Forrester’s B2B Revenue Waterfall: A Complete Guide to Account Based Marketing (ABM)-alignment
Traditional lead management strategies are rapidly becoming obsolete. According to Forrester, a staggering 80% of B2B buying decisions are now made by buying groups comprising three or more individuals. This shift underscores the urgent need for B2B organizations to adapt their sales and marketing approaches to align with modern buying behaviors. The Forrester B2B Revenue Waterfall offers a comprehensive framework to address this challenge, transforming how businesses manage leads, engage accounts, and drive revenue growth.
This article serves as a complete guide to understanding and implementing Forrester’s B2B Revenue Waterfall. It is designed for B2B sales and marketing professionals seeking to modernize their strategies, improve alignment between sales and marketing teams, and ultimately, drive more significant revenue. We will explore the evolution of B2B sales processes, dissect the core components of the Revenue Waterfall, provide practical implementation tips, and outline key metrics for measuring success.
The Evolution of B2B Sales Processes
To fully appreciate the relevance of Forrester’s B2B Revenue Waterfall, it’s essential to understand the historical context of B2B sales processes and the shortcomings of legacy methodologies.
Historical Context
The B2B sales landscape has undergone significant transformation over the past two decades:
The 2006 Origin of MQL/SQL Concepts: The concepts of Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs) emerged in 2006, providing an initial framework for lead qualification. However, these concepts are now outdated, as they fail to account for the complexities of modern B2B buying cycles.
The 2012 Marketing Automation Era Challenges: The advent of marketing automation in 2012 brought new capabilities, but also new challenges. Complex workflows and system integrations often resulted in data silos and attribution issues, making it difficult to accurately measure marketing ROI.
Sirius Decisions’ 2017 Framework: In 2017, Sirius Decisions introduced a more humanized approach with stages like “Target,” “Active,” “Engaged,” “Prioritized,” “Qualified,” “Pipeline,” and “Closed.” This framework represented an improvement over MQL/SQL, but still lacked the comprehensive account-based focus required today.
Forrester’s 2021 Revolutionary Update: Forrester’s 2021 update to the B2B Revenue Waterfall addresses the limitations of previous models by emphasizing account-based strategies, buying group engagement, and comprehensive revenue management.
Why Traditional Methods Don’t Work Anymore
Several factors contribute to the obsolescence of traditional B2B sales and marketing methods:
Non-Linear B2B Buying Cycles: Unlike the linear path of B2C purchases, B2B buying cycles are complex and involve multiple decision-makers, making a linear approach ineffective.
The Problem with Single-Threading Opportunities: Focusing on individual leads within an organization often results in missed opportunities and lower win rates. Engaging multiple stakeholders across the buying group is crucial for success.
Why Inbound Marketing Alone Isn’t Sufficient: While inbound marketing remains valuable, relying solely on content consumption and lead capture is no longer sufficient. Buyers need to be actively engaged and nurtured throughout their journey.
The Limitations of Traditional Lead Conversion Models: Traditional lead conversion models often generate garbage data and fail to provide a holistic view of account engagement.
Understanding Forrester’s B2B Revenue Waterfall
Forrester’s B2B Revenue Waterfall offers a modern approach to B2B sales and marketing, addressing the shortcomings of traditional methods and aligning with the complexities of contemporary buying behaviors.
Core Components
The B2B Revenue Waterfall is built around several core components:
Account-Based Approach: Unlike lead-based systems, the Revenue Waterfall focuses on accounts, recognizing that B2B purchases are typically made by buying groups within organizations.
Buying Group Focus: The model acknowledges that 80% of B2B buying decisions are made by buying groups of three or more people, rather than individual leads.
Integration of New Business and Existing Customer Opportunities: The Revenue Waterfall provides a comprehensive view of both new business and existing customer opportunities, enabling organizations to manage their entire revenue stream within a single framework.
The Shift from MQLs to Account Engagement: Instead of focusing on MQLs, the Revenue Waterfall emphasizes account engagement, tracking interactions and activities across the entire buying group.
Key Stages in the Waterfall
The B2B Revenue Waterfall comprises several key stages, each representing a distinct phase in the customer journey:
Target Stage:
Initial account identification based on market segmentation and ideal customer profiles.
Defining opportunity types, including acquisition, renewal, upsell, and cross-sell.
Active/Engaged Stage:
Implementing engagement scoring mechanisms to track account-level activity.
Monitoring interactions, content consumption, and other engagement signals.
Prioritized Stage:
Establishing qualification criteria to determine when an account is ready for sales engagement.
Moving from engagement to opportunity based on predefined thresholds.
Pipeline Stage:
Creating and managing opportunities within qualified accounts.
Engaging multiple stakeholders across the buying group to drive deals forward.
Implementing the B2B Revenue Waterfall
Successfully implementing the B2B Revenue Waterfall requires a strategic approach to lead scoring, account stage management, and system integration.
Lead Scoring Evolution
Lead scoring plays a crucial role in the Revenue Waterfall, enabling organizations to prioritize accounts based on engagement and potential value.
Point-Based Systems Explained: Traditional point-based systems assign numerical values to different actions and attributes, such as downloading a white paper, visiting the pricing page, or holding a specific job title.
Account-Level Scoring Aggregation: The Revenue Waterfall takes lead scoring a step further by aggregating scores at the account level, providing a holistic view of engagement across the entire buying group.
Contact Engagement Tracking: Tracking individual contact engagement helps identify key influencers and decision-makers within the account.
Threshold Determination and Automation: Establishing clear score thresholds and automating the scoring process ensures that accounts are prioritized consistently and efficiently.
Account Stage Management
Effective account stage management is essential for guiding accounts through the Revenue Waterfall and maximizing conversion rates.
Target to Detected Transition: Identifying accounts that are merely names in a database versus those showing actual activity.
Engagement Scoring Criteria: Defining clear criteria for what constitutes engagement, such as website visits, content downloads, or event attendance.
Prioritization Thresholds: Setting specific score thresholds that trigger a move to the prioritized stage, indicating that the account is ready for sales engagement.
Pipeline Qualification Process: Establishing a process for qualifying accounts and creating opportunities, ensuring that sales resources are focused on the most promising prospects.
Measuring Success and ROI
To ensure the effectiveness of the B2B Revenue Waterfall, it’s crucial to track key metrics and analyze performance across different stages.
Key Metrics to Track
Several key metrics provide insights into the performance of the Revenue Waterfall:
Account Engagement Scores: Measuring the overall engagement level of accounts, providing a gauge of interest and potential value.
Stage-to-Stage Conversion Rates: Tracking the percentage of accounts that move from one stage to the next, identifying bottlenecks and areas for improvement.
Velocity Metrics: Measuring the speed at which accounts move through the Revenue Waterfall, providing insights into sales cycle length and efficiency.
Win Rates by Engagement Level: Analyzing win rates based on account engagement scores, demonstrating the correlation between engagement and sales success.
Analytics and Reporting
Robust analytics and reporting capabilities are essential for monitoring the performance of the Revenue Waterfall and making data-driven decisions.
Account-Level Analytics: Providing a comprehensive view of account activity, engagement, and conversion metrics.
Funnel Analysis: Visualizing the flow of accounts through the Revenue Waterfall, identifying areas where accounts are getting stuck or dropping off.
Deal Cycle Length Tracking: Measuring the average time it takes for accounts to move from initial engagement to closed deals, identifying opportunities to accelerate the sales cycle.
Product and Industry-Specific Insights: Analyzing performance based on product type and industry, enabling organizations to tailor their strategies to specific market segments.
Best Practices and Implementation Tips
Implementing the B2B Revenue Waterfall effectively requires careful planning, system integration, and change management.
System Requirements
CRM Considerations: Ensuring that the CRM system is configured to support account-based strategies and track engagement at the account level.
Marketing Automation Integration: Integrating marketing automation platforms to automate engagement scoring, nurture accounts, and trigger relevant actions.
Data Structure Recommendations: Structuring data to provide a holistic view of account activity, engagement, and conversion metrics.
Change Management
Sales Team Adoption Strategies: Educating sales teams on the benefits of the Revenue Waterfall and providing them with the tools and training they need to succeed.
Marketing Alignment Techniques: Aligning marketing and sales teams around common goals, metrics, and processes, ensuring seamless collaboration throughout the customer journey.
Training and Enablement Approaches: Providing ongoing training and enablement to ensure that teams are equipped to effectively implement and manage the Revenue Waterfall.
In Short
Forrester’s B2B Revenue Waterfall represents a paradigm shift in B2B sales and marketing, offering a modern approach to managing leads, engaging accounts, and driving revenue growth. By focusing on account-based strategies, buying group engagement, and comprehensive revenue management, organizations can overcome the limitations of traditional methods and achieve greater success in today’s dynamic B2B landscape.
To implement the B2B Revenue Waterfall effectively, organizations should:
Adopt an account-based approach, focusing on engaging entire buying groups rather than individual leads.
Implement engagement scoring mechanisms to track account-level activity and prioritize accounts based on potential value.
Align sales and marketing teams around common goals, metrics, and processes, ensuring seamless collaboration throughout the customer journey.
Track key metrics and analyze performance across different stages of the Revenue Waterfall, making data-driven decisions to optimize strategies and drive continuous improvement.
By embracing these principles and implementing the B2B Revenue Waterfall effectively, B2B organizations can unlock new opportunities for growth, improve sales and marketing alignment, and ultimately, drive more significant revenue.
