A B2B business has several options when choosing a customer acquisition structure, and finding the most effective can take time. The most successful companies know a well-defined growth strategy is key to staying productive, flexible, and goal oriented.
One of the first things to determine is whether you need to invest more in top-down or bottom-up sales models. These strategies are polar opposites, so how they affect your growth team, from product to marketing, varies drastically.
In this article, we’ll explore how the two sales models differ, their pros and cons, how to use them in conjunction, and how to decide which is best for your business.
What is a top-down sales model?
Top-down sales targets the “top” company leaders and decision makers.
This approach is one of the oldest and most familiar in sales. It starts with identifying and engaging key decision makers. In marketing, it’s known as account-based marketing (ABM), where you target a few large accounts that match your ideal customer profile (ICP) or buyer persona.
The top-down approach requires greater diligence from your sales team. It involves studying a list of select companies and roles, then using personalized one-to-one outreach to win their business.
For example, if you’re an HR management SaaS using top-down sales, you would narrow down your pool of target companies to the most high-value, high-potential accounts. You would then go after HR directors, the C-suite, and founders at those companies.
All of your marketing campaigns, ads, and integrated sales efforts need to speak directly to those particular prospects. You may, for instance, publish an ebook called 10 New Technology Trends Every HR Director Should Know. You could also personalize landing page copy for individual accounts, using automation technology to make copy adjustments in real time.
Benefits of a top-down sales model
1) You speak directly to key decision makers
The premise of this approach is that, when you win over the key executive(s), you win over the rest of the team. You deal with fewer people during the sales process and have a direct relationship with the decision maker, even after purchase. This can result in faster sales cycles once you have buy-in from your target lead.
2) Contract sizes and values tend to be larger
Since the executive with the most buying power is involved in the sales process, you’re likely working with a bigger budget. You also have the opportunity to pitch cross-departmental solutions and thereby increase the deal size without needing additional upper-management approval.
3) Your contract is more secure
Selling directly to the C-suite helps you avoid having to “re-sell” your services if your main point of contact leaves. It also comes in handy when, say, another competitor tries to approach a lower-level employee later down the line. You have a clear advantage if the decision maker is on your side.
4) Implementation can be faster with direction from the top
The employees who need to implement your product or tool may be more invested in the process when the direction comes from the director level. For example, if a founder requests a new integration and frequent follow-up meetings, your engineering team users are more likely to prioritize it.
Disadvantages of a top-down sales model
1) It’s resource intensive
In this sales model, a single prospect demands significant attention from individual team members. You need to invest a lot of time developing one-to-one relationships — and it doesn’t always guarantee a deal.
2) It requires tight sales and marketing alignment
This isn’t necessarily a bad thing. However, it’s worth noting that if your sales and marketing teams aren’t on the same page with each account, your brand messaging could easily become confused and render the top-down approach ineffective.
3) Top decision makers may not understand the need for your product or service
Unless they’re the core users of your platform, executives may not see the urgency or need for your product or service. You risk spending a lot of time educating a decision maker about your industry, only for them to say they aren’t interested.
What is a bottom-up sales model?
Bottom-up sales is when you cast a wide net to capture multiple leads, invite them to use your product or service, and encourage them to introduce your platform to their companies.
This approach utilizes one-to-many marketing; you target a larger crowd of people to buy, use, and benefit from your product or service. Although you may eventually reach the higher-ups of the company, by this point, you’ll already have buy-in from their employees (your main users).
The idea is that your end users best understand the value of your product. They serve as educated proponents within a company, as they can articulate the impact your product has on their daily lives. You’re able to demonstrate the full benefit of your product or service in practice, instead of in theory.
This approach tends to work best for SaaS companies that offer free or low-cost options. Upon encountering your brand, employees can start to use your product or service right away — without executive sign-off — and can validate its effectiveness before requesting an upgrade.
Using the example given earlier, a bottom-up tactic for an HR SaaS could feature releasing an ebook titled 10 New Technology Trends HR Professionals Should Know. You could also launch an ad campaign that targets multiple HR roles and aims to connect with various user types in one go.
Benefits of a bottom-up sales model
1) You cast a wider net to achieve more immediate results
Unlike the top-down approach, you don’t have to tailor your message to a select few. You can create larger-scale campaigns that appeal to multiple industries and job titles. This allows you to create and test campaigns more quickly, and use the results for fast iterations.
2) You can nurture brand advocates within a company
In many organizations, executives already lean on their employees to find and vet different solutions. As such, they’re more likely to listen to recommendations from their employees than from your sales team. In the best-case scenario, your software will do the selling for you; happy users will spread the word to their colleagues and friends.
3) You and your audience speak the same language
Using this approach, your marketing messaging will come more naturally to you. You won’t have to spend as much time educating a prospect from being problem-aware, to solution-aware, to product-aware. They already understand their pain points, so it’s easier for them to speak your language when you explain the solution to their problems (and how you can help).
Disadvantages of a bottom-up sales model
1) It tends to yield smaller deals
Lower-level employees have less buying power than their managers and may opt to start with a smaller plan that’s readily available for them to use. These buyers also tend to purchase software for themselves or a small team, as opposed to an entire organization.
2) You risk using your team’s bandwidth to support non-paying users
Working with freemium users or other audiences who don’t contribute to your revenue can consume much of your product and customer support teams’ resources. This is bandwidth you could devote to paying customers instead.
3) There’s a limit to how much you can scale adoption
Many buyers may not be in a position to implement your solution across the broader organization. So, you may quickly hit a ceiling in terms of how much you can upsell your customer.
4) Higher risk of churn when the main PoC leaves
This is all too common in SaaS. The main champion and primary user of your platform leaves the team, so there’s no one left to advocate for your solution. This forces you to think of ways to rekindle the relationship — or risk losing the company’s business altogether.
5) Potentially long sales cycles
In some cases, you’ll still need the decision maker to sign on the dotted line. This can slow down the sales process if your point of contact struggles to involve or convince executives. You won’t always have visibility into those conversations, or be able to ensure your product’s value is communicated fully and accurately.
6) Less personalization
The beauty of top-down sales is that you can fully customize your message so it resonates perfectly with a specific buyer persona. In some bottom-up models, the net cast is too wide, and strips out all personalization and segmentation in messaging. This ends up hurting your success rates and fails to establish a relationship with your potential customers.
Top-down vs. bottom-up sales: Which approach is right for your business?
Whether to adopt a top-down or bottom-up sales approach can boil down to several considerations. The best place to start is by asking yourself a few important questions.
Who is your user? What is their role in their company?
Who at a company uses your product or service? What is their role in their department? How closely do they work with their department directors, or the company founders? Analyzing your user and their roles and relationships within the company can help you determine how hard it’ll be to demonstrate your product’s value to key decision makers.
If your user is the business owner, great. Go for a top-down approach for an easy win. If your tool requires company-wide participation in order to show value, the top-down approach has a higher chance of adoption.
However, if your users are, for example, the subject-matter experts in a company, you may need to prove your worth to them first through a bottom-up approach before they’ll bring you to their managers and ask for a higher (paid) plan.
How do most of your target companies operate?
Does management tend to consult employees before making a purchase decision? Do you commonly deal with smaller, more inclusive teams, or larger, decentralized companies?
Take a look at your current best customers and your dream clients. If budget approval requires a lot of red tape and sign-offs, the bottom-up approach might result in long, grueling sales cycles.
Where do users usually drop out of your sales funnel?
Identifying drop-off points in your customer journey can show you where you need to improve. It can also reveal who’s using your product and what’s missing from your messaging.
For example, do prospects frequently drop off after their free trial ends? It’s possible a bottom-up approach is a bad fit until you adjust your pricing or add more features to your product.
Or, do users convert at a high rate from a general, industry-focused landing page, only to cancel their accounts a month later and leave a bad review? You may be casting too wide a net and reaching unqualified leads. In this case, you might try personalizing your messaging to work on the top-down approach.
Where is your growth team focused? Which teams have the most resources?
Do you have a lot of manpower in product, but not in sales? You may lack salespeople to dedicate the time, personalization, and attention a top-down approach needs to succeed. However, a high product focus could grow your company well with a bottom-up approach, where you’re continually adjusting your tool to better fit your customers’ needs.
If you have plenty of salespeople and a strong marketing arm, you can build customized funnels and outreach sequences per lead, hyper-personalizing each message and graphic to reach your dream clients.
What does it take for your product or service to shine?
Is it easy to see the value of your product or service at first glance? Or does it require a little more guidance for your customers to fully realize how you can help them reach their goals? This can help you determine which approach makes more sense for your acquisition team, as well as improve retention.
For example, look at your churn rate. How many of your users drop off after using your product or service for one month? What about six months? Some products just need more time to show their full potential (this is similar to content, which generates compounding returns with time).
If you need your customers to stick with you a little longer or take a couple more actions to fully realize your potential, a top-down approach can provide the white-glove service and attention to retain them.
Do you have to choose one or the other?
You don’t necessarily have to pick one method, as they’re not mutually exclusive. You can use a hybrid approach, or switch between the two.
How you implement these models depends on your goals and business setup. It’s not uncommon to start with a bottom-up approach if you’re a SaaS startup looking to grow your customer base through a high volume of smaller contracts. Over time, you may choose to employ more top-down strategies to drive up the value of your contracts and/or upsell existing clients.
Alternatively, you may use a different approach for each customer segment or package type. Let’s say you offer three tiers of your product: free, standard, and enterprise. Your free and standard packages may be well suited for bottom-up marketing, while your enterprise package may warrant the top-down approach.
Or, say you sell to two different industries like hospitals and eCommerce. Hospitals can’t afford to swap out their software as regularly or easily as an eCommerce business. Therefore, you may need to take a highly personalized top-down approach to sell to hospitals, whereas you can take a bottom-up approach for eCommerce companies.
Wrapping up – Top-down vs. bottom-up sales
There is no one-size-fits-all approach to how you structure your B2B growth acquisition initiatives. Deciding which sales method is “better” requires a careful, honest evaluation of where your business stands, plus putting yourself in your buyers’ shoes. Whichever direction you take, understand why you chose it and how you’ll measure its success over time.