Don’t Go Chasing (Demand) Waterfalls

Demand Waterfall

A one-size-fits-all funnel inevitably ends up fitting no one. Why? Because every business is unique of course. Each has its own legacy, terminology, customers, industry, jargon and way of doing things. This means that a templated funnel won’t suffice.

I remember a great story on NPR a while back about the flaw in the “idea of average” that serves as an excellent allegory. During early WWII, U.S. fighter planes were designed to fit the “average” pilot, but this made everyone unhappy, not to mention endangered their lives, because they either couldn’t reach their controls or couldn’t move with their knees at their elbows. No pilot was actually 5 feet 7 ¾ inches. Not a single one.

By designing something for everyone, the Air Force designed them to fit no one. And it’s the same story with demand waterfalls.

Your business needs to tailor its funnel – it’s a basic prerequisite of proper Revenue Funnel Science – and once you do it, you’ll see a vast performance improvement.

How to Customize Your Funnel Blueprint

1. The funnel sections

First, let’s start off with the easy part. Nobody can tell you precisely what’s inside your funnel, but all funnels should have three distinct segments: top of funnel, middle of funnel and bottom of funnel (TOFU, MOFU and BOFU). Leads (or accounts, for those practicing ABM) move from top to bottom.

TOFU starts at the first encounter and BOFU ends when the lead exits the funnel, usually at the closed-won stage. Where does it go after that? Surprise! All organizations should have multiple funnels, including ones for cross-sell, upsell and renewals. For the time being however, let’s focus on the new-business funnel.

For most businesses, marketing owns TOFU, sales owns BOFU and they share responsibilities in MOFU.

2. The funnel stages

Within your three segments, there are several stages. Now, this is where most businesses get tripped up: You don’t need them all, and you can mix, match and add to your heart’s content. Just make sure that every business unit who touches the funnel is responsible for at least one stage.

For example, if you have a business development (BDR) team, they should own the handoff stage between sales and marketing. Marketing should own everything from the first encounter up to that point and sales should own everything following it.

The standard SiriusDecisions Rearchitected Demand Waterfall™ is a typical model for many organizations and displays these seven stages:

  1. Inquiry
  2. Automation qualified leads
  3. Tele-prospecting accepted leads
  4. Tele-prospecting qualified leads
  5. Sales-accepted leads (SAL)
  6. Sales-qualified leads (SQL)
  7. Won business

However, this model is too perfect: Real funnels are much messier. Seasoned marketers know that leads don’t always move linearly and instead often move sideways, backward, skip stages and do it all again and again. Architect your funnel for all the stages where a lead might end up in the real world.

Here are some practical examples: A business with an extremely fast sales cycle might not need the SQL stage. Or an app company with a self-provisioned free offering (often called the freemium model) might need a stage in-between inquiry and automation qualified leads to hold them. And perhaps, most importantly of all, nearly every business should have a recycle stage for disqualified leads.

It’s time to put your nose to the grinder and map out what makes sense for your business. We recommend luring the broader team into a conference room with pizza and then quickly locking the door.

3. The entry/exit criteria

Once you have your stages defined, you need to set your entry and exit criteria for each. There are two types of rules for each one: business terms and technical terms. Write the business terms out and get a universal agreement before encoding them in this living document of a funnel blueprint. The technical terms are what your sales and marketing operations folks will implement in their respective software systems so automation rules do what they’re supposed to do.

As you may have already guessed, everyone will have their own entry and exit criteria. For some, titles are important and lead scoring is meaningful. In that case, an entry criteria of “VP title and a lead score of at least 20” makes sense. For others, like industrial equipment or food suppliers whose prospects may have ambiguous or inconsistent titles, “talked to a sales development rep,” is a valid entry criteria.

Once your criteria are set and implemented, your funnel is shiny, custom and new – and it’s time to take it for a spin.

Real funnels are messy. That we can promise you. While simpler is always better, don’t worry too much what it looks like. Worry that you have customized it to your business and that your entry and exit criteria are properly set up so you can track movement and can measure its effectiveness.

Do that, and you’ll have built a fighter plane with adjustable seats and nothing between you and revenue success.

Build Your Funnel Right the First Time

Download our eBook, Revenue Funnel Building 101, and watch my on-demand webinar, which also includes a revenue funnel model worksheet to help customize your funnel.


Related Blog Posts