The Demand Waterfall: SiriusDecisions' Funnel Model Explained

By Tracy N · Updated Oct 13, 2026

The Demand Waterfall is a B2B funnel model from the research firm SiriusDecisions, now part of Forrester. It defines the stages a prospect passes through from first inquiry to closed deal, with a named owner and handoff at each step. Its stages underpin the MQL-to-SQL vocabulary most B2B teams still use.

If you've ever argued about what counts as a "qualified" lead, you've been arguing inside this model, whether you knew it or not.

Why the Demand Waterfall still matters

Most B2B companies inherited their funnel vocabulary from this framework. Your CRM lifecycle stages, your marketing-to-sales handoff and even the dashboards your board reads probably trace back to it. According to Clever Touch's history of the model, SiriusDecisions launched the Waterfall in 2002, revised it in 2012, and revised it again in 2017. A Marketone overview calls the model the de facto standard for managing demand generation processes.

Understanding it helps in two ways. First, you can read old playbooks and vendor documentation without guessing what "SAL" means. Second, you can decide which pieces to keep and which to drop, instead of copying a funnel you never chose.

Key Facts

• The Demand Waterfall is a staged B2B demand model from SiriusDecisions, which Forrester completed acquiring on January 3, 2019.
• The original version has five core stages: inquiries, marketing qualified leads, sales acceptance, sales qualification, and the won deal, according to Forrester's own description.
• The 2012 "Rearchitected" version added teleprospecting stages and tracked sales-sourced demand alongside marketing-sourced demand.
• The 2017 Demand Unit Waterfall, unveiled at the SiriusDecisions Summit in May 2017, replaced the individual lead with the buying group as the unit being counted.
• The stages are modular, so each company can adapt definitions to its own motion.

The original stages: inquiry to closed

Forrester describes the first version as five core stages. The sequence runs like this, with the common acronyms attached:

Most teams label the two sales steps with the shorthand SAL (sales accepted lead) and SQL (sales qualified lead). The point of the design is that every handoff has two sides. Marketing doesn't just throw a lead over the wall. Sales has to explicitly accept it or reject it, and the funnel records which one happened.

That accept-or-reject step is the single most useful idea in the whole model. It turns "marketing says this lead is good" into something testable. For a deeper treatment of the MQL and SQL boundary, see MQL vs SQL.

How the model changed: 2012 and 2017

The Waterfall wasn't static. Each revision responded to something the first version missed.

The 2012 rethink

By 2012 the original model had a problem: it assumed demand started with marketing. Clever Touch's write-up of the 2012 update says the revision accounted for the rise of inbound marketing and telesales, and for the fact that sales also generates leads. Forrester describes the second version as adding granularity to marketing qualification and tracking teleservices and sales-sourced demand, with named stages such as the automation qualified lead, the teleprospecting accepted lead and the teleprospecting qualified lead.

Marketone's overview adds that the revised waterfall recommends tracking conversions by lead source: marketing generated leads, teleprospecting generated leads and sales generated leads. In practice that meant you could finally see whether a closed deal started from a campaign, an outbound call or a rep's own prospecting.

The cost was complexity. More stages and more acronyms made the picture harder to explain in a hallway conversation, and many teams quietly skipped the extra stages they didn't need.

The 2017 Demand Unit Waterfall

The third version changed the unit of counting. Forrester's post introducing it says it was unveiled in May 2017 by Terry Flaherty and Kerry Cunningham at the SiriusDecisions Summit in Las Vegas. Instead of individual leads, it tracks demand units, meaning buying groups organized around a need. Several demand units can exist inside one account.

It also starts earlier. The post lists these stages in order:

1. Target market: the potential demand units you'd like to sell to.
2. Active demand: units showing evidence they're in the market, which third-party intent data can help identify.
3. Engaged demand: units with at least one contact who fits a buyer persona and has opted into being identified by you. Forrester notes this mirrors the inquiry stage of the earlier waterfall.
4. Qualified demand, pipeline and closed/won: the later stages, tracked at the demand-unit level rather than the lead level.

Forrester's setup tips for the Demand Unit Waterfall also name the target, engaged, prioritized, qualified and active stages and walk through demand units, buyer roles, scoring and service-level agreements.

What happened next

SiriusDecisions was acquired by Forrester, which announced completion of the deal on January 3, 2019. Forrester now publishes the model under its own name, and its blog describes the Demand Waterfall as a SiriusDecisions framework now part of Forrester.

Critics haven't been gentle. The Clever Touch analysis, dated August 2021, argues the 2012 model was static, with set stages and many acronyms, and that even the 2017 version has a rigid structure. Their alternative is a funnel configured around each company's business goals. That's a fair critique, and it's also the reason this article treats the Waterfall as a vocabulary to adapt, not a standard to obey.

Waterfall versions compared

Waterfall vs bowtie, flywheel and the generic funnel

The Waterfall is one of several ways to draw the revenue journey. They answer different questions.

If your biggest problem is the marketing-to-sales boundary, the Waterfall's explicit acceptance step helps most. If your problem is churn and expansion, pair it with a model that continues past closed/won. Our guide to revenue funnel stages shows how to stitch the two together.

How to implement a Demand Waterfall, step by step

You don't need to adopt all of it. Start with the five original stages and add detail only where you feel pain.

1. Pick your unit. If you sell to individuals or small teams, count leads. If you sell to committees, count accounts or buying groups from day one.
2. Define each stage in one sentence. Write what must be true for a record to enter the stage. "Marketing thinks it's good" isn't a definition. "Meets the ICP and has taken a high-intent action" is.
3. Assign one owner per stage. The owner is the team that gets blamed when records stall. Marketing owns inquiry and MQL. Sales owns acceptance and qualification.
4. Make acceptance explicit. Add a SAL status and a required rejection-reason field. Without a reason, you can't learn why leads fail.
5. Set handoff SLAs. Agree how fast sales must accept or reject an MQL. The full-funnel SLA model covers the timing rules.
6. Write exit criteria. Spell out the evidence that moves a record forward. Stage exit criteria goes through how to word them so reps can't skip steps.
7. Build the conversion report. Measure stage-to-stage conversion by source and segment, and compare against your own history first. Full-funnel conversion rates explains how to read the numbers without chasing someone else's benchmarks.
8. Review monthly. Look at rejection reasons and stale records. Change definitions only through a logged process, as described in funnel governance.

A ready-to-copy stage definition template

Paste this into a doc or a wiki page and fill in the blanks for your own motion.

Keep the whole thing to one page. If the definitions don't fit, they're probably too complicated to enforce.

Examples by business function

Marketing. A demand gen team at a software company scores inquiries and sends the top slice to sales as MQLs. They report MQL volume and also the share of MQLs sales accepts, because volume alone rewards sending junk.

Sales development. An SDR team owns the SAL step. Each MQL gets accepted, rejected with a reason, or recycled to nurture within the agreed SLA. Managers review rejections weekly and feed patterns back to marketing.

Sales leadership. A VP of sales uses SQL conversion by source to decide where reps spend discovery time. If paid social inquiries almost never qualify, that's a staffing and targeting conversation, not a coaching one.

RevOps. The RevOps lead owns the stage definitions, the CRM fields and the conversion report. They run the monthly review and keep the change log, which is the core of lead-to-opportunity process design.

Customer success. The classic Waterfall ends at closed/won, so CS teams often add their own post-sale stages for onboarding, adoption and renewal. That's the gap the bowtie model fills.

Do's and don'ts

Do:

• Keep stage names consistent between the CRM, the dashboards and the sales deck.
• Record why leads are rejected, every time.
• Treat the stages as modular. Add the teleprospecting stage only if you have a tele team.
• Review definitions when your motion changes, such as moving upmarket.

Don't:

• Copy the 2012 acronym list wholesale because it looks thorough.
• Count MQL volume as a success metric without acceptance rates beside it.
• Let marketing alone define "qualified." The stage works only when both sides agree.
• Forget the buying group if you sell to committees. A single contact tells you little about a deal with several stakeholders.

Common mistakes

Teams most often fail by adopting the labels without the behavior. They add an MQL field in the CRM, but nobody owns the accept-or-reject step, so MQLs pile up with no feedback. Another common slip is changing definitions mid-quarter and then comparing conversion rates across the change as if nothing happened.

And some teams adopt the newer Demand Unit Waterfall without the data it needs. Tracking buying groups requires you to know which contacts belong to which account and what need they share. If your CRM can't tell you that, start with accounts and build up.