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The Lead Waterfall: How to measure your pace to goals (and what to do when it’s going wrong)

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    Planning and forecasting are a big part of SaaS marketing, and it’s vital to look ahead and build a strategy that gives you the best chance of achieving your growth goals.

    If you have a good enough understanding of your analytics, and have a clear idea of where you want to be next year, you can even plan and predict how many leads you will need to acquire each day to reach your targets.

    But things aren’t as simple as they might appear, and it’s important to remember that no day, or month, is alike.

    Some months have more days than others, some contain public holidays, and some are more popular for taking vacations. These things make it difficult to accurately forecast your growth, and if you’re not prepared for them, they can cause you many problems.

    And if you react the wrong way, you can burn a lot of money.

    In this article, we’ll look at:

    • How companies often react to these ‘uneven’ months
    • Why their approach isn’t effective
    • Why we take a different approach
    • How you can use the lead waterfall to adapt effectively

    By the end of this post, you’ll have a reliable plan for monitoring and proactively adjusting your approach to avoid being caught short.

    Need help accurately forecasting the growth of your B2B SaaS? Schedule a Free SaaS Scale Session today to learn how we can help you get peace of mind.

    Setting someone else up for failure

    In most SaaS marketing, growth goals are set in collaboration with revenue and strategy teams.

    Unfortunately, these goals are normally set in one of two flawed ways, which is likely to set the marketing team up for failure.

    • Approach 1 – Pick a big number out of thin air, and hope to figure it out as you go
    • Approach 2 – Increase last year’s goals and budget by an arbitrary percentage

    Sometimes we come across a company that combines the two by setting a gigantic goal, that has a non-linear relationship with a budget that’s only been increased by an arbitrary (and usually small) percentage.

    This normally happens because the people setting the goals aren’t the people responsible for hitting them, and they won’t be the ones that look bad if the goals aren’t met.

    The biggest problem with this approach is that it creates huge pressure on SaaS marketers to maintain a high rate of growth over the following year, often without being given the resources they need.

    There can also be the added pressure of trying to achieve more growth earlier in the year, because the nature of monthly payments means that the earlier you acquire a customer, the more payments you’ll receive in each fiscal period.

    This makes it even more important to accurately forecast growth, and have plans in place for when it’s not going as you’d hoped.

    Everything has a ceiling

    We had a client who had just raised around around 90 million dollars, which resulted in a big growth target being set to match what they’d promised their investors.

    They then took their goal for the year, and divided it by twelve to give them monthly MQL/SQL goals to aim for and measure against.

    This seemed sensible to them, until they realized that in November they would effectively lose a whole week due to Thanksgiving due to public holidays and vacation days around that weekend.

    So they came to us concerned they wouldn’t reach their targets because they’d forecast four work weeks, but most of their customers are off eating turkey with their families for one of them.

    To resolve this, our client wanted to know if they should front-load their spend by investing 120% in the first three weeks, in an attempt to balance it out. This seems like a logical solution, but as we explained to them, it doesn’t work that way.

    In B2B Enterprise SaaS, only a small segment of your total addressable market is ‘in market’ at any one moment.

    So while spending in a linear fashion may make sense on paper, in reality, it’s not as clear cut.

    Even if this wasn’t the case, though, there are still buying cycles and buying habits that change during certain times of the year, which will also limit the number of leads you can acquire at those times.

    Demand is not a constant.

    The client struggled to understand this, and wanted us to just spend the money.

    Ultimately, though, we would have been the ones held responsible later on when the cost per acquisition shot up, so it wasn’t in our best interest to go with this approach.

    All months are not created equal

    As I’ve already talked about, buying goes through cycles, and as consumers, our habits change throughout the year depending on what’s going on in that month.

    Every country and culture has its own public holidays, such as Thanksgiving, Chinese New Year, Ramadan, etc.

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    Different countries also have different holiday seasons that should be considered.

    For example, if your primary geographical target is the US, their summer break tends to be between July or August – if you’re targeting European customers, you might consider taking a very light handed approach between April and September (we do like to relax here).

    But if you’re targeting customers in Australia, their summer break is mid-December to mid-January.

    These factors will all affect the buying habits of your customers. Instead of ignoring them or trying to buy your way around them, you should keep them in mind while making your forecasts and setting your goals.

    The good news is that unless you’re in your first year of business, you’ve already got data to help you with this.

    You can look back over the previous year, and compare how each month performed, compared to your growth goals. That way, you can see exactly what impact these buying factors had in real terms.

    And the easiest way to compare these is by putting the data into a Lead Waterfall.

    What is the Lead Waterfall?

    In a nutshell, the Lead Waterfall is a way to visualize where you’re pacing against your growth goals, normally measured over a month. This lets you easily identify whether you’re over-performing or under-performing based on your forecasts.

    You can then analyze the trends in your pacing, and decide if you need to increase or decrease spend, or even change tactics to hit your goal.

    Example of lead waterfall from databox

    Example of lead waterfall from Databox

    The chart above is generated using Databox and represents the days of the month on one axis, and the progress towards your monthly goal on the other.

    The idea is that your ‘Actual’ line (the solid line) should ideally keep up with the ‘Goal’ line (the dotted line). For example, if you’re 20% through the month, you should have achieved 20% of your goal.

    You’re much more likely to see the ‘Actual’ line fluctuating up and down – as in this example where we were below our MQL goal at the start of the month (indicated with a red section) – but by the end of the month, you should be above the ‘Goal’.

    Be proactive

    The Lead Waterfall is great for monitoring your progress towards goals, but there’s no point in monitoring it if you’re not going to be proactive with the information you capture.

    It’s important to know how to react to the data you’re seeing, whether it’s because you’re falling behind, or jetting off ahead.

    What to do if you’re under-pacing

    If you look at your Lead Waterfall and see that you’re underperforming, you need to take a step back and think about not just things you can do, but other factors or events that could impact your performance.

    Environmental factors

    Before you jump to making any changes to budget or approach, it’s important to first look at the environmental factors that could impact your growth. It’s often something quite simple that explains it, so it’s worth spending time looking at these before moving on to tactical changes.

    It can also be useful to zoom out a bit and look at a wider time period to see if the dip is isolated to this month, or whether it was already trending this way. Potentially something happened over the last couple of months, which is gradually having a bigger and bigger impact on your growth.

    • Could your tracking be broken?
    • Have you changed the way you measure or track leads?
    • Has your website had any uptime issues?
    • Have you made any changes to your funnel or ads?
    • Was something temporarily driving traffic up in the months previously?
    • Is anything happening at this time of the year?

    If you’re unsure whether it’s a seasonal dip based on an event or certain time of year, you can look back at the Lead Waterfall for the same time last year and compare the data. There may be an indication that this is a common cycle that you can prepare for in the future.

    Chart showing dip in site traffic over Christmas

    Ho-ho-holey moley: where’s our traffic gone?!

    For example, if you see a dip on July 1st, which looks like a regular Friday, but when you look back, you notice the same thing happened last year.

    This would likely be because people are taking a long weekend to celebrate Independence Day on the 4th, but it might not be immediately obvious.

    For a more detailed guide, check out our article How to Diagnose a Sudden Drop in Leads in B2B SaaS

    Tactical factors

    Once you’re sure there’s no environmental factor, the next step is to look at what tactical steps you can take to immediately boost the leads.

    It’s no good to make SEO tweaks that will take a few weeks to take effect. We want things that can make an immediate impact.

    Here are some examples of things we have done or seen work for our clients:

    • Turn on an ad campaign
    • Increase ad spend
    • Running a webinar
    • Summarize a blog post as a Twitter thread
    • Send an email to your mailing list
    • Publishing additional content
    • Re-sending old content to your mailing list
    • Turn on exit intent pop-ups
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    The key theme is that you’re trying to increase the frequency of messaging to your customers in whatever channels you have available to you. You’re looking for growth hacks, not long-term strategic pieces, so focus on the things that will get results fastest.

    For example, you could repurpose some blog content as a Twitter thread.

    This will likely get some engagement on social media, and it also gives you an opportunity to link directly to the article on your website.

    Best of all, it shouldn’t take longer than an hour to do.

    What to do if you’re over-pacing

    If you’re looking at your Lead Waterfall and you see you’re over-performing, you can put your feet up and have a cup of tea. You’re smashing it!

    OK, it might not be that simple.

    If you’re over-pacing, it’s important to look at what’s working, so that you can do more of the same. If you repurposed that blog into a Twitter thread and pushed your actual growth above your target growth, it’s a great sign that it’s an effective strategy, and you should repeat the process.

    Not only can this be brought into your long-term strategy, but you also now know that you’ve got it in the toolbox for next time your Lead Waterfall isn’t looking as healthy.

    Is there ever a time to decrease your budget?

    Most of the time, if you’re over-pacing, the best bet is to just leave it alone and let the growth continue at the higher rate. But there are situations where it could be beneficial to scale back a bit.

    Budget constraints

    One situation where this would be a good idea is if you have budget constraints for the month or quarter, and you’re ahead of your goal. It would be wise to strategically shut off some campaigns to save that budget. You don’t want to just turn off all the channels, but scaling back the amount of cold traffic could help.

    Resourcing constraints

    Another constraint could be the number of sales reps you have, especially in a demo-based business. If you are drastically outpacing your targets, you may find your sales team isn’t able to service them all.In that case, you could either decrease your budget, or ideally refocus that budget earlier higher up the funnel or earlier in the customer journey.

    This could include things like lead magnet downloads that generate MQLs rather than SQLs, because in a month’s time they might turn into SQLs.

    Don’t write off December

    When you plan your monthly goals and look back at previous years growth month-to-month, it becomes obvious that December will not give you the same growth as previous months.

    This makes it tempting to shut everything down for December, and start again in the new year.

    Don’t do it!

    If you effectively write off December, what you do is make life difficult for yourself when January rolls around. You’ll end up in a colder market while trying to return to full-force. People won’t know you or trust you, so they won’t want to buy from you.

    Instead, use December to switch away from your regular SQL offer (demo, trial, etc) and move towards content consumption or an MQL offer.

    CPM tends to be low for B2B SaaS in December because people have gone off on holiday, but this creates a great opportunity. We recommend taking any video content you have, such as webinars, chopping them up, and running YouTube ads to those webinars.

    People are in content-consumption mode during this period, so by doing this, you will create video view history, and larger remarketing lists. So when you come back in January, you can now serve them more pointed ads that they wouldn’t have responded to in December, but now it’s the new year they’re much more likely to be ready to buy.

    Conclusion

    There’s no way to guarantee that you’ll always be able to meet your growth goals, but it’s important to have an effective way to track it, and a number of levers you can pull to change course if necessary.

    The Lead Waterfall is a simple but effective way to not only monitor your progress, but also look back at patterns and trends that effected growth in the past.

    By tracking your growth month-to-month as we’ve outlined above, you’re giving yourself the best chance to grow at your target rate, and learn more about how you’re achieving your goals.

    If you’d like to learn more about how we help B2B SaaS businesses grow through paid media and SEO, schedule a Free SaaS Scale Session to chat with someone on our team.