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Beyond Measurement: Advanced Demand Waterfall Use Cases
Jason Hekl Vice President 14 May 2015
Terry Flaherty Sr. Research Director
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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
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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
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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)
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
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Foundational Building Blocks for Advanced Demand Waterfall Use Cases What your organization needs to get started
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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
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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
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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
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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
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Advanced Waterfall Use Cases Key questions, implementation guidelines and example scenarios
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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?
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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
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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
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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
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
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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
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
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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
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
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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)
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
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
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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
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
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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?
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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
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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
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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
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
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Advanced Waterfall Diagnostics Waterfall diagnostics methodology leverages performance patterns,
hypothesis maps and supporting data to identify and improve lead management issues.
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
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
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Advanced Waterfall Diagnostics Waterfall diagnostics methodology leverages performance patterns,
hypothesis maps and supporting 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
Both service-level and call quality issues are impacting conversion efficiency
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Advanced Waterfall Diagnostics Waterfall diagnostics methodology leverages performance patterns,
hypothesis maps and supporting 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
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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?
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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
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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
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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
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
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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
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
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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)
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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
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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?
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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
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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
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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 $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
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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
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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 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
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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
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