Three Ways to Use your Demand Funnel, Part 1. It’s an Always-on MRI to diagnose Marketing Effectiveness.

Back to a medical analogy, wouldn’t it be great if you had tools like your doctors have? Tools that could magically see inside your Marketing “body” and allow you to instantly diagnose problems. Not enough MQLs? Instant diagnosis. Conversion problems? There’s a cure for that.

The truth is - you do have an “MRI” for your Marketing troubles. It’s called a Demand Funnel. If you are using it properly, you have all the diagnostic tools you need to completely understand what is and what isn’t working properly in your Lead process!

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Interestingly enough, most organizations have some semblance of a Demand Funnel in place, but many are only used as reporting tools and some are not used at all. Step number one is to understand exactly what your Demand Funnel is telling you. When using an MRI machine as a diagnostic tool, if the doctor has no idea what to look for in the imagery created by the machine, it is useless. Your Demand Funnel works the same way. If you, the Demand Gen expert, don’t know what to look for, it is not effective as a diagnostic tool. Let’s make sure we understand what we’re looking for in your Demand Funnel diagnosis.

Basic Demand Funnel Metrics

In your Demand Funnel, you are measuring the three things you can affect that relate to total Demand:

• The number of Contacts in each stage, and the sum of those representing the entire Funnel.
• Conversion rates from stage to stage.
• Time in stage, which reveals Funnel velocity.

Before we move to diagnostic details, here are a few things to consider. You may not have complete or reliable data past MQL. (For more information, see this {Demand Gen Brief} post.) This is OK, because you can perform a diagnosis on the data you do have. If your MAP is not automated to the point of updating Funnel stages in a timely fashion, you probably need to build (or have built) a program to match your funnel stages, definitions and attributes of Contacts in stage. Otherwise, you will not be working with up-to-date data.

Reading your Demand Funnel MRI

We just determined the three things you can affect relating to total Demand, so now you need to determine the metrics that tell us how well your Demand Gen team is doing. First is to determine the volume of Contacts in each Funnel stage. While your Demand Funnel will be different, it should look something like this:

Prospect              191,302

Inquiry                    22,956

MQL                        11,019

SAL                           10,138

SQL                             2,433

Secondarily, we need to determine the conversion rates from stage to stage and, in turn the composite conversion rate for the entire funnel. Based on this example:

Prospect – Inquiry:          12%

Inquiry – MQL:                 48%

MQL – SAL:                       92%

SAL – SQL:                         24%

Prospect – SQL:                01.27%

Finally, we need two additional data points to determine stage velocity throughout the funnel: stage date (a date/time stamp applied when the Contact reaches any given stage) and time in stage (a calculation based on the stage date for the next stage in the series minus the stage date for the calculated stage). We want to understand this number because total demand is a function of both how many contacts in the funnel convert and how quickly they convert. Think of velocity this way: with the identical conversion rates, if you can cut the time in stage across the entire funnel in half, you can create twice the SQLs at any given point in time. Like conversion rates, time in stage adds up to a composite across the entire funnel. Based on this example:

Prospect                8 days (Inquiry Stage Date 10/18/2014 – Prospect Stage Date 10/10/2014)

Inquiry                  18 days (MQL Stage Date 11/05/2014 – Inquiry Stage Date 10/18/2014)

MQL                      22 days (SAL Stage Date 11/27/2014 – MQL Stage Date 11/05/2014)

SAL                         2 days (SQL Stage Date 11/29/2014 – SAL Stage Date 11/27/2014)

SQL                        15 days (Closed Stage Date 12/14/2014 – SQL Stage Date 11/29/2014)

Composite            65 days

Your next step is to begin documenting the Demand Funnel baselines for each of these metrics on a periodic basis. Start documenting on at least a monthly cadence, with the intention to move to a weekly cadence. The objective is to determine if your metrics are moving in the right direction. Your conversion rates need to go up and your time in stage needs to go down. Volume then becomes a calculation based on how many MQLs or SQLs your sales team needs.

Change the conversation.

Your MRI training is now complete. You know how to read it and diagnose your Demand Funnel problems. Conversations that used to revolve around how many contacts need to be added to the top of the funnel can now be fine-tuned to talk about conversion rates and velocity. Remember, the ultimate goal is closed business (Closed/Won Stage) and the conversation needs to be about how to get there as quickly as possible, rather than how many nebulously-defined “leads” can you generate. You have a powerful diagnostic tool. Use it to your advantage!

Notes:

Your Demand Funnel is your chief diagnostic tool for Demand Generation.

Using the tool to determine specific problems will lead to specific, focused solutions.

Remember, the issue is closed business, not the number of undefined “leads” in the funnel...

                                    

You will also be able to understand where Contacts are “stuck” in the funnel and apply tactics designed to move them to the next stage. That is where we will pick up next week – using your Demand Funnel diagnostics to determine where to apply specific tactics to solve specific problems in: Three Ways to Use Your Demand Funnel, Part 2. Getting Leads Moving.