQL 278

C/W 50

Leveraging current Waterfall conversions, 16,763 inquiries are required to reach the revenue goal

SiriusPerspective:


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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

SiriusPerspective:


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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 71,216 581

SQL to C/W 18% 21% SQL 278 238

C/W 50 50

Implementing nurture programs, enablement and SLA governance improves conversion

SiriusPerspective:


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Revenue Requirement

Reverse Waterfall

Align Campaigns

Evaluate Scenarios

Finalize 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


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Polling Question

Which Waterfall use case do you think will add the most value for your organization moving forward? Performance management Waterfall diagnostics Revenue forecasting Demand planning


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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 standardization 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


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Recommended Research

Core Strategy Report: Waterfall Performance Patterns Core Strategy Report: Advanced Demand Waterfall Analysis Core Strategy Report: The Demand Waterfall Through a

Process Lens The Demand Waterfall, Rearchitected Identifying Signals of Qualification Issues Within the Lead

Management Process The Cascading Effects of the Demand Waterfall Core Strategy Report: The SiriusDecisions Demand Waterfall

Implementation Guide Demand Waterfall Stage Velocity Demand Waterfall Velocity: Prerequisites Reversing the Rearchitected Waterfall Driving Process Efficiency in Lead Management

beyond measurement advanced demand waterfall use cases

Documents

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