Full definition
Waterfall distribution is a priority-based routing strategy where every incoming lead is first offered to the highest-priority buyer. If that buyer is at capacity (or paused, or outside working hours), the lead cascades to the second-priority buyer. If the second buyer is also unavailable, it continues down the waterfall until a buyer with capacity accepts it. This strategy is common in lead marketplaces where buyers pay different rates, because sending the best leads to the highest-paying buyer first maximizes revenue per lead. Waterfall's failure mode is starvation: lower-tier buyers can go long periods without receiving any leads when top tiers have headroom, which damages those relationships. Good implementations add minimum-volume floors per tier and time-window caps that prevent a single buyer from monopolizing a campaign.
Related terms
The process of automatically routing incoming sales leads from suppliers to buyers using rules and software.
A distribution strategy that rotates leads one-at-a-time through buyers in a fixed order.
A distribution strategy that allocates leads in proportion to each buyer's configured share of total volume.
The recipient of leads in a distribution system — typically a sales team, broker, agent, or end-customer who converts leads into revenue.
The maximum number of leads a buyer can receive within a defined time window.