The whole essence of the “Waterfall” model is a move away from a purely leads-focused approach to demand gen, in favor of something more sophisticated, strategic, and reflective of the realities on the ground for B2B sales and marketing. It’s another manifestation of the move towards effective, personalized, audience-centric marketing in the B2B industry we’ve seen in recent years.

Introducing the new Demand Unit Waterfall, SiriusDecisions Senior Research Director Terry Flaherty framed the latest evolution of the concept as a reaction to a shift towards account-based strategies in particular. Again, this isn’t just a conceptual shift, but rather one which more accurately reflects the very real dynamics of B2B buying cycles today.

In 2006, SiriusDecisions launched the Demand Waterfall, which quickly became the gold standard methodology for defining key process stages and handoff points in the lead management process, as well as improving sales and marketing alignment. Over the next six years, the market evolved with the rise of inbound marketing, the growing importance of tele, and recognition that sales generated leads too. This realization led to a need to evolve the
methodology into a re-architected Demand Waterfall.

Since 2012, there have been further changes in process and technologies including the rise of go-to-market strategies based on buyer needs, predictive analytics, and intent monitoring, as well as an increased emphasis
on account-centric marketing.

  1. Target/Addressable Demand: In our first stage of the waterfall,
    we are defining the size of the target market. The Target Demand
    stage defines the number of potential demand units we believe
    exist for our solution in the market.
  2. Active Demand Stage: The Active Demand stage measures the number of Demand Units that are either in the market or need to be in the market for your solutions
  3. Engaged Demand Stage: When one or more member(s) of the demand unit responds to marketing, tele or sales stimulus, they have reached the Engaged Demand stage.
  4. Prioritized Demand Stage: At this stage, the level of engagement from the Demand Unit has reached a threshold that justifies additional interactions from tele or sales resources.
  5. Qualified Demand Stage: Based on interactions with Demand Unit members, the fit and urgency of prospect needs, as well as potential purchase resources and willingness to engage has been verified.
  6. Pipeline Opportunity Stage: The Pipeline stage signifies that sales is able to assign a close date and dollar value to an opportunity.
  7. Closed Opportunity Stage: At this final stage, we have successfully closed the opportunity and realized revenue

The tighter and earlier alignment with sales facilitated by the Demand Unit Waterfall spurs recognition that sales and marketing work together to create revenue. Understanding marketing’s contribution to each stage of demand progression within different buying scenarios is important, but fighting over which function gets credit wastes energy and sets up an “us vs. them” dynamic. Instead, that energy should go into determining the most efficient path to revenue, combining marketing, sales, teleprospecting and channel resources. Measurement in the Demand Unit Waterfall aligns more directly with the way sales (and the rest of the business) views opportunities, and presents new metrics that can be used to correlate marketing activity, efficiency and revenue. CMOs should direct their demand creation and marketing operations teams to evaluate how Demand Unit Waterfall implementation can benefit the marketing function as well as the organization as a whole.