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Learn how the B2B revenue waterfall helps align sales and marketing, improve lead quality, and create a more predictable path to business growth.
Building a predictable revenue engine without a blueprint is like constructing a house without architectural plans. You might get a structure standing, but it won't be efficient, stable, or scalable. The B2B revenue waterfall is that essential blueprint for your business. It lays out every stage of the customer journey, from the first marketing touchpoint to a closed deal and beyond. This provides a clear, shared map that your sales and marketing teams can follow together, eliminating confusion and ensuring everyone is working toward the same goal. This framework removes ambiguity, creating a more direct and reliable path to closing deals and fostering long-term growth.
If you’ve ever felt a disconnect between your sales and marketing teams, you’re not alone. Marketing generates leads, sales tries to close them, and sometimes, valuable opportunities get lost in the handoff. The B2B Revenue Waterfall is a framework designed to fix this. Think of it as a detailed map that shows how potential customers move from initial awareness to becoming loyal clients, ensuring both teams are on the same page every step of the way.
According to Forrester, who developed the model, it's a method designed to improve how businesses find and win sales. It provides a shared language and a clear set of stages to track progress. Unlike a simple sales funnel that often ends once a deal is closed, the waterfall model visualizes the entire demand process. It helps you understand not just if you’re hitting your revenue targets, but how and why. By tracking every stage, you can pinpoint exactly where your process is working and where it needs a little help, creating a more predictable and efficient path to growth.
The traditional sales funnel was great for its time, but B2B buying has changed. It’s rarely a straight line from A to B anymore. The latest B2B Revenue Waterfall model evolved to reflect two major shifts: the rise of buying groups and a more complex opportunity mix. Today, decisions are often made by a committee, not a single person. The waterfall model accounts for this by focusing on the entire account, not just one lead. It also recognizes that growth comes from both new business and existing customers, helping you manage opportunities across their entire journey. This modern approach gives you a more realistic and holistic view of your revenue engine.
At its heart, the B2B Revenue Waterfall is a framework for managing leads, engaging accounts, and driving revenue. To make it work, you need a few key components in place. It starts with a strategic approach to lead scoring, which helps you prioritize the most promising prospects. From there, you need clearly defined account stages to track where each potential customer is in their buying process. Finally, all of this needs to be supported by strong system integrations. Your CRM, marketing automation platform, and financial software must communicate seamlessly to give you a clear, unified view of your pipeline.
So, why go through the trouble of setting up a revenue waterfall? Because it gives your business a clear, repeatable path to winning over customers. When sales and marketing are aligned around the same framework and metrics, everything becomes more efficient. Marketing delivers higher-quality leads that sales can actually close. Sales cycles get shorter because you’re engaging the right people at the right time. This alignment ultimately leads to more predictable revenue, which allows you to make smarter, data-driven decisions for your business. It transforms revenue from a guessing game into a science.
To really get a handle on your revenue engine, you need to understand its moving parts. The B2B Revenue Waterfall breaks down the customer journey into distinct, measurable stages. This isn't just about tracking leads; it's about seeing how potential revenue flows—or gets stuck—as it moves from a simple inquiry to a closed deal and beyond. By looking at each stage, you can pinpoint exactly where your process is shining and where it needs a little help. You can find more insights on how to build a predictable revenue stream on our blog. Let's walk through the five key stages that make up the waterfall.
This is where it all begins. A Marketing Qualified Lead (MQL) is someone who has shown initial interest based on your marketing efforts. Think of people who have downloaded an ebook, signed up for your newsletter, or spent significant time on your pricing page. According to Forrester, these leads are identified based on their engagement with your content and marketing campaigns. This isn't a random visitor; it's someone who has raised their hand, even if just slightly. Your job at this stage is to nurture that interest with valuable content and guide them gently, without a hard sales pitch. Tracking these early interactions is the first step in building a predictable revenue stream.
Once an MQL shows a higher level of intent, they graduate to a Sales Qualified Lead (SQL). This is the official handoff from the marketing team to the sales team. The sales team then vets the lead to confirm they're ready for a direct conversation. This qualification process often involves assessing their budget, authority, need, and timeline (a framework known as BANT). Is this person a decision-maker? Do they have a real problem your product can solve? Answering these questions separates the curious from the serious buyers. Having clear, shared definitions for an SQL is crucial for making this handoff seamless and ensuring your sales team’s time is well spent.
When an SQL is confirmed to have a legitimate interest and potential to buy, they become a Sales Opportunity. This is where the sales process gets real. Your sales team is now actively pursuing the deal, conducting demos, sending proposals, and handling negotiations. This stage is all about building a strong case for your solution and demonstrating its value. It requires tight collaboration between marketing and sales to ensure messaging stays consistent and supportive. Every piece of content, from case studies to ROI calculators, should be readily available to help your sales team make a compelling argument and move the opportunity forward.
This is the moment you’ve been working toward: the lead converts into a paying customer. A Closed Deal is the ultimate validation of your sales and marketing efforts. It signifies that you’ve successfully guided a prospect through every stage of their journey, from initial awareness to a final decision. This stage is where potential revenue becomes actual revenue, directly impacting your bottom line. Analyzing your closed deals—both won and lost—provides invaluable feedback. What worked? Where did prospects drop off? Answering these questions helps you refine your process, improve your forecasting, and ultimately, close financials more efficiently.
The journey doesn't end once the contract is signed. Post-Sale Engagement is a critical, often overlooked, stage of the waterfall focused on customer success and retention. The goal here is to ensure your new customers are happy, successful, and see the full value of their purchase. This can involve onboarding support, regular check-ins, and sharing helpful resources. Strong post-sale engagement turns customers into loyal advocates who are more likely to renew, expand their services, and refer new business your way. It’s how you maximize customer lifetime value and build a sustainable, long-term revenue engine.
Once your revenue waterfall is in place, you need a way to tell if it’s actually working. It’s not just about seeing revenue go up; it’s about understanding the health and efficiency of your entire process. By tracking the right metrics, you can pinpoint exactly where your strategy is succeeding and where it needs a little help. This data-driven approach turns your waterfall from a theoretical model into a practical tool for sustainable growth.
Think of conversion rates as the vital signs of your waterfall. They show you the percentage of leads that move from one stage to the next. A low conversion rate between MQL and SQL, for instance, might signal a disconnect between your marketing message and your sales team's expectations. Velocity measures how fast this happens. Are deals zipping through your pipeline or getting stuck somewhere? The Forrester B2B Revenue Waterfall is designed to help your teams plan and measure how you generate revenue, and tracking these two metrics gives you a clear picture of your funnel's efficiency and where you can make improvements.
Knowing where your revenue comes from is crucial. Revenue attribution connects the dots between a closed deal and the marketing and sales activities that made it happen. Was it that email campaign, a series of blog posts, or a specific sales call that sealed the deal? Accurately attributing revenue requires a strategic approach that combines lead scoring, account management, and solid system integration. When you can clearly see which channels and campaigns deliver the best results, you can double down on what works and stop wasting resources on what doesn’t, ensuring every dollar you spend is effective.
Pipeline coverage is your financial safety net. It’s a ratio that compares your open pipeline value to your revenue target for a specific period. For example, a 3x pipeline coverage means you have three times the value of your revenue goal in potential deals. This metric is essential for accurate forecasting and gives you confidence that you can hit your numbers. The main goal of the B2B Revenue Waterfall is to align your teams to better identify, engage, and win opportunities. This alignment is exactly what you need to build and maintain a healthy pipeline, ensuring you always have enough qualified leads moving toward a close.
Not all leads are created equal, and that’s where a good lead scoring system comes in. This system assigns points to leads based on their characteristics and behaviors, like their job title, company size, or the pages they’ve visited on your site. This helps your sales team prioritize their time by focusing on the leads most likely to convert. An effective lead scoring system is vital for optimizing your conversion rates. By focusing on account-based strategies and buying group engagement, you can move beyond traditional methods and build a more accurate, dynamic model that reflects true purchase intent.
Your Customer Acquisition Cost, or CAC, is the total amount you spend on sales and marketing to acquire a new customer. To calculate it, you simply divide your total sales and marketing expenses by the number of new customers you gained in a specific period. This metric is a direct measure of the efficiency of your revenue engine. A high CAC might mean you’re spending too much to attract customers, which can eat into your profitability. Understanding your CAC is essential for evaluating your waterfall's performance and making smart decisions as you scale your business.
Tracking your average deal size helps you understand the typical value of a new customer. This metric is straightforward to calculate: just divide your total revenue by the number of deals you closed. Monitoring this number over time can reveal important trends. Is it increasing? That could mean you’re successfully upselling or attracting larger clients. Is it decreasing? You might need to adjust your pricing or targeting strategy. When you align your reporting with the principles of the B2B Revenue Waterfall, you can use metrics like average deal size to get a clearer picture of your revenue potential and optimize your sales strategies for bigger wins.
A revenue waterfall is more than just a model; it’s a shared roadmap. But for it to work, your sales and marketing teams need to stop operating in separate silos and start rowing in the same direction. True alignment isn't about forcing teams to get along—it's about building a system where collaboration is natural and necessary for success. When marketing understands sales priorities and sales trusts the quality of marketing's leads, you create a powerful engine for growth. Here are five practical steps to make that happen.
The first step toward alignment is creating a single definition of success. Instead of marketing chasing MQLs while sales focuses solely on closed deals, both teams should be accountable for revenue. Frameworks like the Forrester B2B Revenue Waterfall are built on this idea of a unified measurement approach. Establish shared KPIs that track the entire customer journey, such as pipeline velocity, conversion rates between stages, and ultimately, revenue generated. When everyone is working toward the same top-level goals, team-specific metrics become tools for achieving that shared objective, not the end-all-be-all. This creates a culture of shared ownership where a win for one team is a win for everyone.
You can’t have alignment without communication. A solid strategy goes beyond the occasional meeting; it’s about creating consistent, open channels for feedback. Set up a recurring "smarketing" meeting where both teams can review performance, discuss lead quality, and share insights from the front lines. Sales can provide direct feedback on which campaigns are generating the best conversations, while marketing can share data on what content is resonating with target accounts. Establishing a clear process for lead handoffs and follow-ups ensures nothing falls through the cracks and builds trust between the teams. This consistent dialogue turns finger-pointing into productive problem-solving.
Gut feelings and assumptions are the enemies of alignment. To get your sales and marketing teams on the same page, you need a single source of truth: clean, reliable data. Companies that use advanced data analytics are far more likely to see significant revenue growth because they can pinpoint exactly what’s working. By connecting your CRM, marketing automation platform, and financial software, you can get a clear view of the entire revenue waterfall. This allows you to make informed decisions based on performance, not opinions. Having seamless data integrations ensures both teams are looking at the same numbers, which is the foundation for any strategic conversation about improving results.
Accountability is key to maintaining momentum. Schedule regular performance reviews that bring sales and marketing leaders to the same table to analyze the revenue waterfall together. These sessions shouldn't be about assigning blame but about fostering transparency and identifying opportunities for improvement. Walk through each stage of the waterfall, discussing conversion rates and any bottlenecks. Are leads getting stuck somewhere? Is the handoff process smooth? Sharing these insights ensures both teams understand their impact on the overall process and can make adjustments collaboratively. This practice reinforces the idea that everyone is on the same team, working toward a common objective.
The modern B2B Revenue Waterfall is perfectly suited for an account-based marketing (ABM) strategy, which is the ultimate exercise in sales and marketing collaboration. Instead of marketing casting a wide net and throwing leads over the fence, an account-based approach involves both teams working together to identify and engage a specific list of high-value target accounts. Marketing creates personalized campaigns to warm up these accounts, and sales follows up with tailored outreach. This method requires tight coordination and shared intelligence from start to finish, ensuring that every action is strategic and aligned toward landing key customers. You can find more strategies for growth on the HubiFi blog.
A successful revenue waterfall isn’t built on good intentions alone; it runs on a solid technology stack. The right tools act as the connective tissue between your sales and marketing teams, automating routine tasks and turning raw data into clear, actionable insights. It’s not about having the most expensive or complex software, but about choosing platforms that integrate seamlessly and give everyone a shared view of the customer journey. When your tech works together, your teams can too. This alignment is critical because it ensures that marketing efforts are directly feeding a healthy sales pipeline and that sales has the context needed to close deals effectively.
Forrester notes that technology plays an increasingly significant role in enabling better sales and marketing alignment. This is because the right stack removes guesswork. It provides a single source of truth, so marketing knows which campaigns are driving real opportunities, and sales understands the full history of a lead before they even pick up the phone. From tracking initial engagement to analyzing closed deals, your technology is what makes the waterfall model a practical, data-driven strategy instead of just a theoretical concept. Investing in the right tools is an investment in a more efficient, predictable, and scalable revenue engine.
Think of data analytics platforms as the command center for your revenue waterfall. These tools pull in information from your website, CRM, and marketing campaigns to give you a complete picture of what’s happening at every stage. Instead of flying blind, you can see exactly where leads are stalling, which channels are performing best, and how long it takes for an account to move from one stage to the next. This visibility is crucial for making smart decisions.
As Forrester explains, the B2B Revenue Waterfall provides the "insights that all revenue engine functions—marketing, sales, and customer engagement" need to succeed. A strong analytics platform delivers these insights directly to you. It helps you spot bottlenecks before they become major problems and identify opportunities to optimize your process. You can find more insights in the HubiFi blog to guide your data strategy.
Your Customer Relationship Management (CRM) system is the heart of your sales and marketing operations, holding all your valuable customer data. But a CRM that operates in a silo is a missed opportunity. True power comes from integration—connecting your CRM with all the other tools in your tech stack. This creates a unified system where data flows freely between marketing automation, sales engagement, and customer support platforms.
Successfully implementing a revenue waterfall requires a strategic approach to "lead scoring, account stage management, and system integration." When your systems are integrated, everyone is working from the same playbook. Marketing can see real-time sales updates, and sales has full context on a lead’s marketing engagement. This eliminates data discrepancies and ensures a smooth handoff between teams. Explore how HubiFi handles integrations to create a single source of truth for your business.
Automation is your secret weapon for efficiency and consistency. These solutions handle the repetitive, time-consuming tasks that can bog down your sales and marketing teams, freeing them up to focus on strategy and building relationships. This can include anything from sending lead nurturing emails and scoring prospect engagement to assigning tasks and updating records in your CRM. Automation ensures that no lead falls through the cracks and that every prospect gets a timely, relevant follow-up.
By automating key workflows, you create a more streamlined and reliable process for moving accounts through the waterfall. For example, you can set up triggers that automatically move a lead from MQL to SQL once they hit a certain engagement score, instantly notifying a sales rep to take action. This not only speeds up your sales cycle but also ensures that your process is followed consistently. You can schedule a demo with HubiFi to see how automation can transform your revenue operations.
While data and systems are critical, your revenue waterfall will ultimately fail if your teams aren't communicating. Collaborative tools like Slack, Microsoft Teams, or shared project management boards create a dedicated space for sales and marketing to connect. These platforms break down departmental silos and foster a culture of open communication, which is essential for alignment. They make it easy to ask quick questions, share wins, and solve problems together in real time.
According to Axcient, "Marketing and sales teams must collaborate. Talking openly helps everyone understand the data better and improves results." When a marketer can quickly ping a sales rep about a high-value lead or a sales rep can share direct feedback from a customer call, the entire revenue engine becomes more agile and effective. These tools build the human connection that turns a group of individuals into a truly unified team.
How do you know if your waterfall strategy is actually working? That’s where performance tracking systems come in. These platforms go beyond basic analytics to provide detailed dashboards and reports specifically designed to monitor funnel health and campaign ROI. They allow you to measure conversion rates between each stage, track the velocity of deals, and attribute revenue back to the specific marketing and sales activities that influenced it.
Tools in this category can provide "a set of dashboards that allow B2B marketers to monitor how accounts progress through the funnel." This level of tracking is essential for proving the value of your efforts and making data-backed decisions. With a clear view of your performance, you can double down on what’s working, fix what isn’t, and continuously refine your approach to build a more predictable and powerful revenue stream.
Shifting to a B2B revenue waterfall is a powerful move, but let’s be honest—it’s not always a simple plug-and-play solution. Like any significant operational change, it comes with its own set of potential hurdles. You might find that your teams are stuck in their old ways, your data is a mess, or your departments feel more like separate islands than a unified team. For example, your marketing team might be measured on lead volume while your sales team is measured on closed deals, creating a natural friction point that a new model can expose. Or, you might discover that the CRM data you thought was reliable is actually full of duplicates and outdated information, making accurate lead scoring impossible.
The good news is that these challenges are completely manageable. The key is to anticipate them and have a clear plan in place before you start. By thinking through these common issues, you can build a more resilient, effective, and collaborative revenue engine from day one. This proactive approach saves you headaches down the road and ensures your transition to a waterfall model is smooth and successful. Let’s walk through some of the most frequent obstacles and talk about practical ways to solve them.
One of the biggest roadblocks to a successful revenue waterfall is when your data lives in separate, disconnected systems. Marketing has its analytics, sales has its CRM, and finance has its own records. When these platforms don't communicate, you get an incomplete picture of the customer journey. This leads to inconsistent messaging and a clunky handoff process between teams. To fix this, you need to create a single source of truth. By focusing on seamless integrations between your key systems, you can ensure everyone is working from the same playbook. This unified view allows for a smooth flow of information from one stage of the waterfall to the next, creating a much better experience for both your team and your customers.
People are creatures of habit, and asking your sales and marketing teams to adopt a whole new framework can be met with some resistance. They’re used to their existing funnels and processes, and change can feel disruptive. The best way to handle this is with clear communication and education. Don’t just tell them what is changing; explain why. Show them how the revenue waterfall will lead to more qualified leads, higher conversion rates, and ultimately, more revenue. Start with a pilot program to demonstrate early wins and build momentum. When people see the positive results for themselves, they’ll be much more likely to get on board.
Your revenue waterfall is only as strong as the data that fuels it. If your database is filled with outdated contacts, duplicate entries, or incomplete information, your entire process will suffer. Inaccurate data leads to flawed lead scoring, wasted effort, and unreliable forecasts. It’s the classic "garbage in, garbage out" problem. To solve this, you need to make data hygiene a priority. Implement standardized data entry processes, perform regular cleanups of your database, and use tools to verify and enrich your contact information. For more on this, you can find helpful insights in the HubiFi blog. Clean data ensures your teams are making decisions based on reality, not guesswork.
A common point of failure in any sales and marketing relationship is a lack of communication. Marketing might think they’re sending over great leads, while sales feels they’re unqualified. Without a feedback loop, this disconnect only grows, creating friction and inefficiency. The solution is to build structured communication channels between the two teams. Schedule regular meetings where sales can share insights on lead quality and marketing can report on campaign performance. This isn't about placing blame; it's about working together to refine the process. This collaborative approach ensures that both teams are aligned and continuously improving the quality of leads moving through the waterfall.
Your market isn’t static, and your revenue waterfall shouldn’t be either. Customer needs evolve, new competitors appear, and economic conditions shift. A rigid, unchanging process will quickly become obsolete. To stay effective, you need to treat your revenue waterfall as a living framework that requires regular attention. Set aside time each quarter to review your waterfall stages, lead scoring criteria, and conversion benchmarks. Are they still relevant? Are there new buying signals you should be tracking? Building in this process of regular assessment ensures your strategy remains agile and responsive to the market. If you need help building a flexible system, you can always schedule a demo to see how it’s done.
A revenue waterfall isn't a static model you build once and then ignore. Think of it as a garden; it needs regular attention to thrive and produce results. Keeping your waterfall healthy means your sales and marketing teams stay aligned, your pipeline stays full of qualified leads, and your business continues to grow sustainably. It’s an ongoing process of assessment, monitoring, and refinement that prevents stagnation and keeps your revenue engine running smoothly.
By dedicating time to maintaining your waterfall, you ensure it accurately reflects your customer's journey and effectively guides your revenue strategy. This proactive approach helps you spot issues before they become major problems, like a leak in your pipeline or a disconnect between teams. It also allows you to capitalize on new opportunities as they arise, making your business more agile and responsive. A well-tended waterfall doesn't just track revenue; it actively helps you generate it by creating a clear, data-driven path from prospect to loyal customer.
Your business changes, your market shifts, and your customers evolve. Your revenue waterfall strategy needs to keep pace. Set aside time quarterly or bi-annually to review your entire waterfall with key stakeholders from sales and marketing. Are your lead scoring criteria still accurate? Do the definitions for MQLs and SQLs still make sense for your current sales cycle? A successful B2B Revenue Waterfall requires a strategic approach to lead scoring and account stage management. Take a hard look at each stage and ask if it’s still serving its purpose. This is also the perfect time to get direct feedback from both teams to ensure the strategy reflects what’s actually happening on the ground.
You can't improve what you don't measure. Consistently tracking key performance metrics (KPIs) gives you the insights needed to understand your waterfall's health and make informed adjustments. The Forrester B2B Revenue Waterfall provides a framework that all revenue functions—from marketing to sales and customer success—can use to measure progress and performance effectively. Focus on metrics like conversion rates between stages, sales velocity, and pipeline coverage. Real-time analytics can show you where leads are getting stuck or dropping off, allowing you to intervene quickly. Having a clear, consolidated view of your data is the first step to making smarter, more strategic decisions.
The overall goal of the B2B Revenue Waterfall is to align your teams to better identify, engage, and win opportunities. Use the data from your KPIs to make continuous, small adjustments to your process. If you notice a low conversion rate from MQL to SQL, perhaps your marketing team needs to refine its targeting or your sales team needs to adjust its follow-up cadence. These refinements aren't about overhauling your entire system but about making incremental improvements that add up over time. Smooth handoffs between teams are critical, and having seamless integrations with your existing tools can help automate and streamline this process, reducing friction and saving valuable time.
Your waterfall is only as effective as the people who use it every day. Investing in regular training ensures everyone on your sales and marketing teams understands their role, the technology they use, and the overall strategy. This includes training on your tech stack, the specifics of your lead scoring system, and how each team’s efforts contribute to the bigger picture. It’s also about reinforcing a customer-centric mindset. By prioritizing relationship building and consistently providing value, your team can ensure long-term success. When your team is confident, well-equipped, and aligned on goals, they are far better prepared to turn qualified leads into loyal customers.
What's the real difference between a traditional sales funnel and a B2B Revenue Waterfall? Think of it this way: a traditional funnel is like a one-way street that ends when a deal is closed. It's a simple, linear path. The B2B Revenue Waterfall is more like a modern highway system. It accounts for the fact that B2B buying often involves a whole group of people, not just one lead, and it recognizes that growth comes from existing customers, too. It maps out the entire journey, including post-sale engagement, giving you a much more realistic and complete view of how your business actually generates revenue.
My sales and marketing teams have a hard time agreeing on anything. What's the first step to getting them aligned? The best place to start is by creating a shared definition of success. Instead of having separate goals, bring both team leaders to the table and agree on one primary objective: revenue. From there, work backward to define what a qualified lead looks like at each stage (MQL, SQL, etc.). When both teams agree on the definitions and are measured against the same ultimate goal, the finger-pointing stops and the collaboration begins.
Do I need to invest in a bunch of new, expensive software to implement a revenue waterfall? Not necessarily. The most important thing isn't having the most expensive tools, but having tools that work together. You can often start with the systems you already have, like your CRM and marketing automation platform. The key is ensuring they are integrated properly so data can flow seamlessly between them. This creates a single source of truth that both teams can rely on, which is the real foundation of a successful waterfall.
This seems like a lot to track. If I can only focus on one or two metrics to start, which ones are most important? If you're just starting out, focus on conversion rates and velocity. Conversion rates tell you what percentage of leads are successfully moving from one stage to the next, which immediately shows you where your process might be breaking down. Velocity measures how fast they're moving through the pipeline. Together, these two metrics give you a powerful snapshot of your revenue engine's health and efficiency without overwhelming you with data.
How often should I be reviewing and adjusting my revenue waterfall? Your revenue waterfall shouldn't be a "set it and forget it" project. Your market and customers are always changing, so your strategy should, too. A good practice is to schedule a formal review with both sales and marketing leaders every quarter. This gives you a dedicated time to look at the data, discuss what's working and what isn't, and make any necessary adjustments to your lead scoring, stage definitions, or overall process.
Former Root, EVP of Finance/Data at multiple FinTech startups
Jason Kyle Berwanger: An accomplished two-time entrepreneur, polyglot in finance, data & tech with 15 years of expertise. Builder, practitioner, leader—pioneering multiple ERP implementations and data solutions. Catalyst behind a 6% gross margin improvement with a sub-90-day IPO at Root insurance, powered by his vision & platform. Having held virtually every role from accountant to finance systems to finance exec, he brings a rare and noteworthy perspective in rethinking the finance tooling landscape.
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