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Playbook: Demand Generation Funnel

Demand Gen Funnel

It’s All About Demand Gen Efficiency

Demand generation funnel reports can help B2B organizations measure the impact of certain demand generation activities. They are also helpful if you suspect there’s a sticking point in handoffs between marketing and sales. But there’s a problem with the traditional configuration for funnels that start with contact and lead signals and then move to account-based opportunity signals. Contact and lead signals inflate account engagement and unnecessarily deflate later-stage conversion rates.

original demand gen funnel


Before you interpret this as direction to redesign your current CRM and marketing automation configuration, we ask that you separate the concepts of lead routing and how metrics are reported as an organization.

Brand interactions occur at the person level, and we don’t see that changing. We also don’t see a world where sales won’t want to hear about additional engaged people at an account. We suggest aggregating signals at the account level for reporting and maintaining the lifecycle reporting signals you likely have in your marketing automation platform and CRM.

Demand gen funnel stages and labels vary from organization to organization, but we suggest highlighting best practice stages for reports by organization type. We also suggest keeping stages to a minimum. This is because we’ve found that each stage introduces an additional opportunity for error.

A Recent Update: While the traditional funnel embraces Marketing Qualified Lead (MQL), we’ve seen more B2B businesses moving toward Automatically Qualified Lead (AQL). This label allows for marketing inbound leads, product-generated leads, and sales-sourced leads (outbound) to be captured under an inclusive bucket. AQLs can be analyzed in reports without contradictory labels for non-marketing sources and channels.

B2B organizations that only rely on full-cycle sellers often use the following funnel structure:

full cycle seller funnel


B2B organizations that leverage an inside team that sets meetings for account executives typically use the following funnel structure:


inside sales to full funnel

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Interested in learning more about Demand Gen Funnels?

A few notes on logic

Whether you’re building a custom object using flows in Salesforce or creating the logic in a data warehouse, there are some key considerations when building a funnel:

  • Don’t benchmark your first stage on record creation. You want accounts to be recaptured and flagged when they show interest again after reengaging. 
  • Make sure to allow accounts to fall out of the funnel and requalify. The buyer journey is not linear; your funnel needs to reflect this.
  • At a minimum, record what action the prospect took to trigger the AQL.
  • Don’t overcomplicate things by allowing stages to move back and forth. Accounts either move forward or out of the funnel.
  • If you don’t have a product with recurring revenue, it may make sense for people to reenter the funnel immediately after purchase. Otherwise, you’ll want to gate customers from reentry unless they’ve churned.
  • Record each attempt at a buyer journey instead of overwriting values. This makes your initial stats more accurate and allows for counting average attempts before a successful deal.


Other Funnel Types

The demand generation funnel is the most well-known, but it’s not the only funnel. We’ve seen a few other varieties.

Expansion / Upsell
Sometimes this funnel is combined with renewal because it can be difficult to tell why a customer is engaging with your team until an opportunity is created. If you don’t have renewals or have clear product, marketing, or other lead routing signals specific to upsells, this funnel is useful.

Renewals can be difficult to signal if renewal opportunities are created when the last contract was signed. On the other hand, it is possible to use the opportunity creation as your stage one, as long as the expectation is that stage one to two takes as long as your average contract duration.

Business Unit Specific
Sometimes one demand generation funnel isn’t enough. If you have different product lines that have extremely different buyer behavior, it may warrant new funnels. If the buyer behavior is similar, we recommend sticking to a single demand generation funnel and separating metrics at the reporting layer.


Key Characteristics of Great Demand Gen Funnel Reporting

Many businesses require departments to report the raw volume of records passing through each phase. But the gifts of funnel reporting are understanding how efficiently different sources convert into later stages, how aligned your teams are, where prospects tend to lose interest, and how quickly (or slowly) prospects move through the funnel.

Conversion Rates

When you cohort information by the date a stage was captured and analyze the conversion rates, you are analyzing how a single data set progresses through the funnel. This will indicate how efficiently your teams are converting prospects into customers and allow you to add additional layers of reporting like efficiency by source, campaign type, and more. However, keep in mind that taking snapshots of each stage and dividing stages for a given period won’t provide conversion rates. At that point, you’re calculating ratios.

Useful cohorted conversion rate reports include:

  • MQL conversion by Lead Source
  • MQL to SQL conversion by primary campaign type
  • MQL to SQL conversion by inside sales rep
  • SQL to Opportunity conversion by both inside sales rep and account executive
  • Opportunity conversion by primary campaign type
  • Customer conversion by primary campaign type

Looking at conversion rates at different points in the funnel by campaign type help marketers understand which campaigns are effective lead generators and whether lead source efficiency correlates with effective sources on closed won opportunities. This will help marketing understand whether the campaign type is attracting the right buyers versus people who will agree to a meeting. If lead source doesn’t align with opportunity closed won source, it’s time to look at whether your definitions of an ideal customer are in alignment.

Studying conversion rates by inside sales representatives will uncover whether there’s variability in how efficient each team member is and may even show a conflict between definitions of “qualified” between inside sales and account executives.

Note that we recommend only surfacing representative-specific reporting to their direct manager and looking at high-level conversion rates at the cross-functional level. Managers should always have the first chance to coach an individual, and uncovering too much information introduces the potential for finger-pointing–which is always counterproductive.


Velocity is the rate at which an account moves through a funnel. We recommend benchmarking the date the account first meets the funnel stage definition and then subtracting the prior stage conversion date to calculate the age in a stage. Sum the duration in stage and then divide it by the number of accounts for your average days in a given stage.

funnel velocity


Velocity is important because it identifies opportunities for marketers to improve how a lead moves through the stages. Where is the lead getting caught up? What can we do to shorten the time to conversion? Are we increasing or decreasing sales speed? 

Not measuring velocity is a missed opportunity for marketers and sales leaders to understand how effective their tactics and teams are at moving a prospect toward customer status. It also helps marketers understand how soon they need to react to a problem in order to positively impact pipeline or how long today’s campaign interactions will take to reach a closed won deal status. 

Knowing how long it will take to impact pipeline and bookings positively helps marketers understand how quickly they need to react to a problem–and may even be used to encourage marketers to adopt weekly or bi-weekly report reviews.

Trend Data

Having data on funnel performance in a given period (especially if you can tie it to performance to date vs. goals) is crucial. But perhaps even more critical is a business leader’s ability to see how it’s trending over a given period. We recommend looking at a month’s conversion rates broken by week and a quarter’s conversion rates broken out by month for comparison purposes. 

Trend data allows business leaders to answer critical questions, like:

  • Are we performing better or worse than the previous quarter?
  • Are the improvements we implemented having an impact?
  • If we’re behind, what levers can we pull to get back on course?

Looking at trends in volume over time or velocity is fairly simple. But keep in mind that when analyzing conversion rates for a given time period, you are reviewing cohorted data. It will take time for conversion rates to finalize. Remember how long it takes for a prospect to move from first touch to closed won because that is how long your data will take to be considered final if you are cohorting by your first stage in the funnel.

Maximize Your Funnel: Team Alignment

Research has proven that alignment between marketing and sales translates into better results. If sales trusts marketing, they’re willing to put more effort into lead follow-up, leading to 200% more marketing-driven revenue growth than misaligned teams. Other benefits include 38% higher opportunity win rates27% faster three-year profit growth, and 36% higher customer retention.

Check out our eBook for best practice recommendations on how to get more out of your go-to-market teams with funnels.