Selling strategy is an under-appreciated aspect of a technology company’s overall business model strategy. Far too often I find the decision on how to approach sales being made haphazardly, or in many cases, not intentionally at all! A company will often just start hiring sales reps and turning them loose, with little upfront consideration on what the best approach will be for their specific product type, price point, product complexity, prime buyer persona, or available company resources. Top down selling? Bottom up marketing? Often I see these decisions happening almost by accident. Probably even more often the approach will be to do something similar to the sales/marketing strategy the senior executives have used in their past companies. This is understandable, because that’s what they know and are comfortable with. But quite often, it’s not optimal.
Different sales strategies for different situations
Haphazardly or based on past experience is the wrong way to approach selling strategy. Just like any other “strategy”, to be optimized it needs to be tailored to the specific situation that THIS PARTICULAR COMPANY is facing in the market. Letting what you’ve done in a different situation drive the strategy just doesn’t cut it. Worse yet, having it just kind of happen organically or by accident really is management malpractice. Sales is a critical function in any company; it needs to be carefully planned. In much the same way you need to do extensive product planning to bring the best product you can to a market segment.
There are many different aspects to any selling strategy, of course. Some fundamental, some more subtle. In this article we’ll explore one fundamental of selling (and marketing) strategy: whether to utilize a “top-down” or “bottom-up” approach.
First, let’s provide definitions for these two selling approaches.
Top-Down: This means selling to the DECISION MAKER for the purchase your purchase or possibly even higher. Generally, we’re talking about at least the manager that has control over the budget which will fund the purchase. Quite often, this might mean very high within a company at the CEO or CFO level. Other product purchases might have a decision maker who is at the director or department manager level. This varies from case to case, but we’re definite not referring to the USER of the product when we talk about a top-down approach.
Bottom-Up: Conversely, this means targeting your selling and marketing at the lowest level of the sales chain, usually the ultimate USER of the product and/or his direct management. This is often an individual contributor, who will be the first person affected by how well the product works – or doesn’t! It is important that they are actually able to purchase your product out of a lower level budget for this approach to be effective. In a Bottom Up selling scenario, you are essentially attempting to “seed” your product at lower levels of the organization. With success at these lower levels you will see it grow horizontally and vertically to other areas of the organization. The ultimate goal is for it to achieve enough success at the individual or department levels, that it eventually catches the attention of top management, who adopts the product company-wide.
It’s really sales AND marketing
It should be noted that while the title of this article refers to top down or bottom up sales, we’re really talking about both sales and marketing here. In this case, we’re using sales as the generic term for sales and marketing. At its simplest definition, marketing is really just sales at scale, anyway.
Primary advantages/disadvantages of bottom-up and top-down selling & marketing
Top down primary advantage: If you convince the person holding the purse strings or other high-level authority that you have a product worth buying, you’ve obviously gone a long way toward making a sale – and usually a very big one!
Top down primary disadvantage: The very senior executive may not really be knowledgeable enough or care to make the decision So he may outsource the “product evaluation” or even the decision-making to a person lower in the organization, at the individual contributor or department management level, anyway. By “skipping” this person lower in the organization, you may have already gone over the head and alienated a key influencer who will hold great sway in the product purchase decision.
Bottom up primary advantage: You are selling or marketing directly to the people that will care the most, the ultimate end user and his/her department. They will be the most interested party in the buying chain, and are the most likely to be receptive to your selling or marketing efforts. If this is a product that can be purchased for an individual or department, you’ve made a sale and the larger organization is now a customer. Even if this is a decision that can only be made higher in the organization, if you are successful selling at the end user level you have now created an “internal champion”. If you’ve done a good job in both creating the product and selling, your champion will now advocate within the company for your product. The internal champion is one of the most powerful advantages you can obtain in any sales situation.
Bottom up primary disadvantage: sometime this lower-level internal champion doesn’t have enough influence within the organization to be an effective enough advocate to drive purchases internally up the management chain. In this case, your sales or marketing efforts aimed at him or her have been essentially wasted from an enterprise sales perspective, beyond any individual or department level purchase that has occurred.
Key questions to ask before deciding
Now that we’ve covered the strengths and weaknesses of each method, we’ll move on to the specific situations where each approach is most appropriate.
When putting together a strategy of any kind, I often like to first put together a list of questions to ask which help to characterize the situation. Often in answering these questions, the best strategy “drops out” and becomes obvious as a result. Here’s my list of questions for deciding on whether structure your sales efforts in a top-down or bottom-up manner:
Do you solve an individual/departmental problem or a company-wide one?
This is one of the first things to consider. Keep in mind that whether or not you should be selling top-down or bottom up largely depends upon what level of the organization your product fits in. If it’s a company-wide application that doesn’t have utility at the individual or department level, almost by definition you are going to have to sell top down. On the other hand, if it’s an application that COULD be utilized company-wide, but also has utility in a standalone or departmental configuration, you have the option of adopting either a top-down or bottom-up sales & marketing approach.
What level of resources does your company possess?
This may be the most important thing to consider straight away. Top-down selling generally implies a “sales force intensive” effort. Those folks at the top aren’t easy to reach, and not just anyone can sell to them. So to properly sell top down you’re likely going to invest some serious capital in building an outside outbound, direct sales force. There may be some potential to utilize third party sales channels here, but we’ll save that discussion for another day. A bottom up sales approach, on the other hand, can usually be started with far lesser levels of available resources. You may do a lot of direct marketing to the user levels of your product within a large enterprise. You may have no sales force at all, or lower cost type of sales force such as an inside sales force or a VAR channel both of which would be more demand-driven and inbound oriented.
What are your price points?
This is where the details matter. Many different aspects of your product, marketing and sales mix need to match with your chosen top down or bottom up approach. For example if your only price point is a company wide license or subscription north of $1M at the your the market. Price points in particular need to be well suited to your approach. In general, lower entry points are well suited to a bottom up sales approache (and can also work with a top-down approach), where higher entry points usually work fine in a top down scenario.
How complex is your technology or product?
Product complexity also matters, just like price. If your product required lots of IT intervention or many hours of user training to get even an individual or small department of customers up and running, a bottom up campaign is likely to be fruitless. You can sell a highly complex (or a simple) product top down, But products sold bottom up almost by definition need to be simple to install and use.
What is the management style of you target customer’s company?
An old-style, hierarchical organization may respond more favorably to a top-down approach. A company with a more decentralized org structure, where decisions are made lower in the organization and are then raised in the organization to be “blessed”, may respond better to a bottom up approach.
Is a committee involved?
If a “buying committee” in involved with your product category, bottom up selling becomes much tougher. The committee may enforce the use of certain products, making it difficult for your product to be purchased at lower levels of the organization. In addition, committees often require an intensive, drawn out selling approach inconsistent with most bottom-up style sales organizations. So a top down or hybrid approach is usually required in this instance.
Bottom up and top-down sales approaches are not mutually exclusive
It often makes the most sense – especially if you have the resources – to engage in both top down and bottom up selling simultaneously. Not only are these approaches not mutually exclusive, but they are complementary in many cases, sometimes even multiplicative in their effectiveness. For example, you may have a senior sales rep directly calling on the C-level folks, while bombarding the rank and file with your low cost marketing campaigns. This can quickly get your product discussed in the target customer organization, much more quickly than when utilizing only one of the other. Care must be taken, however, to ensure that the top down and bottom up messaging is coordinated and complementary.
Ok, you’ve heard what I think about using a top-down vs. a bottom-up sales strategy. Does this match well with your experience? What have you found different? Expand this discussion by sharing your knowledge and experiences in the comment field below:
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