The SiriusDecisions Demand Unit Waterfall and Predictive Analytics
Predictive analytics plays a crucial role in supporting alignment to this waterfall. Let’s look at each stage in turn.
1. Target demand: Map ideal customer profiles to addressable market
The first stage is to define your total addressable market (TAM). The aim is to understand and agree across departments how many potential demand units there are for your solution. Predictive analytics ties closely into this with intelligent prospect profiling, which goes beyond look-a-like data profiling to build a sophisticated target audience of ideal customer profiles based on thousands of internal and external data signals.
2. Active demand: Recognize signals indicating an intent to buy
The active demand stage is about discovering the demand units that are actively researching solutions to their business problem that your value proposition can address. The focus is on narrowing down your total addressable market into those most likely to convert to better target your sales and marketing activities. There’s a clear synergy with predictive analytics in that leveraging historic buying intent signals, you can predict future behavior, such as which demand units will convert, when, and what their total lifetime value could be. Predictive lead scoring then ranks leads in priority order by these factors, so sales and marketing can focus their activity accordingly. Poor marketing and sales alignment has always been a big hurdle for B2B demand generation, as both departments have different goals. The fundamental question what is a lead? may have different answers. This is an issue we must resolve to effectively target potential buying groups. The demand unit waterfall offers an answer, which predictive analytics ties into by creating a single customer understanding around which that all parties can unite.
3. Engaged demand: Personalize your messaging
The engaged demand stage occurs when a prospect or customer within the demand unit responds to you. This stage is the natural result of predictive analytics, which helps better define and target demand units. Better top-of-waterfall prospect profiling and predictive lead scoring mean sales and marketing activities are focused on the demand units most likely to convert. Both departments are therefore more effective and efficient. You know which customers and prospects you should target with which messaging and when. The result is higher conversion: more demand units moving more quickly through to the engaged demand stage.
4. Prioritized demand: Identify the best opportunities to pass onto sales
A demand unit moves into this stage when it crosses a threshold of engagement that justifies further interaction from your team. Complex buying funnels with multiple engagement channels traditionally mean lengthy buying cycles, high attrition and low conversion rates. Predictive analytics combat those issues by ensuring you’re targeting the right people, in the right way, at the right time. The advantage is that you can predict leads and opportunities that are most likely to convert, prioritized by revenue potential and/or customer lifetime value. This gives a clear matrix, as below; with likelihood to convert next to revenue potential / lifetime value so you can focus for example your best resources on A1 prospects. By focusing activity on your A1s, you maximize conversion likelihood – and speed – through the demand waterfall.
5. Qualified demand: Invest in the right deals
Qualified demand is based on actual interactions with members of the demand unit. A demand unit enters the qualified demand stage when you really understand their needs, fit, urgency, buying power and intentions, and their willingness to engage. Predictive analytics assess all the actions for every member of the demand unit to score an opportunity. This goes much further than basic individual lead or contact scoring. Advanced predictive analytics include all activities associated with an account or opportunity to score all of your qualified demand opportunities so that you can prioritize and invest in the right places.
6. Pipeline: Manage the deal to close quicker and at the greatest value
When sales can assign a monetary value and projected close date, you’ve entered the pipeline opportunity stage. Predictive analytics has an important role here by validating human-based sales forecasts and ensuring that the opportunities are most effectively managed based on their likelihood to convert and lifetime value potential.
7. Closed: Identify more opportunities
This final stage is successful closure: the deal is done. This stage isn’t the end, though. The demand unit waterfall fully supports existing account growth strategies through cross-sell, upsell and retention. Cross-sell opportunities may have a different demand unit, so once opportunities are created you can manage them through the same process we’ve been discussing. Predictive analytics leverage machine learning algorithms, which means that the machine continues to improve the accuracy of its predictions. Each win helps you identify more demand units, more accurately, at the top of the waterfall – whether new accounts or up- and cross-sell opportunities within existing accounts.
The Business Case for Predictive Analytics
The SiriusDecisions Demand Unit Waterfall is a significant evolution in the B2B sales and marketing funnel and addresses major concepts, including total addressable market, demand units, and sales and marketing alignment.
However, the vision of the waterfall is difficult to achieve without insights, which may include existing customer data, intention signals, and purchasing patterns. Predictive analytics provide critical insights that enable a modern framework for B2B demand management. As a leading provider of artificial intelligence solutions, Sidetrade offers a range of solutions to assist sales and marketing departments at each stage of the waterfall.
To learn more about how you can harness the power of predictive analytics for B2B sales and marketing, you can download our ebook.