The Importance of Modeling Your Demand Generation Operation
This is part of our series, the Seven Pillars of B2B Demand Generation Success. In this post we describe Pillar #2, the core demand gen model that is at the heart of your operation. The primary planning and management activities all make use of the model: forecasting, analyzing performance, reporting, decision making, and budgeting.
What is the demand generation model?
At the core of your demand gen system is a quantitative model (typically excel) that demonstrates the inputs and outputs of the demand gen system. The demand generation model incorporates the conversion rates between each stage of the lead-to-close process (LCP), and is used to predict the outputs (opportunities, deals, and bookings) based on differing inputs (budget, people, and lead gen campaigns).
How is the demand generation model used?
When planning, the model allows you to test differing scenarios and predict the results. It can show the impact of adding a person to the SDR team, or demonstrate the effect of attending a given tradeshow. It is also crucial in measuring results in real time. Whereas average sales cycles may be 9 months or longer, the demand gen model allows you to measure ROI of campaigns immediately, because it shows the impact on today’s inputs on tomorrow’s bookings.
Key Demand Generation Model resources
Importantly, all leadership reviews of the demand gen function should be based on the model and the pre-agreed key metrics and KPIs. This makes reviews productive, as you can focus on the deltas between actual results and the model predictions (both good and bad), and can focus on insights, analysis and any changes (if any) that result from the analysis.
For a deep dive on how to think about and build your model, we highly recommend David Skok’s landmark series on building a sales and marketing machine.
A key point to keep in mind that the master model is a roll up of all of the underlying campaigns or funnels that are active (or planned), and each campaign should have it’s own model. This point was well-described recently by Jason Hekl of Marketing Converts, in his article Fallacy of the Funnel.
Conclusions on the Role of Your Demand Generation Model
Given its central role to the planning, management and measurement of your demand gen operations, the model is the most important tool in the daily operations of the team.
At WinFirst, all of our client projects entail the delivery of a demand gen model, customized for the client’s products, market and go-to-market strategy. If you’d like to learn more, or receive a representative model that you could leverage, please contact us.
This is part of our series, the Seven Pillars of B2B Demand Generation Success. Here is the full list of posts in this series.
- Codify the Demand Gen System
- Build and Work the Pipeline Model
- Differentiate and Define Roles within the Lead-to-Close Process
- Measure and Know Your Pipeline Throughput Capacity
- Design the Right Incentives – Particularly for New Customer Acquisition
- Enact, Implement & Enforce
- Execute Lead Gen Campaigns with Adherence to Best Practices