How To Build and Manage a Demand Model Forecast

Today’s episode is on Demand Models: we’ll be learning how to understand where you’re currently at from a demand perspective, and how to take all the information you have to forecast what demand needs to be in order to meet company goals. This is the third installment from me on Demand Models. First, I wrote about how I use my anxiety as a superpower – the demand model being a part of what I use to lower my anxiety! The second post focused on releasing a template of the Demand Model itself. This one walks through that Demand Model and helps you understand how to get started. 

What is it? Marketing today is all about revenue, and demand models help us understand ARR and MRR, and other revenue goals. They give us an idea of what needs to be done in order to meet specific marketing goals. In a way, it turns marketing into a math problem and gives a sense of control over a goal given your resources. 

One benefit of a demand model is that you can prove how many resources you need to meet a specific goal. Most demand models are unique based on a specific company’s unique products.

Demand Model Elements

Understand where you’re trying to go

  • Where is the quarter beginning? When will the quarter-end? How much do we want it to grow within this time?
  • Keep in mind churn—you might have customers coming up for renewal
  • Try to understand where you’ll be at from Net Revenue Retention perspective

How likely is it that the pipeline will close within this time period?

  • Look at what’s qualified—this will involve working with Sales

Now turn revenue into a number of deals

  • For x customers in a segment, you know you average a certain amount
  • Break it down to discover how many customers you need to meet the goal

Then you need to know your conversion rate from early-stage to late-stage

  • Take into consideration both win rate on revenue as well as count

Finally, what’s the percent likelihood that a lead coming in today will close by the end of your quarter?

What I Learned From Launching A New Website

We had a big Metadata milestone two weeks ago.

We said goodbye to our old website—so long gradients.

We overhauled our messaging. And we introduced a new brand identity that most B2B software companies would have shot down a long time ago.

We now have a website that genuinely reflects who we are, our personality, and what makes us unique in a crowded ABM category.

None of this was easy. It was a beast.

So here’s what you need to know if you’re planning to wrestle this beast at your own company. Or just looking for the CliffNotes version like my high school self would.

  1. Don’t start with the website
  2. Flip the focus of your messaging
  3. Test your messaging out with different audiences
  4. Good design should make you feel uncomfortable
  5. Take risks so you can stand out

Don’t start with the website

This might sound odd but hear me out.

Towards the end of last year, I started to push (aka annoy) Jason about our website.

It didn’t reflect who we were, it didn’t speak to our customers, and it didn’t support our Sales team. It spoke to us and our tech.

So after more pushing (aka he was now completely annoyed with me) – I got him to sign off on having me redo our website.

Naturally, I wanted to start with the website. I created a new sitemap, defined our capabilities, and put together an SOW with our digital creative agency.

I thought this would be a quick little redesign because I knew what to say and how to say it. Until I didn’t.

I shared my plan with a few of our customer advisory board members to get their initial take. Thankfully, they told me they thought about Metadata and our product in a different way.

This led to me pausing the website and instead focusing on our messaging.

If you start with the website, you’ll get it all wrong. Start by talking with your customers, then more customers, and then prospects. Trust me.

Flip the focus of your messaging

I scheduled close to 15 different conversations with the exact type of marketer I needed to get the attention of: B2B marketers held accountable to pipeline and revenue.

I met with three groups of people: our best customers, new customers and late-stage prospects in our pipeline. And let them do most of the talking (like actually).

I started with these five questions:

  1. Why did you buy Metadata? / Why are you considering Metadata?
  2. How does using Metadata make your life easier?
  3. What would your life be like without Metadata?
  4. How would you describe Metadata to other marketers in your network?
  5. Where does our current messaging fall flat?

I felt like I had struck gold by getting their responses to these questions.

It forced me to forget everything I knew about our product and what I wanted to say. Because it’s not about what I wanted to say, it’s about what they wanted to hear.

So rather than focus on our new messaging on Metadata and what it does, I focused on our audience and reframed our messaging using their own words.

It’s a slight nuance with an enormous impact.

Your messaging will 100% fall flat if it’s only focused on your tech. Don’t focus on what your software does; focus on how it makes your customers’ lives easier.

Test your messaging out with different audiences

All of the conversations I had were incredibly helpful. But I still felt like I had a serious blind spot.

All of the people I had met with were either 1) very familiar or 2) somewhat familiar with Metadata. I needed to get feedback from people who had zero idea what Metadata was.

We stumbled on Peep Laja‘s new company, Wynter, to help us address our blind spot.

B2B marketers like me use Wynter to get feedback on the messaging from the people they’re marketing to.

You pick the type of creative you’re looking to get feedback on (landing page vs. ad vs. email) and then select the type of audience you need input from.

In our case – we tested the same landing page against two different audiences (our primary personas).

  1. Directors of Marketing at SaaS companies
  2. VPs of Marketing at SaaS companies

From there, you can highlight specific sections on the landing page you’re most interested in getting feedback on with questions like:

  1. What’s your first reaction after reading this section?
  2. What about this page is unclear or off-putting?
  3. What about this page resonated with you?

Some of what we found confirmed we were on the right track with our messaging. 

Some of what we found also confirmed we needed to simplify more. And strip the buzzwords that make our skin crawl.

We took any feedback that was consistent across both cold audiences and revised our messaging, so it could stand on its own. Regardless of how familiar someone is with Metadata.

Get your messaging in front of both warm and cold audiences. There’s enormous value in getting feedback from both.

Good design should make you feel uncomfortable

If you ever checked out our old website, you could tell very quickly neither Jason nor I were designers. We worked with a few freelancers and even tried out 99Designs. 

All of the design output felt very vanilla. It was firmly in our comfort zone.

And if you’ve been following Metadata at all, you know vanilla is the exact opposite of who we are.

We teamed up with Algert, a digital creative agency, who has helped build brands like Drift and Privy (you may have heard of them).

Towards the end of 2020 – we started to test new design concepts with Algert in our marketing campaigns so they could get a sense of our comfort level and what we wanted.

Even what we tested then was a massive leap from where we were starting from. Gradients and all.

We built on these design concepts when coming up with our new brand identity. And when we shared these concepts with Leadership, including new color schemes, no one could agree on anything.

I looked at this as being a good thing because good design never happens by committee.

Give your designers as much creative freedom as they need. Tell them to keep pushing the design when you start to feel slightly uncomfortable.

Take risks so you can stand out

I look at companies like Gong and Drift as my north star for what I want to do at Metadata. 

Not because I want to copy exactly what they’re doing, but because the best marketers steal and put their own spin on it.

As Drift has moved upmarket, they’ve played it safer when it comes to taking risks. Especially compared to the early days with Dave Gerhardt.

Gong, not so much. They continue to set the bar when it comes to taking risks.

My point here is this: Most of B2B marketing today is very cookie-cutter. Which leads to boring output.

You aren’t going to get fired if you play it safe. But you for sure won’t stand out.

We don’t have nearly as many people or big funding rounds as our direct competitors do. Rather than use this as an excuse, I knew we could stand out by taking risks.

I had no idea how these risks would land (thankfully, they landed well), but we decided to:

  1. Write direct copy that pokes the analyst bear and calls our competitors
  2. Show actual product videos without requiring you to fill out a form
  3. Point out what’s broken in B2B marketing and how we want to be different
  4. Show the people and personalities that make Metadata unique
  5. Push our design and illustrations so it feels like nothing you’ve ever seen before

Playing it safe won’t get you anywhere. And that’s why you’ll continue to see us take even more risks in the future.

How to Reduce Your CPL By 82% On LinkedIn Ads

This is the first post in our new content series, No Fluffs Given. We’re tired of the fluffy content in our LinkedIn feeds, with no real substance or actionable takeaways. So we’re teaming up with some of the best B2B marketers we know. People who have ACTUALLY done this stuff before. And giving you new, actionable tactics to implement today.

In 90 days, we increased our paid lead volume by over 270%, while simultaneously decreasing cost per lead (CPL) by 82%, and increasing lead-to-MQL conversion rate to over 60%. 

Did I mention this was during a pandemic as well? This is the no-bullshit way to cut your spend, increase your lead volume, and accelerate your pipeline to turn those leads into revenue.

Three ways to lower your CPL on LinkedIn

Here’s the cold, hard truth: you need to understand the platform you’re working on. If you don’t understand how LinkedIn and the algorithm works, you’re bound to fail. 

LinkedIn is a beast – it started as a simple place to connect with other professionals, but today it has a feed, live videos, groups, and so much more. 

The good news for you is that I already spent hours, weeks, months, and years studying LinkedIn and made all the mistakes you can make on their advertising, so now I’m here to help you avoid those pitfalls and generate high-quality pipeline.

1. Use LinkedIn Lead Gen Forms

Unless you’re running a brand awareness campaign, use LinkedIn Lead Gen Forms. Nobody wants to go to your website and then fill out a form just to access your content. 

Well, let’s be honest, they don’t want to fill out a form on LinkedIn either, but the form will be auto-filled for them and they’re way more likely to complete it. 

I’ve had multiple companies see a 30-50% increase in their conversion rates just by using Lead Gen Forms. That’s nearly unheard of in the marketing world – so don’t skip this step!

Note: you will get a lot of personal emails, but clean your data on the backend. It’s worth it.

2. Target prospects who are active on LinkedIn

By targeting your campaigns to people who actively use LinkedIn, your impressions will be higher and so will your conversion rates. Intuitive, right? 

The people who use LinkedIn the most are most likely to interact with your ads. Now you’re probably thinking “well that’s great Breezy, but how am I supposed to know who is active on LinkedIn?”. 

That’s where I go back to the phrase understand the platform you’re working on

There are aspects of the LinkedIn platform that only the active users are part of including Member Groups and Member Skills

There are LinkedIn Member Groups for every industry and persona out there. LinkedIn member groups a gold mine. People who join these groups are interested in learning and becoming the best they can possibly be at their jobs. 

Your content will help them to do that, so by targeting these groups, you’ll be able to get in front of the right people. 

Create a list of groups your prospects might join – I like to kick this off with a poll internally, then just a few simple searches in case we missed anything.

Member Skills aren’t just great for getting profile views; they’re also great for ads!

Below the list of job experience on a prospect’s personal LinkedIn profile is a section called “Skills & endorsements”. Member Skills can range from broad topics like “marketing” or “sales”, to more specific skills, like the use of your competitor’s product. 

If you’re running ads for Hubspot, look for “Pardot” and “Marketo” as skills listed on their profile.

Not only do skills help to paint a better picture of the responsibilities inside your prospect’s role, but they also are a bit more of an advanced LinkedIn feature, so it’s likely they are more active users.

3. Think outside the box

If you’re like most companies, you probably want to target the Decision Maker for your product or service. 

Usually, this means you come up with a list of titles you want to go after, or maybe you only want to talk to Director level and above. 

I say go for it, but if you run into any troubles here are a few tips:

  • Job Titles targeting is OK, but not great since there are so many titles out there. Give it a few tests, but if it’s not working, try using Job Function instead. Oh, and while we’re here, use Job Function as exclusion criteria for things like Marketing, Sales, Business Development, Consulting, etc (unless of course, these are your target markets).
  • Job Seniorities targeting is OK, but not great, again, because there are so many job titles out there and LinkedIn can’t seem to get a handle on all the variations. Instead, try using Years of Experience. It achieves the same goal but is much more accurate on the LinkedIn platform!

Don’t forget the basics

Sometimes we get so caught up in all the small details that we forget the easy stuff! Here’s a quick list to make sure you stay on track:

  • If you’re not selling globally, use Locations (Permanent) to make sure you’re only marketing to your target market. Note: most people are marketing to North America, so your CPL will probably be lower if you target anywhere else.
  • Retargeting! It doesn’t get much better than people who are already familiar with your brand. Install the LinkedIn Tracking Pixel on your website so that you can retarget your ads to those people.
  • Use retargeting from G2 Crowd or other review sites. I wish I could tell you this will be cheap – it won’t be. But they are high quality leads that will convert well in your pipeline (see example later in the post).
  • A/B testing is still important. Try swapping out a line of text but keep your imagery the same. Or just change the CTA on your ad image. Even small changes can show big results!

Optimize your campaigns for the metrics that really matter

If you’ve made it this far, your head is probably filled with a bunch of different ways to bring down your cost per lead, target your prospects, and run a killer campaign! 

Hopefully you’re feeling excited – you should be. But before you go, don’t forget that CPL is just step one of your pipeline metrics. 

What about cost per marketing qualified lead (MQL)? Cost per sales qualified lead (SQL)? And so on… 

Here’s an exercise you can do internally to figure out the best strategy for your team!

TOFU, MOFU, and BOFU

And I’m not talking about the kind you eat!

TOFU content will bring in the highest quantity of leads and your cost per lead (CPL) will be lower.

Don’t get lost in the top line of your data: you aren’t doing lead generation, you are here for revenue generation. This type of content usually has titles like “What is XYZ”, “10 Things every XYZ Need to Know”, and “How to do XYZ”.

BOFU content will bring in the highest quality of leads and your cost per lead (CPL) will be higher. The quantity will be much lower – I mean much, much lower.

But they are way more likely to convert through your pipeline into paying customers.

This type of content usually has titles like “The 5 Things to Look for When Evaluating XYZ Platforms” or might be an industry report such as the Gartner Magic Quadrant or Forrester Wave.

If your CPL could be $40 or $60, which would you pick? 

Marketing teams are often held to a number of Leads and MQLs that they need to hit.

The better marketing teams are also focused on sales qualified leads, sales allowed leads, opportunity creation, and ultimately turning leads into customers. So, if you look at the scenario above, your cost-per-lead in scenario two is higher, but your cost-per-opportunity is lower.

Make sure you’re aligned on what success looks like at your company, and if you’re focused on generating customers then plan to run experiments for at least the length of your average sales cycle to see real results!

Meet Breezy Beaumont

Head of Growth & Marketing @ Correlated

Breezy is a full-stack marketing leader with tons of hands-on experience in multiple hyper-growth software companies. She’s always bringing in best practices and new technologies to improve processes through data-driven marketing with the motto “work smarter, not harder.” As an ex-competitive marathon runner, these days you can find her outside training for an upcoming triathlon. Connect with Breezy on LinkedIn here.

Metadata Named #56 on Financial Times’ List of Fastest Growing Companies in the Americas

Awarded as One of The Financial Times The Americas’ Fastest Growing Companies 2021

San Francisco, CA, April 20, 2021metadata.io, the first demand generation platform, has been ranked No. 56 on The Financial Times’ (FT) 2021 list of Americas’ 500 Fastest Growing Companies.

The list recognizes the most innovative and fastest-growing companies in seven countries across North and South America.

This recognition comes on the heels of a breakout year in 2020 for the company, securing an oversubscribed Series A and ranking as No. 233 in the Inc. 5000 Fastest-Growing Private Companies in America Annual List. 

FT’s Fastest Growing Companies list is composed of enterprises that contribute most heavily to economic growth, ranked by compound annual growth rate (CAGR) in revenue between 2016 and 2019.

Out of millions of companies in North and South America, only 500 were selected for the inaugural list announced on April 13, 2021, and Metadata is pleased to be acknowledged for their demand generation platform.

metadata.io, founded in 2015, has reported an impressive growth rate of 1869.18% revenue growth over the past three years. 

“It is an honor to be included on The Financial Times’ 2021 list of Americas’ fastest growing companies, especially at a time where many B2B technology vendors are struggling to show value to their customer base,” says Gil Allouche, Founder & CEO at Metadata.

“Our growth and momentum is a result of our passion for helping B2B marketers optimize their campaigns to generate pipeline and revenue, not just leads. We cracked the code for B2B demand generation and look forward to continuing to help customers embrace autonomous software technologies to execute their marketing programs with tangible results, closer to revenue targets and goals.”

How to Build a Demand Model Any CMO Would Respect

I recently wrote about workplace anxiety and how data can be a great remedy. For this post, I’d like to expand on the topic of data, specifically how I’ve built and used “demand models”.

Demand models use various data inputs and then work backwards, using historical conversion rates and costs, to identify the budgets and scenarios you need to meet the demand in a given period.

A true demand model is tied to revenue, not leads.

It’s a bottom-up calculation where you start with your planned ending revenue number and you work your way up the ladder to figure out how much demand (in dollars) marketing needs to generate. 

By distilling marketing and sales activities down to accessible numbers, your company leadership will have confidence that the goals are at least somewhat achievable, and what rates and values will need to hold true in order for the goals to be met.

The CMO can communicate more accurately with the CEO about how many actual opportunities and deals marketing will drive this quarter to support growth.

Key ingredients for your demand model

Here are the major data points I include in Metadata’s model:

Estimated start-of-quarter ARR – The amount of revenue you predict you’ll have at the start of the period you’re forecasting. For the sake of argument, let’s assume we’re measuring quarters.

Estimated end-of-quarter ARR – The revenue you want to get to by the end of the quarter you’re forecasting.

The net new ARR needed (the growth delta) – The difference between the start-of-quarter and end-of-quarter numbers, i.e. how much new ARR you need.

Net churn – Customers leave, new ones sign on. This number could be positive or negative. But it should be based on the actual $’s that are at stake for a given quarter, not just an average % for the year.

Most SaaS businesses sign on more people in the 2nd and 4th quarters than the 1st and 3rd, so straightlining an average won’t work.

Total ARR goal The growth delta plus (or minus) net churn, giving you the total ARR goal for the quarter. 

Let’s say that the total ARR goal number is $1.7 million. Marketing is not on the hook for sourcing and closing all of that in the quarter. The majority will come from existing sales pipeline you’ve been building up over the quarters. 

Expected pipeline revenue The next section of the demand model includes estimated revenue from current quarter and next quarter pipeline.

At Metadata, we have 6 opportunity stages, so I break this section down by each stage. Each stage includes the total revenue in that stage, the expected close rate for that stage, and then the expected revenue by multiplying these together.

I use historical close rates by opportunity stage to plug into the model and may either increase or decrease based on our current trajectory.

Total ARR to Source and Close in the period

Add together the expected closed/won pipeline revenue from the existing quarter and next quarter and this is the revenue you’re forecasting will close from existing opportunities. Subtract this number from the Total ARR Goal above and you have the amount of revenue that needs to be sourced and closed between now and the end of the period you’re forecasting.

We now start to work this revenue back to the activities we need to drive in Marketing and Sales to get to that number.

Average ARR selling price – In order to turn the revenue you need into the total number of new customers, you need to divide the total ARR goal above by the average ARR of each new customer.

Conversion rates – I then use stage-to-stage historical conversion rates to work the total number of new deals back to the number of early-stage opportunities I need to deliver. I then work that back into the number of demo requests I need to drive through Marketing.

How many demo requests then? I need to know my demo request to opportunity conversion rate, which will tell me how many demo requests I need to drive to turn into the early stage opportunities that will turn into closed/won deals.

Cost per demo request – As long as I understand my average cost to drive a demo request, I can now figure out how much marketing budget I need to drive the # of demos needed. If there is a delta (meaning I can’t afford all of them), then I get into a war room and start figuring out how to get additional lift on conversion rates, lower cost per demo, or places to find earned demand.

Note: I’ve included an ungated demand model template you can use to input your own data points and update regularly.

The biggest challenge for your demand model: sales cycles

The one thing we haven’t discussed are sales cycles.

Sales cycles can be 30 days, 90 days, 120 days or more. This means the marketing I do today will likely not turn into company revenue for a quarter or more.

Metadata’s sales cycle is short enough that we usually have the pipeline/churn/revenue data within a quarter to feed a demand model. However, as we move upmarket our sales cycles will extend.

If your cycle is 90 days or less, then you’re within a quarter and don’t need to worry too much about this.

If it’s longer than that, you’ll want to do an analysis of how many deals are sourced and close within whatever timeframe you’re working from and use that to adjust the number of demo requests you need to drive so that enough of them close within that time frame.

Start with basic inputs and let it grow 

For a basic demand model, these data points are a good start:

  • Revenue now
  • Revenue goal for end of the quarter
  • Average product selling price 
  • Conversion rate from opportunity to closed/won
  • Conversion rate from lead to opportunity

For a quarter or two, your model may only include 10 data points.

It’s fine in the beginning to just use estimates for churn and pipeline and then feed in more accurate inputs as you generate more sales data. Before long you’ll have 40 or 50 data inputs. 

Don’t obsess over the demand model

I do not recommend updating the demand model every day. One day it will say you need 100 demo requests, the next day it will be 85. Daily incremental data changes are not worth obsessing over.

So stick to doing updates once or twice a month. If there are discrepancies in your data, bake those into the next iteration and keep evolving. If your model says you have more than enough budget to pay for the demand this quarter, that’s great!

But don’t rest on your laurels. Spend the downtime finding that next round of demand for your product.

Whether your model delivers good news or bad about the demand/budget ratio, it serves a supremely important purpose: it reduces the dread of uncertainty, allowing you to plan ahead and make the best marketing decisions for your business.