I’ve been excited about the coming of SiriusDecisions’ revised waterfall since February when Kerry Cunningham first told me he was working on it. Like a movie trailer, Kerry implied significant changes, without actually giving anything away. I was intrigued – and the unveiling last week didn’t disappoint.
Though the first SiriusDecisions Demand Waterfall was created only about 10 years ago, its concepts refine ideas that go back to the 1980s and 90s. It’s used to put complex strategic and procedural concepts into a more digestible framework.
This was no easy task ten years ago. So, revising this framework today during a time of great and rapid change in the marketing discipline itself – think of all the new tech, data, targeting and engagement tactics, etc. – is a commendable achievement.
You’re going to see lots of feedback on the new waterfall. In fact, the revisions could easily provide enough fodder for a 50-page research paper. But before jumping too far into the weeds, we thought it best to take a step back and glean the biggest takeaways.
After speaking to several practitioners, consultants and analysts about SiriusDecisions’ New Demand Unit Waterfall, there seems to be a building consensus around three themes:
1. Acknowledgment of the importance of pre-inquiry/pre-lead efforts at the top of the funnel
The top two layers of the latest edition of the demand waterfall – target demand and active demand – are completely new, including major concepts such as TAM, total addressable market. This addition instructs marketers to ask: How big is the market you are going after? What is the potential? Without identifying TAM, marketing strategies could be dead on arrival.
Marketing frameworks to date have neglected pre-lead/inquiry stages, and this has consequently enabled a sort of top-funnel apathy and complacency toward the status quo among marketers. The result is top-funnel chaos, including disparate/siloed channels, manual, time-sucking processes, opaque performance measurement/attribution, and most importantly, over-spending on top-funnel initiatives (specifically media) to compensate for these inefficiencies.
This addition to the waterfall comes at a time when leading B2B marketing teams are refocusing their top-funnel efforts. So, it’s nice to see that a notable analyst firm is catching up. For example, Jennifer Pockell Dimas, VP of Marketing at PLEX Systems, commented:
“At PLEX we added a layer on top of the traditional SiriusDecisions waterfall four years ago to denote responses from non-target accounts, and last year, I added an additional measure on top called ‘engagements,’ which is pre-form activity such as email clicks or high value web visits.”
This push upstream is a clear reflection of industry trends and need for greater top-funnel efficiency. It will be interesting to watch how this affects budget allocation and marketing tech investments going forward. (Note to Kerry and Terry Flaherty: this may need to be your next SiriusDecisions report.)
2. A more refined unit of measurement that better reflects today’s B2B marketing needs
The new waterfall replaces the lead framework with the more sophisticated concept of demand units.
Though I think we can all agree that the last thing B2B marketers need is a new term or buzzword, the demand unit concept makes sense, for no other reason than it highlights the complexity and various elements of demand creation data, which was previously oversimplified by the term lead or inquiry.
This oversimplification has likely contributed to why top-funnel efforts have been so greatly neglected; when you approach demand simply as a lead, it’s easy to think that generating demand is a quick, simple process. We all know that’s the furthest thing from reality.
By beginning to broach the complexities of demand units, I’m betting that more marketing orgs will allocate greater attention and resources to optimizing the initial demand creation stages by which marketers identify and engage these units. And, by focusing more on the top, they’ll find that they get better performance throughout the entire funnel.
This, however, isn’t to say there won’t be problems implementing the demand unit framework. Executing on the new demand unit concept will require major procedural changes for marketing orgs.
The transition from targeting an individual (or even account) to a buying unit made up of disparate individuals with varying needs (see the demand unit matrix below) will require teams to multiply efforts across a wide combination of buying groups and their needs (as outlined by SiriusDecisions).
I believe the framework is of great value, but it’ll take us B2B marketers some time to get there. To add some color to these sentiments, Jennifer Pockell Dimas commented:
“In terms of your complications…. yes – I talked to Terry [Flaherty] about this too. Take PLEX. We have 25K Parent and Children target accounts, 15K Global Ultimate Parents. No one will go through those accounts to determine which sales plays (demand units) could possibly be counted at each account – it’s just not scalable or really knowable for us until we REALLY get in there and talk to folks at the account. It would make more sense if we prioritized a small subset of our target list, but not for our whole list. I do, however, like the way it allows you to bridge from people to opportunity counting though – good thinking, just not scalable for my enterprise play.”
We’ll have to wait and see how this plays out. I’m thinking that enough marketing orgs will lead the way by implementing the demand unit framework, which will then, in turn, encourage a few martech vendors to evolve their capabilities to support these efforts. SiriusDecisions is probably a few years ahead of this one, but that’s their job.
Further, the new demand unit framework will very likely increase the value of sales development reps (SDRs) and their integration with the marketing organization. In fact, this leads to a third significant observation…
3. Replacing sales-marketing alignment with full team integration
The new waterfall integrates marketing and sales more than ever before. SiriusDecisions dropped the “M” from “MQL” and “S” from “SQL,” removing a hereto important delineation of responsibilities and efforts.
Sales-marketing alignment isn’t anything new, but with the growing importance of ABM (a bellwether of the demand unit approach), alignment has slowly evolved into full-blown integration of efforts, where sales and marketing teams work side-by-side throughout the buyers journey rather than owning individual stages.
As Matt Heinz noted in his recent blog post on the new waterfall:
“I LOVE that the current nomenclature specifically and intentionally does not call out where sales is involved vs marketing involved. For best-in-class organizations, those groups work in a seamless, cohesive way to drive and convert demand.”
“The removal of source function from the waterfall cements two massive shifts in the philosophy of demand management: the migration from ‘sales-and-marketing alignment’ to a truly integrated collaboration, and the diminishing importance of function or departmental attribution in the pursuit of account-based revenue.”
Though, some may have difficulty pulling the plug on departmental attribution. On the topic of how the new waterfall affects pipeline measurement, Jennifer Pockell Dimas commented:
“I will always track sourcing even if we don’t talk about it as much – we need to know that all legs of the stool (marketing, sales and partners) are contributing to demand sourcing in a way we feel good about. That said, more pipeline is what we all need wherever it comes from and sales, marketing and partners are better aligned then ever for demand creation.”
The shift from departmental alignment to integration will be felt strongest with regard to funnel measurement and analytics. Everyone seems very interested in seeing how this plays out.
What does all this mean for B2B marketers?
The revisions made in the upgraded waterfall are pretty significant, with far-reaching implications to the entire B2B marketing community. There will be substantial interest among marketers and organizations in finding answers to questions such as:
- How will this revised framework affect current marketing tech stacks?
- In what ways will it affect the allocation of marketing and sales resources?
- How will it change the way measure/analyze marketing and sales performance?
- What are the implications for account-based marketing/account-based revenue strategies?
Again, I couldn’t begin to approach all these questions in a single post. But we’ll be working with partners to provide more useful perspectives and resources in the coming months.