What Is Demand Waterfall?

Demand waterfall is a B2B demand generation framework that tracks and categorizes leads through progressive qualification stages from initial inquiry to closed revenue, providing a structured approach to lead management and funnel optimization.

The demand waterfall model was created by SiriusDecisions (now Forrester) to standardize how B2B organizations measure and manage demand generation efforts. It defines clear stages that prospects move through, with specific criteria for progression and hand-offs between marketing and sales teams.

How Demand Waterfall Works

The demand waterfall consists of distinct stages that leads progress through based on their level of engagement, qualification, and sales readiness. Each stage has entry and exit criteria that determine when leads advance to the next level.

The Seven Stages of the Demand Waterfall

Stage 1: Inquiry Raw leads that have shown initial interest by responding to marketing efforts (form fills, content downloads, event attendance). No qualification has occurred yet.

Stage 2: Marketing Qualified Lead (MQL) Leads that meet basic demographic and firmographic criteria and have demonstrated sufficient engagement to warrant further evaluation. Marketing deems them worthy of sales attention.

Stage 3: Accepted Lead Sales accepts the MQL and agrees to pursue it. This represents the hand-off from marketing to sales development representatives (SDRs).

Stage 4: Sales Qualified Lead (SQL) SDRs have validated that the lead has genuine interest, fits the ideal customer profile, and meets qualification criteria (budget, authority, need, timeline). Ready for an account executive.

Stage 5: Sales Accepted Opportunity An account executive accepts the SQL and creates an opportunity in the CRM. Active deal in the sales pipeline with defined next steps.

Stage 6: Closed Won The opportunity converts to a customer. Revenue is recognized and attributed back through the waterfall stages.

Stage 7: Closed Lost The opportunity didn't convert. Important for analyzing why deals fail and where the waterfall leaks.

Why Demand Waterfall Matters for Social Media

Social media plays a crucial role in feeding the demand waterfall by generating inquiries and nurturing leads through progressive stages. Understanding how social media efforts contribute to each waterfall stage helps marketers optimize their strategies and prove ROI.

Social Media Touchpoints by Waterfall Stage

Inquiry Generation: Social media advertising, organic posts with lead magnets, LinkedIn InMail campaigns, and event promotions generate initial inquiries that enter the waterfall.

MQL Nurturing: Social engagement, retargeting campaigns, and educational content on platforms like LinkedIn and Twitter help move inquiries toward MQL status by demonstrating interest and fit.

SQL Support: Social proof through customer testimonials, case studies shared on social, and executive thought leadership content on LinkedIn help SDRs convert MQLs to SQLs.

Opportunity Acceleration: Sales teams use social media for relationship building, sharing relevant content, and staying top-of-mind with active opportunities throughout the sales cycle.

Key Metrics in the Demand Waterfall

Conversion Rates Between Stages

Critical Metrics to Track:

• Inquiry to MQL conversion rate (typical: 10-30%)
• MQL to SQL conversion rate (typical: 20-40%)
• SQL to Opportunity conversion rate (typical: 50-70%)
• Opportunity to Closed Won rate (typical: 20-30%)

Velocity Metrics:

• Time in each stage
• Overall waterfall velocity (inquiry to closed won)
• Stage-specific bottlenecks

Volume Metrics:

• Number of leads at each stage
• Stage capacity and rep workload
• Lead generation required to hit revenue goals

Calculating Waterfall Requirements

To determine how many inquiries you need, work backwards from revenue goals:

Example Calculation:

• Revenue goal: $1,000,000
• Average deal size: $50,000
• Deals needed: 20
• Close rate: 25%
• Opportunities needed: 80
• SQL to Opportunity rate: 60%
• SQLs needed: 133
• MQL to SQL rate: 30%
• MQLs needed: 443
• Inquiry to MQL rate: 20%
• Inquiries needed: 2,215

This math reveals exactly how many social media-generated inquiries you need to hit revenue targets.

Demand Waterfall vs. Sales Funnel

Key Differences

Traditional Sales Funnel: Generic stages (awareness, interest, decision, action) without clear qualification criteria or hand-off points. Often marketing-centric with unclear sales involvement.

Demand Waterfall: Specific qualification stages with defined entry/exit criteria. Clear hand-offs between marketing and sales. Enables precise measurement and optimization of each stage.

Why Waterfall Is Better for B2B:

• Defines clear roles and responsibilities
• Provides standardized terminology across teams
• Enables accurate forecasting and capacity planning
• Identifies specific bottlenecks and leaks
• Supports data-driven optimization

The demand waterfall provides structure that the traditional funnel lacks, making it essential for complex B2B sales processes. Understanding hot leads and how they move through the waterfall accelerates conversion.

Common Demand Waterfall Problems

Lead Hand-Off Failures

The Issue: Marketing passes MQLs to sales, but sales rejects them as unqualified. This creates conflict and wastes marketing investment.

The Solution: Establish clear MQL criteria agreed upon by both teams. Regular calibration meetings ensure alignment. Service Level Agreements (SLAs) define response times and follow-up requirements.

Stage Leakage

The Issue: Leads stall in stages or fall out of the waterfall before converting. High leakage rates indicate process problems.

The Solution: Analyze where and why leads leak. Common causes: poor lead quality, slow follow-up, inadequate nurturing, misaligned messaging. Fix the specific stage with the highest leakage.

Lack of Recycling

The Issue: Leads marked as "not ready" disappear instead of being nurtured back into the waterfall when timing improves.

The Solution: Implement lead recycling programs that continue nurturing disqualified leads. Many "not now" leads become "ready" 6-12 months later. Social media retargeting keeps recycled leads engaged.

Optimizing the Demand Waterfall with Social Media

Top-of-Waterfall Strategies

Increase Inquiry Volume:

• Paid social campaigns targeting ideal customer profiles
• LinkedIn sponsored content with lead gen forms
• Gated content promoted across social channels
• Virtual event registration through social promotion
• Social media contests and giveaways

Improve Inquiry Quality:

• Better targeting using platform audience tools
• Content that attracts right-fit prospects
• Clear qualification questions in lead forms
• In-market audience targeting on Google and Meta

Middle-of-Waterfall Nurturing

Accelerate MQL to SQL Conversion:

• Retargeting campaigns with case studies
• Educational content series on LinkedIn
• Executive thought leadership to build trust
• Social proof through customer testimonials
• Engagement with prospects' social content

Support SQL to Opportunity:

• Sales enablement content to share
• Competitive differentiation posts
• Product demonstration videos
• Customer success stories
• Live Q&A sessions and webinars

Bottom-of-Waterfall Support

Accelerate Opportunities:

• Account-based social campaigns
• Executive-to-executive social engagement
• Timely, relevant content sharing
• Building relationships with buying committee members
• Staying top-of-mind during evaluation

Understanding the marketing rule of 7 helps you plan sufficient touchpoints at each waterfall stage.

Measuring Social Media Impact on the Waterfall

Attribution Models

First-Touch Attribution: Credits social media for inquiries it directly generated. Shows which social campaigns drive top-of-waterfall volume.

Multi-Touch Attribution: Credits social media for all touchpoints throughout the buyer journey. More accurately reflects social's nurturing role across waterfall stages.

Last-Touch Attribution: Credits the final touchpoint before conversion. Often under-represents social media's contribution to early and mid-stage nurturing.

Social Media Waterfall Metrics

Key Metrics to Track:

• Inquiries generated by social channel
• Cost per inquiry by platform
• Inquiry to MQL conversion rate for social-sourced leads
• Social-influenced opportunities (touched social during journey)
• Revenue attributed to social media
• Average deal size for social-sourced customers

Platform-Specific Performance:

• LinkedIn: Typically highest quality B2B inquiries
• Facebook/Instagram: Larger volume, varies by targeting
• Twitter: Thought leadership and awareness
• YouTube: Video content for education and nurturing

Implementing the Demand Waterfall

Step 1: Define Stage Criteria

Work with sales and marketing to establish clear definitions for each stage. Document what makes a lead qualified at each level and what triggers progression to the next stage.

Step 2: Set Up Tracking Systems

Configure your CRM (Salesforce, HubSpot, etc.) to track waterfall stages. Create custom fields, workflows, and reports that align with your defined stages.

Step 3: Establish SLAs

Define response time requirements and hand-off processes between marketing and sales. Example: Sales must contact accepted leads within 24 hours.

Step 4: Create Nurture Programs

Build stage-specific nurture campaigns. Prospect nurturing strategies should align with where leads sit in the waterfall.

Step 5: Monitor and Optimize

Weekly review of stage conversion rates and velocity. Monthly deep-dives to identify bottlenecks. Quarterly strategic reviews to adjust criteria and processes.

Demand Waterfall Best Practices

Align Marketing and Sales

Regular meetings between teams to review lead quality, conversion rates, and hand-off processes. Shared goals and compensation tied to waterfall performance.

Use Lead Scoring

Implement behavioral and demographic scoring that automatically moves leads through waterfall stages as they meet thresholds. Reduces manual qualification effort.

Implement Lead Recycling

Create processes to recycle leads that aren't ready now but could convert later. Keep recycled leads in lower-stage nurturing programs.

Track Velocity Not Just Volume

Fast-moving leads through the waterfall are often higher quality. Identify what creates velocity and optimize for it.

Maintain Data Hygiene

Bad data (duplicates, incorrect information, outdated contacts) corrupts waterfall metrics and wastes sales time. Regular data cleaning is essential.

Advanced Demand Waterfall Concepts

Predictive Lead Scoring

Use AI and machine learning to predict which inquiries are most likely to become MQLs, SQLs, and customers. Prioritize resources on highest-probability leads.

Account-Based Marketing Integration

Adapt the waterfall for account-based approaches where multiple contacts at target accounts progress through stages collectively rather than individually.

Revenue Waterfall

Extend the waterfall beyond initial sale to include expansion revenue, renewals, and cross-sells. Tracks customer lifecycle value more completely.

Waterfall Dashboards

Create real-time dashboards showing waterfall metrics, conversion rates, velocity, and bottlenecks. Use tools like Tableau, Looker, or built-in CRM reporting.

The demand waterfall provides essential structure for B2B demand generation and enables marketing and sales teams to work together effectively. When combined with strategic social media use at each stage, it becomes a powerful framework for predictable revenue growth. Use marketing performance metrics to track your waterfall effectiveness and identify optimization opportunities.

Frequently Asked Questions